Waste of the Day: SBA May Ignore Erroneous Grants

Topline: The Small Business Administration won’t try to recover most of the potentially improper grants it gave to restaurants during the Covid-19 pandemic, according to a Dec. 18 report from the agency’s inspector general.

SBA let several grants slip through its collective fingers

Key facts: Another audit from 2024 found that large chunks of the money were approved even though SBA employees didn’t check whether the restaurant was eligible for the grant. The government didn’t verify how much money each restaurant lost from the pandemic, instead relying on self-reported numbers. Officials also paid $552 million to 901 restaurants that had already been flagged by other government agencies for “likely fraud.”

The Restaurant Revitalization Fund opened for applications in May 2021 to give restaurants up to $10 million in grants to replace the revenue they lost because of the pandemic, according to the 2024 report.

The SBA received 278,300 applications asking for $72.2 billion. Roughly 101,000 applicants were approved for $28.6 billion, the maximum amount authorized by Congress, according to the 2024 report.

The SBA could only verify that 70% of the money had been spent properly, meaning an estimated $8.6 billion was improperly awarded. It was the second-worst payment accuracy rate out of all 68 federal programs reviewed for improper payments in 2024.

In total, there were over 61,000 restaurant grants that “lacked sufficient support” to prove they should have been paid, according to the most recent audit. The SBA has not yet tried to recover most of the money, but agency managers told the inspector general they will review 10,050 grants in 2026.

That leaves over 50,000 grants worth $9.6 billion that will not be reviewed, according to the inspector general.

Letting bad grants ride

The audit follows an August 2025 report that found the SBA has not tried to recoup $544 million in improper payments sent to ineligible movie theaters, concert halls and other performance venues through the Shuttered Venue Operators pandemic assistance program.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com. 

Background: The SBA grants are considered “potentially improper” and are one small piece of the total amount Washington wastes on improper payments. In fiscal year 2024, $161 billion was sent to the wrong person, for the wrong amount or the wrong reason.

Fiscal year 2025 ended in September, but it remains unknown how much was lost to improper payments. The numbers are typically released in late November but 2025 data was still missing from PaymentAccuracy.gov as of Dec. 22.

Open the Books emailed the Office of Management and Budget on Dec. 1 to ask why the data has not been released. There was no response. 

Summary: It has been well over two years since the federal government declared an end to the Covid-19 emergency. It’s time to recover the money that Washington spent improperly.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.