In the current economic climate, many small businesses needed assistance to keep their workers employed and keep their companies open. However, some companies and individuals may have received assistance that they were not entitled to, and reporting this misuse of the program is essential. What should you know if you have evidence of fraud?
What qualifies as fraud under the PPP?
One part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the , is intended to help small businesses weather their economic challenges. The majority of the funds from these loans must be used by a business for maintaining its workforce. However, businesses may also use a portion of the funds to pay for building maintenance, necessary upgrades and other expenses.
Unfortunately, some of the people and businesses applying for these loans did so without meeting necessary qualifications or the intent to put these funds into their business. Any false information presented in requesting a PPP loan could constitute fraud. This can include:
- Claiming additional employees to receive a larger loan
- Misrepresenting the business as smaller than it is in order to qualify for a PPP loan
- Falsifying required records about the use of loan funds
- Misusing funds received through a PPP loan
- Applying for loans for a business that they do not currently own, including closed companies or nonexistent business
What can you do if you suspect PPP fraud?
Reporting misuse of PPP loans is an important way to push back against fraud, and the law provides protections to people willing to file a confidential complaint about the misuse of PPP funds. Both federal and state law shield whistleblowers from retaliation resulting from filing a complaint. They may also be entitled to a portion of the money recovered during the legal action against the person who committed fraud.
While the law does offer protection, whistleblowers may want to speak with an attorney so that they can take further steps to protect their career while reporting wrongdoing.