What types of PPP fraud are being investigated?There are three primary categories of PPP fraud that are the focus of federal investigators, including application fraud, misuse of loan funds, and forgiveness certification fraud. If you or your business is charged with any of these types of fraud, you could face criminal and civil penalties.
Application fraud can occur in multiple ways. When a business applies for PPP funds, it is supposed to submit accurate information on the application. Companies that apply must qualify under 15 U.S.C. § 632 as having small business concerns to be eligible for the program. They must also base their applications on real business needs because of the economic conditions to help to continue their business operations. If you or your business failed to provide accurate information on your loan application or received funds when your business should not have been eligible, you could be charged with PPP loan fraud.
Similarly, you could face PPP loan fraud charges if you used the funds for any disallowed purpose. Under the program, the funds must be used for the following purposes:
- Meet payroll
- Pay rent and interest for pre-existing obligations
- Cover utility expenses
- Pay insurance premiums
If you used funds from the PPP for any other purpose, you could be charged with fraud.
PPP loans are eligible for forgiveness. However, if you do not qualify to have your PPP loan forgiven and apply for forgiveness, you could be charged with fraud. Submitting a certification that contains incomplete or false information could result in charges.