Whether we want to or not, the country will continue to feel the effects of the COVID-19 pandemic for years to come in a multitude of ways. Many actions were taken by the government in the early days to help United States’ citizens through the largely unprecedented times, particularly to help support small businesses. As I’m sure many small business owners would say, the assistance offered through the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program was critical to small business owners who, in the early days of 2020, were suddenly facing an unknown future. As closures and restrictions were put into place from every level of government in a bid to try to protect Americans from the novel virus, hospitals and their staff, doctors, and scientists all scrambled to contain the virus and determine the best path forward.
PPP and EIDL applications flooded the SBA in the hopes that the assistance offered through these programs would help to prevent millions of small businesses from sinking under the weight of the pandemic. Unfortunately, the roughly $1.2 trillion in assistance provided by the programs, while good-intentioned and critical to many small business owners’ chances of survival, was not immune to massive levels of fraud. In a report released on January 30, 2023, the Pandemic Response Accountability Committee (PRAC) details a breakdown of the fraud, what is being done about it, and safeguards to help prevent it from happening again.
President Biden signed two bills aimed at preventing fraud by participants within the Small Business Association on August 2, 2022. H.R. 7334 is titled the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 (EIDL Act). H.R. 7352 is titled the PPP and Bank Fraud Enforcement Harmonization Act of 2022 (PPP Act). Both Acts establish a ten-year statute of limitations for fraud by borrowers under their respective programs. The head of the U.S. Small Business Administration, Administrator Isabella Casillas Guzman credited the Acts with a renewed ability to investigate and prosecute borrowers who committed fraud in SBA lending programs created to assist small businesses during the height of the COVID-19 pandemic.
For both programs, the main purpose is to put in place a a ten-year statute of limitations for fraud.
The SBA’s Paycheck Protection Program went into effect March 27, 2020. At that time many business owners faced confusion in trying to navigate the affiliation rules to determine their company’s eligibility for the program. Fast forward nearly two years and many businesses that received Paycheck Protection Loans have submitted applications for forgiveness of those loans. Some of those businesses are now having to consider potential affiliation issues that they may have initially overlooked in response to inquiries from SBA in its review of their loan forgiveness application.
We thought this would be a good time to revisit the basics of SBA’s affiliation rules for the Paycheck Protection Program.
On Wednesday, January 5, 2022, the U.S. Court of Appeals for the Sixth Circuit issued another setback to the COVID-19 vaccine mandate for federal government contractors. In its opinion, the four-judge panel upheld the November 30, 2021 preliminary injunction and denied the Government’s request to stay the injunction “because the government has established none of the showings required to obtain a stay.” On appeal, the government asserted that the three states involved, Kentucky, Ohio, and Tennessee, and two Ohio sheriffs’ offices which brought the initial claim did not have standing to bring such a case. Additionally, the government argued that even if there was standing, the Property Act authorizes the contractor mandate. However, the Court of Appeals determined all plaintiffs established standing based on four elements and held the Property Act does not authorize the President to take such action.
On Friday, a US Appeals Court overturned the temporary halt on the vaccine mandate for large businesses. This is interesting to note because some of the same analysis used in connection with whether the large business mandate is enforceable could apply to the contractor vaccine mandate.
With COVID-19 cases on the rise, all of us are doing our best to stay safe and healthy. But for federal contractors, the COVID spike also brings increased risks of delays and other problems under active government contracts.
According to the U.S. Small Business Administration Office of the Inspector General, potential fraudsters have obtained $250 million in federal funds intended to help businesses survive the impact of COVID-19.
The Inspector General also identified $45.6 million in potentially duplicate payments and warned that with well over $220 billion left to give out, rapid changes were needed.