by Jonny Frank and Ryan LaRue
The Paycheck Protection Program (PPP) inadvertently—but inevitably—puts PPP lenders between a rock and a hard place. At PPP’s inception, the government pushed lenders to make loans to stimulate the COVID-19 rocked economy. Equally inevitable and with the benefit of 20-20 hindsight, regulators, prosecutors and congressional oversight committees will ask why lenders extended loans to fraudsters. Here, we provide five practical steps lenders can take to mitigate the legal and reputational risks of extending PPP loans to borrowers who obtained loans under false pretenses or inappropriately used the funds earmarked by the government to protect jobs.