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4 Things to Know if You’re Being Investigated for PPP Loan Fraud


In response to the COVID-19 pandemic, the federal Paycheck Protection Program (PPP) was part of a massive stimulus package that provided forgivable loans to small businesses. However, the rules regarding the application process and what the loan can be spent on have changed several times over the past two years. If you’re being investigated for PPP loan fraud, here’s what you need to know.

Steps to Take if You’re Being Accused of PPP Loan Fraud

1. Understand what happens during the investigation.

Typically, the Small Business Administration (SBA) begins a PPP loan fraud investigation with an audit. During the audit, the SBA will look at:

  • Whether or not there were lies or inconsistencies in your original application;
  • Whether your business was negatively affected by COVID-19 and in genuine need of the loan;
  • How the loan was spent;
  • All loan forgiveness was proper.

In certain cases, a fraud investigation or prosecution may also begin with the Department of Justice.

2. Know that not all audits lead to a criminal investigation.

When COVID-19 first began, emotions were running high and there were many inconsistencies surrounding PPP loans. If the SBA determines that a borrower wasn’t eligible for the loan or misused funds from the loan, the SBA may simply ask for the loan to be repaid by a certain date. If the borrower genuinely made a mistake, it will likely not become a criminal fraud case.

3. Learn the penalties for a PPP loan fraud conviction.

If an SBA audit turns into a criminal investigation, the potential penalties become much more severe.

If the borrower is accused of lying on their PPP loan application, they can also face other penalties, including making false statements, wire fraud, and bank fraud — if convicted, each of these crimes carries hefty fines and jail sentences.

4. Reach out to a trusted attorney immediately.

If you’re being investigated for PPP loan fraud, it’s crucial to act fast and get proper legal counsel. Contact Nick Lotito & Seth Kirschenbaum today at (404) 471-3177 so we can take immediate and effective action.

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