Unfortunately, the PPP Loan fall-out is far from over. As we noted in the last blog on PPP issues, we are seeing a number of PPP Forgiveness denials for a number of different reasons, and, along with that, we are seeing the first audits and investigations as well. Specifically, companies that already received forgiveness for loans over $2M are being audited and investigated by SBA on a rolling basis. As part of that, SBA is asking for additional supporting documentation for the amounts claimed, expenses incurred, and the needs analysis that was performed. Loan Recipients are encouraged to keep all documentation related to the loan in case they face an audit or investigation. This is starting to ramp up so it is not yet clear how aggressive SBA will be on the analysis, but we can expect this to continue for the next five years as the statute of limitations on False Claims Act issues is, generally, six years. This blog covers what you need to know.

These audits and investigations are likely not intended to catch major bad actors who are already facing penalties. Indeed, many are familiar with the now infamous Lamborghini purchase made with SBA PPP loan dollars, as well as other suspicious, often lavish, purchases discovered through criminal investigations. While these cases represent extreme circumstances, and as PPP Forgiveness begins to wind down, audits and investigations of loan recipients are now winding up.

Although most recipients’ behavior will not rise to the level...

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