Fraud Enforcement Risk Mitigation Steps For PPP Lenders

Lenders have disbursed $792.65 billion in potentially forgivable loans to small businesses and nonprofits through the Paycheck Protection Program, which began in April 2020 and ended this May.¹

For the program to work, especially in the spring of 2020, Congress sought to encourage a full court press by all types of lenders. Participation had to be low risk or else lenders, fresh off memories of massive post-financial crisis settlements, would likely be wary. As a result, Congress provided strong protections, including a section of the statute titled "Hold Harmless" for lenders.²

While Congress shifted much of the risk and responsibility from lenders to borrowers, are lenders truly held harmless under the program? The short answer is no.