Too many shades of gray?

0
19

[ad_1]

With the world and, as a consequence, the economy practically stalled last year, the Payroll Protection Program (“PPP”) has indeed become a bailout for small and medium businesses. It saved jobs and boosted the economy by injecting liquidity for qualified applicants, saving many businesses. In these mergers, most of the recipients followed the law and guidelines, received their money honestly and legally, and continued to operate throughout the pandemic. Unfortunately, there are always those who consider themselves above the law and try to go beyond the established rules and regulations. These people only start pedaling back when they are caught, often feigning ignorance, despite the fact that they are clearly taking advantage of the loan. Here are some examples of how people abuse the system and PPP loans:

  • A Florida man received a PPP loan to buy himself a new Lamborghini for $ 318,000.
  • The small restaurant received a PPP loan and told its employees that they would no longer receive a salary and would only work for tips, despite the fact that under the terms of the loan the businesses were holding and paying their employees.
  • The company survived bankruptcy fraud as it was denied a PPP loan two or three times until it finally got a loan because it lied on the application.
  • Shake Shack, Harvard University and Chris Steak House, owned by Ruth, applied for and received loans, returning money only when they faced tremendous public pressure.
  • Some of the Big Four professional sports teams, some of which are worth more than $ 1 billion, have applied for PPP loans.
  • Influencers – despite continuing to make hundreds of thousands of dollars through sponsorships, social media interactions, and reality shows – felt compelled and justified to apply for a $ 20,000 loan. Although legally they have their rights, should they borrow these loans from a moral point of view?

One thing that seems clearer than ever is that people and companies can justify almost anything if it ultimately matches what they are trying to achieve. Typically, this is a key component for those who commit fraud: streamlining the actions taken. Combined with motive and opportunity, it’s no surprise that there has been rampant PPP fraud, especially given the turbulent and uncertain atmosphere since 2020.

It seems that those who abuse the system, and often the society, grossly underestimate the price they will catch. The price is high both quantitatively and qualitatively. How will the public perceive the offender after the information becomes known? As the saying goes: it takes a lifetime to earn a reputation, but just a moment to destroy it. The reputation argument is especially important for those who received loans legally, but did not necessarily need them.

While the aforementioned violators may constitute a “high-profile minority,” it cannot be denied that PPP loans have been vital to the survival of many of the silent majority businesses. While some thriving businesses rejected or repaid their loans, believing they could survive without them, cash injections saved others.

Given the possibility of a second round of PPP forgiveness, the number of applications is skyrocketing and the government is taking more steps to prevent loan and forgiveness fraud. Since the Small Business Administration has decided to abandon Form 3509/2510, the liquidity justification form, it faces significant resistance when requesting documentation for PPP loans received by businesses. While this process can be lengthy, it is a vital step to ensure that all loans are used appropriately to help prevent further fraud.

[ad_2]

Source link