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On July 28, 2020, the Small Business Administration’s (“SBA”) Inspector General (“IG”), Hannibal “Mike” Ware, issued a Management Alert informing SBA Administrator Jovita Carranza that the IG’s preliminary review of the Economic Injury Disaster Loan and Advance (“EIDL”) grant program revealed strong indicators of widespread potential fraud.

This program goes beyond the usual overviews of the Paycheck Protection Program (PPP).

Since the Paycheck Protection Program Flexibility Act became law on June 5, 2020, Treasury and the Small Business Administration (“SBA”) have released several new and revised rules for the Paycheck Protection Program (“PPP”). This guidance implements provisions of the PPP Flexibility Act and makes other changes to the program.

The U.S. Department of Justice (DOJ) has a track record of aggressively pursuing those suspected of fraudulently exploiting federal relief programs meant to combat crises,¹ and early signs indicate that DOJ will continue this practice with the current COVID-19 pandemic.

Scrutiny into Paycheck Protection Program Loans Intensifies — Attracts SEC Attention

On May 16, 2020, the Small Business Administration (“SBA”), in consultation with the Department of the Treasury, released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application (the “Application”), available here.

On May 13, 2020, the Department of the Treasury and the Small Business Administration (“SBA”) released guidance on how SBA will review a borrower’s required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

In this webinar, V&E attorneys Caroline Blitzer Phillips, Adrianne Goins, Brittany Sakowitz and Daniel Graham discuss the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), the Paycheck Protection Program (“PPP”) established as a result, the various requirements of PPP applicants, and the adjustments to the program made in the days and weeks following.

On April 1, 2020, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court decision holding that a qui tam relator in a False Claims Act (“FCA”) action failed to file its complaint alleging Small Business Administration (“SBA”) loan fraud within the required statute of limitations.

The coronavirus pandemic continues to upend the global economy and is increasing compliance risks for businesses in the process.

On April 30, 2020, the IRS released guidance disallowing deductions for otherwise deductible expenses if payment of the expense results in forgiveness of a covered loan under the CARES Act.

The U.S. Department of the Treasury has released a web-based application for loans under the $17 billion loan program for businesses critical to maintaining national security created by the CARES Act.