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Understanding PPP loan fraud

On Behalf of | Apr 11, 2023 | White Collar Crimes |

The government responded to the economic impact of the 2020 pandemic by offering the Paycheck Protection Program, allowing companies to request loans for payroll and other business-related expenses.

The PPP had no repayment requirement. However, failing to follow guidelines or applying under false information would result in PPP loan fraud.

What is PPP loan fraud?

PPP loan fraud comes in many forms. For example, if a person made a false statement on their application or used the money from a PPP loan for an unapproved purpose, that constitutes fraud. The same is true if the applicant submitted false certification for loan forgiveness or completed multiple applications through various lenders.

Not meeting the criteria is the most common reason for making false statements. For example, only businesses with less than 300 employees per business or location and more than a 25% reduction in gross revenue could apply.

What are the potential penalties for PPP loan fraud?

There is no singular penalty for PPP loan fraud. Various federal statutes can apply depending on the situation. For example, making false statements to a federal agency and making false statements on a loan application are different charges. Penalties for PPP loan fraud can range from 5 to 99 years of incarceration and as much as $1 million in fines.

What can you do if you are under investigation?

PPP loan fraud is a serious offense. When accused, most people consult with an attorney to better understand their rights.

Understanding the complexities of the PPP guidelines is the first step in ensuring compliance.