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Defaults on Loans for Veterans Cost Taxpayers $31 Million

U.S. military veterans at a veteran career fair and expo in Washington on Jan. 18, 2012
U.S. military veterans at a veteran career fair and expo in Washington on Jan. 18, 2012Photograph by Saul Loeb/AFP via Getty Images

A federal program meant to speed small business loans to veterans has cost taxpayers $31 million since 2007 because so many borrowers defaulted, and lax oversight means the loans may not even have gone to veterans, according to a new report from the U.S. Government Accountability Office

The Small Business Administration’s Patriot Express loan program started as a pilot in 2007 to get loans of as much as $500,000 to businesses owned by veterans, reservists, and family members. As is the case with other SBA programs, the loans are made by private lenders and guaranteed by the agency. SBA repays as much as 85 percent of a loan’s value if borrowers default.