May 6, 2020 / Jason B. Freeman, Contributor
The SBA issued a FAQ extending the due date to seek relief under the SBA’s safe harbor for borrowers who made incorrect certifications during the PPP loan process. The extension provides borrowers with an opportunity to repay proceeds by May 14, 2020 as part of a voluntary disclosure process whereby the SBA will deem the certification to have been made in good faith. In other words, the SBA will look the other way at the false certification.
But borrower beware: That relief does not in any way prohibit a United States Attorney’s Office from investigating or prosecuting a borrower for bank fraud if they made a false representation in order to obtain a loan. That fact has been overlooked by almost every commentator to date, and may leave some uncertain borrowers stuck in an uncomfortable middle ground, weighing their legal options and facing the reality—one all too familiar to white-collar lawyers—that the very act of walking through the safe harbor may actually give rise to an implicit admission that they committed a crime in the first place. The SBA may not care; but will another prosecuting agency? 
The SBA’s announcement comes on the heels of a warning that it intends to audit many, many PPP loan recipients following applications for forgiveness—a move that signals future scrutiny as part of an effort to cut down on fraudulent applications. It also comes just a day after the Department of Justice announced its first federal charges against defendants for allegedly seeking fraudulent PPP loans. And it also follows comments from the Chair of the Senate Committee on Small Business and Entrepreneurship that it intends to conduct “aggressive oversight of the Paycheck Protection Program (PPP), including whether companies made false certifications to the federal government to receive PPP loans.”