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What Should I Do If My Bank Freezes My PPP Loan Account?

April 1, 2022 Federal Criminal Attorneys

Recent changes were made to the Paycheck Protection Program, or PPP, and it’s important to remain alert to how this can affect your business if you’ve accepted one of these loans. The terms of the loan agreement can affect the business as a whole. For example, the SBA stopped the practice of launching systemic audits against companies that took PPP loans but got less than $2 million in terms of the federal funding.

This change is significant, but many business owners might remain unaware of the facts. This can cause confusion even when the rules of the Treasury Department are clear; changes are frequently unknown even to the beneficiaries. There are still outstanding investigations of PPP fraud that are well beneath $2 million. The change in the audit threshold can understandably remain overlooked in these cases.

Loan Accounts, Investigations and Audits

There are cases where the PPP loan recipient is audited or investigated. This might also lead to having the loan funds frozen, which has a detrimental affect on the organization. This situation is serious, and it should be handled by using skillful methods. The lawyers at our firm have an exceptional level of expertise in this area of the law. We can provide useful advice on all matters related to the PPP loan program, loan forgiveness, audits and investigations.

The recognition that the PPP loan caused an account to freeze also signifies that the loan might be coming under the attention at the federal level. Federal law carries stiff penalties that can adversely affect business owners who remain unaware of these changes. If the PPP loan causes the account to be frozen, it can indicate further problems down the road. Taking care of the issue early can help to alleviate the worst impacts of the situation before it escalates. This is why it’s imperative to have legal assistance to help you navigate this complex situation.

DOJ and SBA Pursuing PPP Loan Fraud Cases

Under the CARES Act, there were many companies who took advantage of the new PPP loan program. This happened in most cases under the circumstances of good faith, and this shouldn’t be overlooked. Business owners who accepted the loan often believed that the terms of the loan would be favorable to their predicament. Losing revenues under the pandemic was devastating on a financial level; the PPP loan money allowed many of these small businesses to remain intact.

Initialization Period of PPP Loans

The PPP loan had a funding pool of almost $350 billion; however, this fund was almost instantly depleted. This was the level of economic impact caused by the pandemic. To assume fraud as a default position is an effective insult to the struggles of small business owners who were desperate for some relief. The allegations of fraud should be followed by evidence of some kind. This calls into question the intent of the loan applicant and the terms and conditions of the loan. This loan program essentially opened up all the recipient companies to an unusually high level of scrutiny from the federal government.

Business owners and individuals who took advantage of the PPP loan should be aware of the signs of being under scrutiny for potential fraud:

  • Fraudulent claimants tend to stack loans, which means they apply for funding from multiple lenders.
  • False statements on the application are illegal; this can trigger an investigation or audit.
  • Falsely certifying the PPP loan application is also a form of fraud.
  • The PPP loans can only be used for specific business expenses. Examples include utilities, payroll expenses, rent, mortgage interest and other allowable expenses.
  • Fraud can be triggered by businesses that use the PPP loan to engage in illegal activities. Example include finance bank fraud and insurance fraud, for example.
  • It is an act of fraud to submit a certification for the PPP loan forgiveness if it’s fraudulent.

Frozen Accounts, PPP Loans

Defense strategies can help your organization to survive any allegations of PPP loan fraud. If you are facing these charges, act right away. Get the legal assistance necessary to overcome the allegations of fraud. Even if there are some legitimate cases of fraud, no business owner should accept this allegation as fact. Our lawyers fight to prove that your company complied with the terms of this PPP loan to the best of your ability. It’s also important that you take the charges seriously. Avoid assuming that the case will settle in your favor without mounting a significant legal challenge.

Our legal team offers insights and legal support to each client facing the charges of fraud. The actual position of your company must be analyzed in terms of the documents involved with accepting the PPP loan. The federal agents have the authority to freeze the company’s PPP loan account; however, there are many ways to contest this action. The frozen loan account indicates that there could be a case of fraud. However, this is not conclusive evidence.



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