How Common is PPP Loan Fraud?

In response to the COVID-19 pandemic, the government created the Paycheck Protection Program (PPP) in March of 2020. The goal of the program was to provide a loan (that did not need to be paid back) to American businesses, many of which had to close their doors due to the virus. In a little over one year, the program has given nearly 11 million people more than $780 billion.

Applying for a PPP Loan

When PPP loans were first announced, hundreds of thousands of business owners were eager to apply for it. Though the guidelines have changed several times since the loan was first announced, the first round of applicants had to meet the following requirements in order to be approved:

  • Businesses had to be operational before February 15, 2020.
  • Businesses had to still be open and operational at the time of their filing for the application.
  • Businesses needed to have 500 employees or less.
  • If a business had multiple locations (such as a franchise), each location must have had fewer than 500 employees.

PPP Loan Fraud

There are several ways a business could be accused or found guilty of PPP loan fraud. Some of the most common include:

  • Making a false statement on your application.
  • Using PPP loans for an unapproved purpose. Loans were not a blank check and generally speaking, had to be spent on things like payroll expenses (salaries, tips, paid leave, employee benefits, etc.), utilities, and bonuses (hazard pay and commissions).
  • Applying for PPP loans from multiple lenders. This is known as “loan stacking.”
  • Submitting a false certification.

According to Project on Government Oversight (POGO), the U.S. Department of Justice has brought criminal charges against more than 200 individuals in 119 cases related to PPP fraud since April 3, 2020. As the Justice Department continues to investigate, this number will likely grow.

If you’ve been accused of PPP loan fraud, it’s important to act fast. Contact Nick Lotito & Seth Kirschenbaum today at (404) 471-3177 so we can take immediate and effective action.

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