In March 2020, Congress approved the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a more than $2 trillion stimulus package designed to mitigate the appalling economic cost of the COVID-19 pandemic. And like clockwork, the Paycheck Protection Loan scams began.
Initial funds of some $659 billion were allocated to the PPP, to be distributed by the Small Business Administration (SBA) in the form of low-interest loans to enable businesses to retain staff and meet certain other costs.
SBA to Loan another $130 billion by August
Around $130 billion in funds was still unallocated at the PPP’s original expiry date of 30 June, prompting an extension of the program until 8 August.
Many businesses have already found the PPP an invaluable lifeline. And no doubt many more will now wish to take advantage of the extension.
But the publicity given to the program, and the apparent ready availability of enormous sums of money, has made the PPP an irresistible target for various kinds of fraudsters and scammers.
The good news is that very few of these attempted scams are particularly sophisticated. But the Federal Trade Commission (FTC) and state attorneys general have nevertheless warned all firms to be on their guard.
And an awareness of the following common frauds will go a long way towards protecting your business.
E-Mail Phishing Scams
Unless you have already been in contact with the agency, be extremely wary of any email purporting to come from the SBA.
Scammers frequently send such emails encouraging businesses to apply for a PPP loan and requesting the provision of sensitive information such as Social Security Numbers or Tax IDs. They will then put these details to dishonest but profitable use. One common method is to apply for their own benefit for loans to which they are not entitled.
Viruses and Malware
Perhaps even worse, the links contained in such emails are frequently used to install malware or viruses on the recipients’ computer, which can also be used to steal information.
The best defense against these kinds of attacks is simply not to open any email from the SBA unless you have already initiated contact with them. The agency does not reach out to businesses to encourage them to apply for loans. And it will never request confidential information by email.
But if by some oversight you do open such a message, you should on no account provide any confidential information in reply or click on any links.
Robocalls and Online Advertising
In addition to emails, you should also be alert to any robocalls purporting to come from the SBA; and on the lookout for any online ads encouraging you to apply for a PPP loan. These ads frequently link to bogus websites designed to harvest confidential data.
You also need to observe all the above precautions if you receive any unsolicited communication from a financial institution or third party about PPP loans.
Why You Should Never Pay for Help With Your Application
Finally, it’s important to be aware that the SBA does not charge a fee for processing loan applications. And if any third party requests payment for “help” in preparing an application, it should be a red flag that you are likely dealing with a scammer.
The application process is not complex, and paying for assistance will do nothing to improve your chances of success or to speed up the process.
And in the worst case, the scammers will not only relieve you of an entirely unnecessary application fee but may also gain access to confidential business data of far higher value.
Talk to Our Experts
Unfortunately, whether you’re interested in a PPP loan or not, you may well be the target of attempted fraud.
And that’s just one the many potential problems that coronavirus continues to cause for businesses of all types and sizes as case numbers surge again.
The legal and insurance issues involved are particularly complex, And it’s therefore important that you consult with both your legal and insurance advisers to ensure that you have all the necessary protections in place.
So for an initial exploration of exactly what you need to do, why not call us today on 805-564-7645 or send us a message here. Or, if you think you’ve been a victim of one of the many Paycheck Protection Loan scams, contact your local police and the Small Business Administration today.