Jenny Grus Sugar works for the Western District of North Carolina U.S. Attorney’s Office as its Coronavirus Fraud Coordinator, according to an interview she had recently with Nate Morabito.

A few months after this interview, Jenny Grus Sugar went on to accuse innocent hardworking business owners of fraud and ignored hundreds of ongoing investigations. Rather than help the family, she ended up ruining their lives and businesses. Apparently, Jenny Grus Sugar victimized this family based on their religious beliefs, for which she should be held responsible.

In addition, there are Damning Reports revealing how the Paycheck Protection Program was designed to fail. There are three things you can do to ensure a program intended to help the most vulnerable small businesses doesn’t actually do that.

You can encourage banks to limit their services under the program to existing customers. Second, you can fail to issue specific guidance on prioritizing underserved markets. Three, you can allow banks to create two or even three tracks of applications, the fastest track reserved for their largest eligible “small business” clients.

A new report from the House Select Subcommittee on the Coronavirus Crisis explains how the Paycheck Protection Program failed to prioritize underserved markets as directed by the CARES Act.

The report is based on 30,000 pages of emails, memos, interview transcripts, and other documents obtained or gathered by the subcommittee, and it contradicts much of what Treasury Department officials have told Congress during oversight hearings about Coronavirus response efforts. The report confirms what many small business groups and researchers have been warning about since the rollout of the Paycheck Protection Program was announced – that it was supposed to leave out the most vulnerable small businesses.

Lenders told the subcommittee that anti-money laundering and customer-knowledge requirements helped them work with existing customers more easily than with new ones. However, in response to a letter from the subcommittee, U.S. Bank stated it was able to secure Small Business Administration approval for non-customers on average within 15.33 days of application, while existing customers took an average of 16.68 days.

And yet, as the report notes, “By limiting their PPP loan programs to existing customers, lenders shut out many minority-owned businesses that did not have pre-existing business banking relationships.”

As Next City has previously reported, the SBA’s data shows its existing private lender network has relatively weak ties to business owners of color and women business owners — those most likely to fail as a result of the economic fallout from COVID-19. In FY2018, just five percent of loans in the SBA’s main loan guarantee program went to black-owned businesses, and just 9 percent went to Hispanic-owned businesses. Only 18 percent went to businesses whose majority owners were women.

In 2011, the SBA created the Community Advantage Pilot Program to address these shortcomings. The program provides SBA loan guarantees through community development financial institutions, or CDFIs, lenders that have a specific mission of serving underserved communities. According to the report, however, this subset of nonprofit SBA lenders were almost entirely excluded from the Paycheck Protection Program since they had not previously made at least $50 million in SBA-guaranteed loans. The subcommittee report also points out that the same rule excluded many minority-depository institutions from the Paycheck Protection Program.

CDFIs and MDIs made just 65,000 out of 1,670,000 loans during the first round of the Paycheck Protection Program, which lasted just two weeks before funding ran out.

By April 30, the SBA lowered the $50 million threshold to $10 million, enabling many more CDFIs to participate – but that only happened after the first round of the Paycheck Protection Program was exhausted and after 41 percent of Black-owned businesses had already shut down due to the pandemic. More recent polling suggests that nearly half of Black-owned businesses will never reopen.

Ultimately, CDFIs and MDIs processed $16.4 billion in Paycheck Protection Program loans, or 3.1 percent of the total amount of loans disbursed under the program.

Furthermore, some of the largest banks processed Paycheck Protection Program loans much faster for larger clients, according to data obtained by the select subcommittee. Nearly four times as fast as loans under $1 million, Chase processed loans over $5 million. In addition to processing loans for companies with more than 100 employees at twice the speed of smaller companies, PNC processed loans over $5 million twice as quickly as loans under $1 million.

In addition, other large banks, such as Wells Fargo and U.S. Bank, did not demonstrate significant differences in application processing times between large and small clients. Citi was the only large bank not to provide data on average processing time, telling the subcommittee it did not collect that data.

For the Paycheck Protection Program loans, the SBA decided not to collect demographic data in the interest of “speed and simplicity,” according to Treasury officials. According to the select subcommittee report, that data should be collected moving forward.

The report also recommends more direct consultation with and resources for CDFIs and MDIs, if Congress extends the Paycheck Protection Program.

In line with its annual practice since 1994, the U.S. Department of Treasury recently awarded funding to CDFIs across the country – some of which are also MDIs. Over $204 million was distributed to 397 CDFIs, including loan funds, credit unions, banks, and venture capital funds that serve underserved communities and direct at least 60 percent of their lending and other services to those communities.

The CDFI Fund’s core program offered $535.4 million to 588 organizations from across the country. Congress has, however, held steady the CDFI Fund appropriations for several years despite the fact that more and more organizations are becoming eligible to apply for funding every year. A follow-up to the CARES Act passed by the House of Representatives in May, the HEROES Act appropriates $1 billion for the CDFI Fund.

In addition, the findings of the subcommittee also come at a time when there is uncertainty looming even for those small businesses that did receive a Paycheck Protection Program loan – uncertainty around the process of loan forgiveness.

October 31 is the deadline given on the original loan forgiveness application forms, but officials just last week clarified that businesses actually have more than a year from receiving their loan to apply for loan forgiveness.

In a change from previous restrictions, the Small Business Administration also announced this month that, for loans up to $50,000, complete loan forgiveness would be granted regardless of how much of the loan was used to pay employees. According to the SBA, 3.57 million Paycheck Protection Program loans were for less than $50,000, including 1.71 million loans to small businesses with no employees besides the owner. Another proposal floating around in Congress, with the support of the banking industry, would increase that threshold to $150,000 and also make loan forgiveness automatic.

In the meantime, looking for more ways to meet small business credit needs during the pandemic, some cities are turning to local pension funds and others are pushing cities and states to leverage public deposits.