What Criminal Exposure Could You Be Subject to Because of your SBA PPP Loan?
After Mnuchin, the Treasury Secretary announced that all SBA PPP loans of $2 million are guaranteed an audit, and smaller loans may be audited as well, there has been concern surrounding potential criminal exposure. How can you, as a small business owner avoid the risk of exposing themselves to criminal charges?
During an audit, IRS is looking for signs that you took funds when your businesses did not really need them. These audits are an effort to make sure only those who needed assistance received it. Followed by those that could survive on their own funds did not take away from businesses that were failing.
So how can you avoid potential criminal exposure?
Business owners can avoid criminal charges during an SBA loan audit by following these protocols:
- Make sure all certifications you submitted for the loan are accurate
- Hold onto appropriate documentation to support loan application certifications
- Be cognizant of any statements by company representatives to ensure consistency with claims to the government
- Stay compliant with any follow-on requirements for retaining the loan, obtaining loan forgiveness or submitting subsequent certifications
- Keep internal compliance mechanisms functioning appropriately
- Take note–whistleblowers often report fraud internally before going to the government.
If business owners do not take the above points seriously then once audits do come around, you may be on the hook for loan fraud, bank fraud, and criminal tax exposure. No company will be treated differently based on size or ownership. Be prepared to support your SBA PPP loan eligibility. Also, ensure that you are following all the regulations to prevent potential serious charges (these have shifted significantly since the start of the SBA PPP program.
If you keep organized records of how you used the SBA PPP, and are able to prove your eligibility there is no need to be concerned.
If you need assistance analyzing your potential risk, reach out to Milikowsky Tax Law. We are experts in criminal tax defense and government audits, and we want to help you keep your business safe.