In response to the economic crisis caused by the spread of COVID-19, Congress passed the Coronavirus Aid, Relief, and Economic Security Act on March 27, 2020, which President Donald J. Trump subsequently signed into law. The CARES Act establishes the Paycheck Protection Program, under which the Small Business Association will guarantee up to $349 billion in loans to help small businesses continue operating during the COVID-19 crisis. A small business, together with its affiliates, can borrow up to $10 million under the CARES Act and have that amount fully forgiven if the company and affiliates use that money on payroll and other approved expenses. Banks began accepting PPP loan applications on April 3rd, and small businesses are scrambling for funds before they are completely depleted. As of April 7th, banks had processed $70 billion in taxpayer-backed loans for 250,000 small businesses. Although swift extension of PPP loans is essential in the face of the economic situation, the federal government is keenly aware that the expedited timeline will heighten the risk of fraud in obtaining Government funds. Critically, these risks exist for small businesses, as well as their private equity firms and investment funds.
Regulations, Compliance, & Enforcement
Trending Now
FAR 52.222-90 Explained: New Clause May Result in 6,825 Audits Per Year • DOJ Stands Up a New Fraud-Fighting Division: What Government Contractors Need to Know About the National Fraud Enforcement Division • FAR Updates Trade Agreement Act Thresholds • GE’s $36 Million ITAR Penalty — A Wake-Up Call for Export Control Compliance • Treasury Canceled Booz Contracts Over Vetting of IRS Leaker, Bessent Says
COVID-19: Looming False Claims Act Liability for Paycheck Protection Program Loans
Virrage Images | Shutterstock
Track False Claims Act cases, audit trends, and compliance best practices with our Compliance & Enforcement newsletter, delivering up-to-the-minute intelligence Monday–Saturday — Subscribe here.