Jun 4, 2025

PPP Loan Fraud

PPP Loan Fraud: What You Need to Know

The Paycheck Protection Program (PPP) was designed to help small businesses survive the economic impact of the COVID-19 pandemic. However, the program has also been subject to significant fraud, with individuals and businesses obtaining loans under false pretenses.

Common Types of PPP Loan Fraud

• Falsifying payroll expenses
• Misrepresenting the number of employees
• Using loan funds for unauthorized purposes
• Applying for multiple loans using different business entities

Investigations and Enforcement

Are PPP loans still being investigated?

Federal agencies, including the Department of Justice (DOJ) and the Small Business Administration (SBA), continue to investigate PPP loan applications for signs of fraud. These investigations have led to numerous arrests and prosecutions, and enforcement efforts are ongoing.

Will PPP loans under $150,000 be audited?

While larger loans have received more scrutiny, the SBA has indicated that all PPP loans, regardless of size, may be subject to review or audit. Borrowers with loans under $150,000 should still maintain proper documentation in case their loan is selected for review.

Penalties for PPP Loan Fraud

What happens if you get a PPP loan fraudulently?

Individuals found guilty of PPP loan fraud may face severe penalties, including criminal charges, fines, and imprisonment. In addition to federal prosecution, the government may seek to recover the full amount of the fraudulent loan, plus additional damages and penalties.

How PPP Loan Fraud Is Detected

How do you prove PPP fraud?

Authorities use various methods to detect and prove PPP loan fraud, such as reviewing loan applications, verifying payroll records, and cross-referencing information with tax filings. Whistleblower tips and data analytics also play a significant role in uncovering fraudulent activity.

How to Protect Yourself

If you received a PPP loan, it is important to keep accurate records and use the funds only for authorized purposes. Consult with a legal or financial professional if you have concerns about compliance.

PPP Loan Fraud