LEGAL EAGLE SPOTLIGHT SBA, DOJ Intensify PPP Enforcement Key Risks for Borrowers and Lenders By Dan Nelson and Amy Lewandowski, Spencer Fane LLP by the SBA through its COVID-19 relief programs, investigators are now taking their time in retroactively reviewing eligibility and ensuring full compliance moving forward. AUSA Investigations National DOJ components, 93 U.S. attorneys nationwide and internal SBA auditing teams are all looking deeper into borrowers’ eligibility for COVID relief funds, as well as lenders’ due diligence in issuing and monitoring PPP loans. And these requests are not limited to borrowers and lenders — even third parties have received letters requesting information, such as associations that provided PPP insight to their members when applying for funds. Investigations into borrower eligibility can be based on numerous factors: • Was the type of business eligible? (e.g., nonprofits, certain country clubs, etc.) • Did the business meet the definition of “small”? • Was the type of business eligible at the time it applied? (e.g., eligibility standards during first vs. second draw loans) • Did the business submit the required information? • Did the business abide by the SBA’s affiliation rules? (e.g., did applicants disclose any business affiliates?) • Were the PPP funds used properly? • Did the applicant submit accurate information? (e.g., did they submit the proper requested documents?) • Did the applicant still qualify at the time of any forgiveness application? • Was the amount of the PPP loan provided substantiated by truthful information? (e.g., was payroll inflated, etc.?) The SBA appears to be continually auditing PPP borrowers, requesting that they retroactively confirm information such as that just identified in the list, not only to ensure that businesses were eligible for relief from the outset, but also to audit whether they qualified for the loan amount issued and subsequently forgiven. Not only should borrowers be aware, but lenders also face ongoing scrutiny of these loans. While investigative agencies have been examining potential PPP borrower fraud since the inception of the program in early 2020, the DOJ has recently also begun investigating whether the financial institutions that operated as PPP lenders also abided by the applicable laws. Banks or other financial institutions that issued PPP loans were required to comply with certain While the COVID-19 pandemic may be in the not-so-distant past, investigations into lenders and borrowers who took out loans pursuant to COVID-19 relief programs persist. With ongoing scrutiny from the Small Business Administration (SBA), the U.S. Department of Justice (DOJ) and the SBA Office of the Inspector General (OIG), staying informed is critical. In January 2026, President Trump announced the DOJ’s new National Fraud Division focused on investigating and pursuing fraud charges and civil claims. With the SBA, DOJ and OIG making their way through the backlog of PPP loans, both borrowers and lenders should ensure ongoing compliance and be prepared to handle an investigative request from any of these entities. Most of us remember the confusion and uncertainty during the COVID-19 pandemic. Concerns about shutdowns, making payroll and navigating the “new normal” of stay-at-home orders — all while keeping businesses running — meant that new legislation needed to be implemented immediately, and companies had to act fast. While guidance at the time was confusing, with over $200 billion identified in potentially fraudulent loans disbursed 18 | The Show-Me Banker Magazine
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