Cases of potential fraud regarding Paycheck Protection Program (PPP) loans surfaced, after JP Morgan Chase granted SMB loans to disqualified publicly traded clients. As a result, stimulus loan applications of about 220,000 eligible SMB loan applicants were left out of the funds released as economic relief for small businesses.
Last April, burger restaurant giant Shake Shack was forced to return a $10 million PPP loan intended only for small businesses .as gesture of mistake made in good faith. sis. Other companies, such as Potbelly Sandwich Shop, and Ruth’s Chris Steakhouse chain , are yet to announce that they intent carry out similar actions. The two big companies had also received approval for a $10 million and $20 million loans, respectviely, from JP Morgan Chase despite their ineligibility to receive the stimulus package.
JP Morgan Chase Said Other Applicants Have to Wait for New Congress-Approved Funds
At first JP Morgan Chase, through the company’s spokesperson said that although the money loaned out will be returned by the aforementioned companies, the bank will not be able to release new loans until Congress authorizes the release of new funds.
Now that the Department of Justice has launched investigations of circumstances surrounding JP Morgan’s release of PPP loans to non-SMBs, the bank recently announced that the Small Business Administration has provided an additiomal $15 billion, to fund PPP loan applications of around 239,000 SMBs..
SBA to Review Applications of Businesses that Received Funding
As part of its administrative role, the Small Business Administration said that corollary to the DoJ’s investigations, the agency will review who among the recipients do not qualify as PPP borrowers,
The government agency also announced that those who are aware that they are not qualified, can return the money and be considered as having acted in good faith. However, the offer of clemency is good only up to May 07, 2020.