Paycheck Protection Loans offered by the federal government are a way for small businesses across the United States to stay afloat amidst COVID-19. When the loans were first introduced, business owners scrambled to apply. Now, as funds are dispersed, many small business owners have questions regarding how and when they can use the loan.
When PPP funds are misused, the business owner can be charged with fraud and forced to repay the loan in full. In addition to repayment, federal fraud charges carry serious consequences that can significantly impact a person’s life. If you have recently received a PPP loan disbursement or are considering submitting an application, here are three ways you can avoid PPP loan fraud.
Ask Yourself, “Do I Actually Need The PPP Loan?”
When you sign the PPP Loan application you certify in good faith that you actually need the funds from the loan to support the ongoing operations of your business. When the loan was first introduced, large corporations applied for the loan causing much controversy. Any business that plans to accept the loan should examine the Small Business Administration guidelines to ensure they meet all criteria. Any business that does not meet the criteria or that fails to abide by the guidelines is required to repay the loan If you are not confident that your business qualifies, one of the best things you can do is to secure a competent attorney to review your application with you.
Why Businesses Should Only Accept One PPP Loan
Only select banks are approved lenders for the PPP loan. Any business that wishes to apply for the loan must do so through a certified lender. Although some lenders will take any applicant, many require that they are also customers. Additionally, just because a business qualifies for the loan does not mean they will be accepted. It might take a business several applications prior to approval.
If you apply for multiple PPP loans, it is imperative that you sign loan documents for only one of them. Accepting loan disbursements for multiple loans can result in federal fraud charges. Any time funds for more than one loan are received, the applicant can avoid fraud charges by notifying their lender and repaying that loan in full.
Follow the PPP Loan Guidelines
One of the most common questions regarding the PPP Loan is use of funds. The PPP Loan was designed to aid small business owners in paying for their operating expenses so they did not have to lay off any employees. All applicants should understand that lenders have differing views of what qualifies as an operating expense and what does not. If you are concerned about how you can use your loan funds without facing fraud charges, you should discuss your situation with your lender.
Keeping track of what you spend the funds from the PPP Loan on is extremely important. If you are able to show that the money went towards payroll, day-to-day operations, or other working capital expenses you are less likely to face fraud charges and less likely to accumulate more business debt.
Knowledgeable Debt Settlement Attorneys Help Your Business
Don’t let COVID-19 be the demise of your business. If you are struggling to make ends meet, you need knowledgeable legal counsel that can help you get your business back on the right track. McCarthy Law provides access to debt settlement attorneys experienced in negotiation who will work in your favor to reduce and eliminate the balance you owe on your student loans.
The attorneys at McCarthy Law PLC are a trusted source of legal representation when it comes to student loan debt settlement. Under our debt settlement program you could only have to pay a fraction of the cost of what you owe on your loans. To schedule a consultation with a knowledgeable and experienced debt settlement paralegal, call our office at 855-976-5777 or fill out an online contact form today.