U.S. halts collection on some past-due covid loans, sparking federal probes

The U.S. government has halted some efforts to collect an estimated $62 billion in past-due pandemic loans made to small businesses, concluding that aggressive attempts to recover the money — a portion of which may have been lost to fraud — could cost more than simply writing off the debt.

The Small Business Administration, which manages the program, adopted the policy in April, prompting the agency’s watchdogs to compute the potential losses in a September report that found the practice “risks” violating federal law. The internal directive since then has sparked an outcry on Capitol Hill, where House Republicans on Wednesday opened an investigation and joined their Senate GOP counterparts in demanding documents from the SBA.