Risk Factors for PPP Loan Fraud Investigation and Why You’ll Need to Contact a PPP Loan Fraud Attorney in Tampa

The Paycheck Protection (PPP) was passed by Congress as part of the Coronavirus Aids, Relief, and Economic Security (CARES) Act in March 2020 and was designed to provide forgivable loans to small businesses during this period of economic uncertainty. The purpose of the loans themselves were to cover payroll costs, mortgage, interest, rent, and utility costs over the period the loan was made. Unfortunately, between a wide array of loopholes, an overwhelming number of applications, and rapidly evolving regulatory requirements, many business owners who received PPP loans are now at risk of federal investigation and severe criminal penalties over allegations of PPP loan fraud. 

Therefore, any business that submitted a PPP application and/or received a PPP loan should be aware of the program’s requirements and the various circumstances that may raise a red flag in the eyes of a federal investigator. If your company is being targeted by a federal investigation or audit, enlist the protection and guidance of the PPP loan fraud attorneys in Tampa with The Rickman Law Firm. We can discuss your case in greater detail and use our experience actively representing clients to protect you against allegations of PPP loan fraud.

The Application

As for where and when PPP loan fraud is most likely to arise, it begins with the application process. Submitting false supporting documentation, applying for PPP loan forgiveness when you’re ineligible, or applying for a larger PPP loan than your business is currently eligible for could easily bring you under investigation for PPP loan fraud. PPP fraud may also arise if the circumstances of your business change between the time of the application and the time of its approval. To avoid becoming susceptible to investigation, it’s important to document any such changes, correctly identify your total number of employees, avoid wrongfully claiming the Small Business Administration (SBA) status, and accurately report your average monthly payroll amount. This is crucial as all PPP applicants were required to certify in good faith that the information on their information was accurate and that the loan was necessary to support their small business.

The Use of the PPP Loan Funds

The next area of risk regarding PPP loan fraud is the use of the PPP loan funds. There are two categories under this umbrella — using the funds for unauthorized purposes and using the funds for fraudulent purposes. Both types of purposes fall outside of the specific four purposes outlined by the PPP and are, thus, impermissible and can lead to allegations of PPP loan fraud. It’s also important to note that, with respect to mortgage, rent, and utilities, that the PPP funds can only be used to cover expenses for obligations that were preexisting as of February 15, 2020. To prove your company is in compliance with this requirement, we recommend thoroughly documenting the source of payment for company expenses, both eligible and non-eligible. 

The Certification

Finally, there is the loan certification. In addition to meeting the eligibility requirements, applicants for the PPP loan were also required to make specific certifications. These certifications included that the ongoing economic certainty necessitated the loan, the funds will be used only for the allowed purposes, the company will not apply for another loan, and that the application and all supporting documents is accurate. It should go without saying that any certification made in bad faith has the potential to lead to charges of PPP loan fraud. While these risks certainly should not deter you from applying for or appropriately spending a loan your business needs, you should make sure to have an experienced PPP loan fraud attorney by your side that you can turn to if you are targeted for a federal investigation or audit. 

For a free consultation with an experienced PPP loan fraud attorney in Tampa, please contact The Rickman Law Firm at (813) 999-0502 or submit our contact request form.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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