Although the Paycheck Protection Program (PPP) loans were incredibly beneficial for many companies to continue operations and keep their employees during the height of the pandemic, the U.S. Department of Justice has confirmed that the Paycheck Protection Program has led to the largest fraud in U.S. history, estimated to be as high as $80 billion.

Unfortunately, far too many business owners either pocketed the money or misused the loan for non-business-related expenses. Additionally, millions of borrowers overstated the number of employees on payroll or created entirely false companies to claim the loan. Because the government was pushing to get the loans out quickly, little was done to verify the applications, their legitimacy, or their compliance with program criteria. As of late March 2022, the government has begun to crack down on prosecutions for these fraudulent cases.

Review Your Compliance

It may become difficult for the Department of Justice to distinguish between truly fraudulent borrowers and those who had the right intentions but may have mistakenly failed to comply in any way. With this in mind, it is critical for any business that received PPP funds to circle back right away and ensure they fully complied with the program criteria.

Firstly, businesses who received PPP loans should seek legal or expert advice to evaluate compliance and ensure it was sufficient against program guidelines. If it turns out this is not the case, that same counsel can help identify and address potential exposure to enforcement as well as apply corrective measures immediately. Acting diligently and proactively is highly important.

Report PPP Identity Theft

It is also possible that those who committed Paycheck Protection Program fraud have falsely used another individual’s information to file for a loan. Due to the gravity of the situation, if you have any suspicion that someone may have stolen and used your information to apply for a PPP loan, the Small Business Administration (SBA) urges you to file an SBA Declaration of Identity Theft form right away.

According to the SBA website, you should also contact the lender that issued the loan and report the fraud to them directly. Then, report the identity theft via the FTC’s identity theft website and you’ll receive step-by-step recovery assistance. Be sure to keep a close eye on your personal or business credit reports via AnnualCreditReport.com, Experian, Equifax, or other credit reporting services.

Even if you feel you have accurately complied with PPP loan criteria and are in the clear, it’s a good idea to be prudent and proactive in making one hundred percent certain to avoid any potential prosecutions against you or your business.

If you have any questions or need help discussing your PPP loan, please reach out us at Republic Bank of Chicago and we can help walk you through it and point you in the right direction. Give us a call at 800-526-9127 and a team member will be ready to assist you!

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