The $2.2 trillion COVID-19 relief law was enacted by Congress in March to extend financial aid to small businesses in need. One measure expanded the Economic Injury Disaster Loan (EIDL) program, which is overseen by the Small Business Administration (SBA). This expansion gave small business owners a loan advance of up to $10,000 — which does not have to be repaid.
The SBA has so far issued $38 billion worth of disaster loans to almost 430,000 small businesses impacted by COVID-19. For many companies, the EIDL program has been a desperately needed financial boost during this unprecedented economic crisis. Unfortunately, as EIDL fraud prosecution cases have begun to emerge, many business owners are now concerned about their loan eligibility and legal liability.
If you are facing an investigation for Economic Injury Disaster Loan fraud, or have questions about the legal penalties that EIDL fraud carries, get in touch with The Snow Legal Team today. Our dedicated North Carolina federal criminal defense attorneys are committed to fighting for the rights of small business owners and are ready to answer your questions.
What Do I Need To Know About An Economic Injury Disaster Loan?
Disaster loans have an interest rate of 3.75% and a loan term of 30 years. Loans exceeding $25,000 must be backed by collateral, such as inventory or equipment. In addition, borrowers are not permitted to sell, lease, license, or transfer their collateral without approval from the Small Business Administration — this is where things could get tricky for business owners.
For example, if a business wishes to sell an old piece of equipment, and buy a new one, it will need written permission from the SBA if the old equipment is one of the items collateralizing the disaster loan. It is also crucial to note that owners require the SBA’s approval to reorganize, merge, or alter their business structure — this includes adding or removing a business partner. Many business owners have inadvertently run afoul of their EIDL terms by doing this.
What Companies Are At Risk Of A Federal EIDL Fraud Investigation?
Any person that knowingly makes false statements to obtain an Economic Injury Disaster Loan can be prosecuted and could face criminal and financial penalties. To be eligible for the EIDL program, businesses must be able to effectively demonstrate that they’ve suffered “suitable economic injury” due to the Coronavirus pandemic.
Federal authorities are vigorously investigating false and inaccurate certifications made on EIDL applications. Regardless of your loan amount, if you received federal funds through the Economic Injury Disaster Loan Program, your business could become subject to a federal investigation.
What Should You Do If Your Company Is Targeted For Paycheck Protection Program Loan Fraud?
If you’re facing investigation for EIDL fraud, it’s imperative that you seek the advice of an experienced federal defense attorney. The penalties for federal fraud crimes can be severe, so it’s crucial that you have dedicated and knowledgeable legal professionals fighting on your behalf.
The Snow Legal team has over 20 years of criminal defense experience, and our North Carolina EIDL loan fraud attorneys are committed to aggressively defending your reputation. Federal fraud charges can be complicated and overwhelming, but we strive to ensure that all of our clients understand the legal rights they’re afforded under U.S. law. Reach us online by filling out a contact form, or call our office at (704) 358-0026 for a free, no-obligation discussion about your case.