The US government established the Paycheck Protection Program (PPP) to offer financial support to small businesses impacted by the COVID-19 outbreak. Many businesses battling to survive in these trying times have found the program to be a lifeline. Unfortunately, a few people have cheated the system and committed fraud. As a result, there have been numerous arrests and prosecutions, including in well-known incidents involving politicians and celebrities.
Maurice Fayne, commonly known as Arkansas Mo, is one of the most well-known people to have been sentenced to prison for PPP loan fraud. Reality TV star Fayne made an appearance on Love & Hip Hop: Atlanta. He secured a $2.2 million PPP loan in May 2020 for his trucking business. He paid child support and bought jewelry with some of the money. Fayne was detained in May 2020, and in March 2021, he entered a guilty plea. He received a 17.5-year prison term.
There have been numerous more people detained and accused of PPP loan fraud in addition to Fayne. This includes people who used fake information to secure loans, business owners who obtained loans for nonexistent staff, and even bank officials who coordinated with borrowers to conduct fraud.
If you’re wondering how a second PPP loan can be utilized for similar costs to the first one, such wages, rent, utilities, and mortgage interest, the answer is yes. For second draw loans, there are, nevertheless, some extra limitations and prerequisites. Although it doesn’t make loans itself, Blue Acorn is a company that offers services associated with the PPP lending scheme. There are conditions that must be satisfied in order to qualify for a PPP loan, such as the business must have been operational by February 15, 2020. Finally, the business owner should not classify themselves as an employee when asking for an SBA loan unless they receive a salary or compensation from the company.
In conclusion, during the epidemic, the PPP loan program has been a vital source of financial assistance for small enterprises. However, it’s crucial to be alert to the possibility of fraud and make sure that loans are applied for as intended. To avoid any potential legal concerns, businesses should also be informed of the conditions for eligibility for second draw loans and other lending programs.
Yes, those who are self-employed and obtained PPP loans must pay taxes on the income they earned. The costs, though, that were incurred using PPP money may be tax deductible. It is advised to speak with a tax expert to fully comprehend the tax repercussions of PPP loans for self-employed people.