small business administration said that ppp loans received by nonprofit organizations are not considered federal financial assistance, are not subject to audit requirements under uniform guidance, and need not be included in the organization's schedule of expenditures of federal awards. at least one of the people involved in the 2021 united states capitol attack received a ppp loan. richard barnett received a $9,300 ppp loan on april 14, 2020. a 38-year-old man in irvine, california, had falsely claimed to be operating four businesses and had received about $5 million which he allegedly used to buy luxury cars. oversight acting pentagon inspector general glenn fine was named the chair of the committee that oversees how the ppp loans were administered as well as the rest of the funding from the cares act. on april 7, 2020, four days after ppp loans began to be made, president donald trump removed fine as head of the committee. report from sba inspector general hannibal ware, the inspector general of the small business administration, said that the small business administration had set stricter rules than were stated in the law establishing the program, which is causing an "unintended burden" on businesses. the small business administration requires 75% of a ppp loan be used for payroll costs, which is a rule not found in the law. the small business administration stated all ppp loans would have a maturity date of two years, while the law allowed for up to ten years. the small business administration has also not complied with all of the requirements stated in the law. the law required the small business administration to issue guidance to lenders about the loan deferment process, but it did not do so. the law required lenders to prioritize businesses in underserved and rural areas, but the small business administration did not issue any such guidance to lenders. the law required the small business administration to register each ppp loan using the taxpayer identification number of each business within 15 days after each loan was made, but it did not do so. a group of software and information technology companies has sued the small business administration and the department of the treasury, alleging that the two agencies had improperly added restrictions to the program that were not present in the original law. a lobbyist for the independent community bankers of america has said that virtually all business owners have taken such a loan assuming it would be forgiven, but the rules are highly complex and all the rules have not yet been released for loans that have already been made. the american bankers association has urged the federal government to release the forgiveness rules urgently. report from government accountability office on june 25, 2020, the government accountability office released its first bimonthly report of its oversight of the paycheck protection program, as required by the coronavirus aid, relief, and economic security act. the report showed that, while the small business administration had worked quickly to implement the ppp, the urgency caused confusion throughout the implementation of the ppp. examples of ongoing confusion regarding the ppp included questions about who was eligible to apply for a ppp loan, the release of many unclear interim rules, the frequent release of numerous incomplete answers to questions, and a lack of clarity about how ppp loan proceeds must be used in order to qualify for loan forgiveness. the confusion added to the economic stress that employees were already experiencing from the pandemic. some small businesses were concerned that a government agency would later cite them for certifying their need for the loan without good faith. small businesses were also uncertain whether they would qualify for any loan forgiveness. these uncertainties caused many small businesses to decide to return their loan proceeds rather than face these possible consequences. as of may 31, 2020, businesses had returned more than 170,000 ppp loans, totaling approximately $38.5 billion, largely resulting from many confusing statements and a lack of clarity and confusing information released by the small business administration. the report found that the ppp loan application process allowed small businesses to self-certify their needs and qualifications. consequently, some applicants were able to exploit the program by illegitimately inflating their payroll costs to qualify for larger ppp loans, misrepresenting their number of employees to illegitimately appear eligible for a ppp loan, and certifying that the loan proceeds would be used for allowable costs while actually using the loan proceeds for personal uses. the government accountability office's report said that the small business administration still had not explained how it would conduct the reviews of ppp loans that exceeded $2 million each, nor had it explained how it would perform oversight of ppp loans that were smaller than that threshold. memo from office of management and budget on june 18, 2020, the office of management and budget issued a memo regarding the interaction between ppp loans and federal awards. in the case of an organization that has received a federal award and has also received a ppp loan, the organization may use ppp loan proceeds to pay for payroll costs as long as it does not charge the same payroll costs to a federal award. furthermore, the organization must utilize the ppp loan proceeds first in order to sustain its workforce, and the organization should take steps to preserve federal funds for restarting work on the federally funded project. loan necessity questionnaires in late october 2020, the small business administration created a nine-page loan necessity questionnaire for entities that received ppp loans of $2 million or more. the questionnaires ask about the entity's quarterly revenue, its capital expenditures, its dividend payments, whether it paid $250,000 or more of annualized compensation to any employee during the 24-week covered period, and to what extent its operations were altered due to covid-19. in the version for non-profit organizations, the questionnaire asks about the organization's endowments. nonprofit schools will need to provide information about their revenue from tuition. some of the responses require information that could only have been obtained after the entity had already certified its need for the loan on its ppp loan application. as part of the ppp loan forgiveness process, the small business administration will send the questionnaire to the lender of each entity that received a ppp loan of $2 million or more. within five business days, the lender must send the questionnaire to the applicable entity with a notification that small business administration has undertaken a review of its ppp loan. after receiving the questionnaire from the lender, the entity has ten business days to complete and return the questionnaire to the lender. the small business administration said it would use the completed questionnaires to assess to what extent the entity was truthful in its good-faith certification in its loan application that the ppp loan was necessary for ongoing operations due to economic uncertainty. the small business administration may determine an entity was ineligible for a ppp loan and may pursue repayment or other remedies if the entity does not complete and return the questionnaire. the completed questionnaires are not necessarily exempt from the freedom of information act. the questionnaires ask the entity to indicate which parts of the completed form contain confidential or proprietary information, which might possibly prevent public release of the information under foia exemption 4, which states exempts "trade secrets" and matters that are "commercial or financial information obtained from a person" that are "privileged or confidential". the small business administration estimated that 42,000 for-profit entities and 10,000 non-profit organizations would receive questionnaires. fraud the u.s. department of justice charged more than 500 people with illegally claiming ppp loans, collectively totaling hundreds of millions of dollars. one california couple submitted about 150 fraudulent applications to claim over $20 million intended for small businesses. after their conviction in june 2021, they were given ankle bracelets, but they cut them off and fled. they were sentenced to prison in absentia. they were captured in montenegro in february 2022, and extradited to the u.s. later that year. a 2021 working paper by three finance professors at the university of texas at austin estimated that about 15% of the program's loans, representing $76 billion (about 1.8 million loans out of the total of about 11.8 million loans), had at least one indication of fraud. about 1.2 million loans (totaling $38 billion) had at least two indications of fraud. the study identified four primary and five secondary indications of a suspicious loan. the primary indicators were "non-registered businesses, multiple loans at a residential address, abnormally high implied compensation relative to industry by core-based statistical area (cbsa) averages, and large inconsistencies (as large as tenfold) between the jobs reported by borrowers on their ppp application and another contemporaneous government program application with a different incentive structure." the secondary indicators were "discontinuities around the maximum ppp compensation level of $100,000, rounded loan amounts, overrepresentation of ppp loans relative to u.s. census data on the number of business entities in a particular industry and county, clustering of loans with similar features within lender-county pairs, and criminal records for ppp borrowers." the study found that financial technology (fintech) companies were far more likely to make suspicious ppp loans; fintech companies made about 29% of total ppp loans, but accounted for 52.63% of suspicious loans, and "fintech loans are highly suspicious at a rate of almost five times that for traditional lenders." a december 2022 report from the us house select subcommittee on the coronavirus crisis cited fintech firms and small business lenders such as blueacorn, womply, bluevine, and kabbage as among those that failed to help prevent fraudulent loans, which insider suggested may jeopardize participation in future programs. the article cited bloomberg news reporting that estimated fintechs "handled only 15% of ppp loans overall but accounted for 75% of the fraudulent ppp loans investigated by the justice department." notes in the case of a church, a temple, a mosque, a synagogue, another house of worship, an integrated auxiliary of churches, or a convention or association of churches that is not required to apply for a determination of its 501(c)(3) status, the organization is eligible as long as it meets the requirements of section 501(c)(3) and all other ppp requirements. a hospital that is tax-exempt under section 115 of the internal revenue code qualify as a nonprofit organization if it maintains written documentation that it has reasonably determined that it is described in section 501(c)(3) of the internal revenue code and is therefore within a category of organization that is exempt from taxation under section 501(a). 501(c)(12) electric cooperatives and 501(c)(12) telephone cooperatives are also eligible. a tribal business is a business that is wholly owned by one or more indian tribal governments or by a corporation that is wholly owned by one or more indian tribal governments. being partially owned by one or more indian tribal governments also qualifies if all other owners of the business are either united states citizens or small businesses. a seasonal business is eligible to apply for a ppp loan if it was in operation on february 15, 2020, or it was in operation for at least eight weeks between february 15, 2019, and june 30, 2019. according to the small business administration, affiliation is generally determined based on ownership, management, interest, and other circumstances. two entities are affiliates if one entity owns at least 50 percent of the other. two entities are also affiliates of each other if one controls — or has the power to control — the other. two entities are also affiliates of each other if another entity controls, or has the power to control, them both. having the power to control does not necessarily imply that the power is actually exercised. if an external party has at least 50 percent ownership, it has the power to control. the power to control may also exist by way of contractual agreement. a faith-based organization may disregard the number of employees of its affiliates if the connection between the two organizations is based on a religious teaching, religious belief, or is otherwise a part of the exercise of religion. the affiliation rules do apply, however, if the affiliation is solely for non-religious reasons, such as administrative convenience. the application should include a