President Biden recently signed two bills into law that will give the federal government more time to catch and prosecute those who committed fraud related to the Paycheck Protection Program (PPP) and the COVID-19 Economic Injury Disaster Loans (EIDL).
The PPP was a loan program granted by the federal government to encourage small businesses to retain employees and to assist with certain operating costs to keep businesses viable during the COVID-19 pandemic. The EIDL offered economic relief to businesses that qualified. Business owners were required to use the loans to cover payroll and inventory, pay debt, or fund expenses.
The “PPP and Bank Fraud Enforcement Act of 2022” extends the statute of limitation from five years to 10 years for fraud charges to be brought in connection with PPP loan applications. The law applies to both first- and second-draw loans made under the program.
Likewise, the “COVID-19 EIDL Fraud Statute of Limitations Act of 2022” gives prosecutors 10 years to file fraud charges connected to loan applications from the COVID-19-related EIDL program, including EIDL advances and targeted EIDL advances.
The government will prosecute COVID-19 relief fund fraud for the foreseeable future. Business owners who received government-funded relief and have not conducted due diligence to make sure those funds were properly granted should make sure they do so to avoid prosecution.
In 2020, the U.S. Small Business Association’s (SBA) Office of Inspector General flagged more than $78 billion in fraudulent loans and grants paid to unqualified entities and more than $6 billion in loans and grants linked to purported identity theft. Last year, the SBA identified more than $4 billion in potentially fraudulent loans.
Business owners who have questions regarding their PPP or EIDL loans should contact the attorneys at O’Reilly Rancilio by calling 586-726-1000 or by visiting our website.
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