The Small Business Administration (SBA) has ceased efforts to collect $62 billion in COVID-19 loans, figuring that those efforts would cost more than simply writing them off, The Washington Post reported.

The SBA, which manages the program, adopted the policy last April. In September, the agency’s watchdogs found that the practice “risks” violating federal law. The internal directive has prompted House Republicans to open an investigation and to demand documents from the SBA, as have Senate Republicans.

The program, known as Economic Injury Disaster Loans (EIDL), began in 2020 to help cash-starved companies survive the pandemic-induced financial crisis. It stopped accepting loan applications in May 2022. In contrast to other pandemic-era programs, under EIDL, borrowers were required to pay back their loans. In addition to uncovering tens of billions of dollars in potentially fraudulent loans that should not have been made in the first place, the agency’s inspector general is also investigating whether it has chosen not to pursue some borrowers with back-due balances, especially involving unpaid loans less than $100,000.

Loans of that size together add up to about $62 billion, although the SBA has not said how many are in repayment or experiencing any trouble, the Post reported.

Sen. Joni Ernst (R-Iowa), the ranking member of the Senate’s Committee on Small Business and Entrepreneurship, wrote the SBA in March to express “urgency and significant concern” about its efforts to recoup unpaid EIDL balances. In a recent statement, she also he faulted the SBA for a policy that appears to be in “violation of federal law based entirely on a faulty cost-benefit analysis.”

“It’s completely unacceptable that SBA is leaving taxpayers on the hook for $62 billion in EIDL loans,” she said.

Rep. Roger Williams (R-Texas), the chair of the House Small Business Committee, led 13 Republicans in a letter that subtly threatened to obtain the materials pertaining to SBA’s management of the Paycheck Protection Program (PPP) as well as EIDL by subpoena.

While the SBA had decided that it would not take the most aggressive actions possible to pursue borrowers who received loans worth $100,000 or less, it did say that it planned to send out letters demanding payments and threatening penalties, and it aimed to bar these borrowers from obtaining federal aid again. But the SBA opted against referring all unpaid and delinquent loans to the Treasury Department, which can garnish wages and initiate other collection activities, according to reports, letters and other materials prepared by SBA and its top watchdog that were later reviewed by the Post. SBA leaders said that the government at the time would be unlikely to recover most of the money anyway, and that they had few options because of decisions made under the Trump administration that limited debt collection.

In a statement, Han Nguyen, an agency spokesman, said that “borrowers need to repay their loans, and the agency will continue its collection efforts against all those who do not.” He added that the EIDL program, in particular, uses the “most comprehensive set of legal and cost-effective tools to vigorously pursue repayment of loans, particularly those with legitimate fraud indicators.”

“There was a real need to get the money out the door quickly,” Liz Hempowicz, the vice president of policy and government affairs at the Project on Government Oversight, a nonprofit watchdog, told the Post in reference to the SBA’s management of the roughly $1 trillion in loans and grants issued during the pandemic.  “When it came to this balance between speed and accuracy, I think we miscalculated and put too much emphasis on getting money out the door quickly.”

In another report, the agency’s inspector-general watchdog found that the SBA waited for five years to submit timely loan data to Experian, one of the monitoring agencies that lenders consult when making a decision about a borrower.

“All these credit reporting systems help ensure that lenders have the data they need to make informed decisions about creditworthiness for individuals and small businesses,” acknowledged Sheri McConville, the acting director of the Office of Performance and Systems Management at SBA, in a follow-up letter to the inspector general.

“The SBA should be treating these taxpayer-funded loans the same way as any business owner would who is owed a large debt,” Rep. Williams said in a statement. “The SBA should continue pursuing loans of all sizes rather than taking the path of least resistance.”