3. Consider The Optics
Although primarily aimed at helping small businesses, organizations of all shapes and sizes received PPP loans. Even if the loans seemed necessary at the time, poor optics may invite additional scrutiny. Put differently, even without foul play, regulators are likely to key in on situations where borrowers appear to engage in large-scale capital improvement projects or potentially had access to capital from parent companies, who are, in turn, owned or controlled by foreign governments. In those situations, a borrower may be best served by repaying the loan rather than seeking forgiveness. While repayment will not insulate a company from potential liability, it may lower the temperature and deflect additional scrutiny.
Conclusion
There is little question that investigation and prosecution of PPP fraud will only grow in the coming months. PPP borrowers can help themselves by being vigilant and involving compliance and legal teams every step of the way. While doing so may not prevent an audit or investigation, it will ensure that the company is prepared and in the best position to achieve a successful result.
Ashley Baynham is a Brown Rudnick Partner in the White Collar Defense & Government Investigations Practice Group. Stephen Cook is a Brown Rudnick Partner and Practice Group Leader of the White Collar Defense & Government Investigations Practice Group. Seth Fiur is an Associate at the Firm.