False Information on PPP Loan Application: Defenses Available
So your being accused of providing false information on your Paycheck Protection Program loan application, and your absolutely terrified. Maybe the SBA says you lied about your number of employees, maybe they claim you werent eligible for the program but you certified that you were, maybe they say your business didnt exist when you applied, or maybe there claiming the revenue or payroll figures you submitted were false. Now your facing potential federal fraud charges, the lender is demanding repayment of the full loan, your forgiveness application has been denied, and your wondering if your going to prison. You might have made an honest mistake on the application, or maybe you relied on information your accountant provided that turned out to be wrong, or maybe the situation is more complicated and you dont know how to explain it—but the government is treating this as deliberate fraud and the consequences there describing are DEVASTATING.
Here’s what you need to know: **Providing false information on a PPP loan application is a federal crime that can be prosecuted as bank fraud, wire fraud, or making false statements to a financial institution, with potential sentences of up to 30 years in prison and massive financial penalties**. The government is aggressively pursuing these cases through criminal prosecution and civil False Claims Act lawsuits. HOWEVER, not every allegation of “false information” is provable criminal fraud—fraud requires intent to deceive, and there ARE defenses available if you can demonstrate that any false information was the result of honest mistake, good-faith error, reliance on professional advice, ambiguous guidance, or other non-fraudulent circumstances. The defenses that might be available depend entirely on the specific facts: what information was allegedly false, whether you knew it was false when you submitted it, whether you intended to deceive anyone, what documentation you relied on, and whether the false information was “material” (meaning it actually affected the lending decision).
This article explains what it means to be accused of providing false information on a PPP application, what kinds of false information allegations the government is pursuing, what prosecutors must prove to convict you of fraud (spoiler: they need to prove intent, not just that something was wrong), what defenses are available when the false information was unintentional or there are mitigating circumstances, what you absolutely should NOT do when accused, recent cases showing what outcomes people are actually getting, and what steps you should take immediately if your facing this allegation. If your accused of false information on your PPP application, getting experienced federal defense representation immediately is critical—this is not something you can handle yourself or with a general business attorney.
What Does “False Information” on a PPP Application Mean?
When the government accuses you of providing “false information” on your PPP loan application, they’re alleging that you made misrepresentations or provided incorrect information in your application materials. This can cover a wide range of potential issues:
False certifications of eligibility: You certified that your business was eligible for PPP when it actually wasnt—for example, certifying that economic uncertainty made the loan necessary when your business was actually thriving, or certifying that you were an eligible small business when you exceeded the employee or revenue thresholds, or certifying that you werent engaged in illegal activity when you were.
False information about business existence or operations: Claiming your business was operating and had employees when it didnt actually exist, or claiming the business was operational on February 15, 2020 (a key eligibility date for the first PPP draw) when it wasnt yet in operation, or claiming the business was a certain type of entity (like a sole proprietorship or LLC) when it was actually something different.
False payroll information: Providing incorrect information about your payroll costs, number of employees, wages paid, or employee compensation (this overlaps with the payroll inflation issue we covered in a previous article, but can also include outright false statements like claiming you had employees when you had none).
False information about prior criminal history: PPP applications required certification that you werent subject to certain criminal indictments or convictions. If you certified “no” when you actually had disqualifying criminal history, thats false information.
False tax ID or business identification information: Using someone else’s EIN, using a fake Social Security number, misrepresenting your business name or entity type, or providing false formation documents.
False information about ownership: Misrepresenting who owns the business, the percentage ownership stakes, or whether certain individuals are affiliated with the business.
The allegation of “false information” is broad and can encompass almost anything you stated or certified in your PPP application that turns out not to be true. The critical question is whether the false information was provided knowingly and with intent to defraud, or whether it was an innocent mistake.
What Must Prosecutors Prove to Convict You of PPP Fraud?
This is absolutely critical to understand: **To convict you of fraud for providing false information on a PPP application, prosecutors must prove beyond a reasonable doubt that you KNOWINGLY and INTENTIONALLY provided false information with the intent to defraud the lender or the government**. It’s not enough for the government to show that something on your application was wrong—they have to prove you knew it was wrong and you submitted it anyway intending to deceive.
The elements prosecutors must prove for common PPP fraud charges:
For bank fraud (18 U.S.C. § 1344):
- You knowingly executed or attempted to execute a scheme to defraud a financial institution (the PPP lender)
- You had the intent to defraud (you knew the information was false and intended to deceive)
- The scheme involved obtaining money or property from the financial institution
For making false statements (18 U.S.C. § 1014):
- You made a statement to a financial institution
- The statement was false
- The statement was material (it had the potential to influence the bank’s decision)
- You made the statement knowingly
For wire fraud (18 U.S.C. § 1343):
- You devised or participated in a scheme to defraud
- You acted with intent to defraud
- You used interstate wire communications (like submitting the application electronically) in furtherance of the scheme
The key element across all these charges is INTENT. Prosecutors must prove you acted knowingly and intentionally to deceive. If the false information was the result of honest mistake, misunderstanding, reliance on incorrect information from others, calculation error, or good-faith interpretation of ambiguous guidance, you didnt have fraudulent intent, and the government cant prove the crime.
This is where defenses come in—your defense attorney’s job is to show that even if some information on your application was incorrect, you didnt have the intent to defraud that’s required for a fraud conviction.
Defense #1: Lack of Intent / Good Faith Mistake
The primary defense in most PPP fraud cases involving false information is that you didnt have the intent to defraud—any false information was the result of honest mistake, not deliberate deception:
How this defense works: You can demonstrate that you made a good-faith effort to provide accurate information, you reasonably believed the information you provided was correct at the time you submitted it, and any inaccuracies were the result of misunderstanding the eligibility requirements, making calculation errors, relying on incorrect information from others, or interpreting ambiguous guidance in good faith.
Evidence that supports this defense: Communications showing you asked questions about how to complete the application correctly. Documentation showing you consulted with accountants, attorneys, or lenders about eligibility and application requirements. Evidence that you disclosed the relevant facts to professionals and relied on there advice. Records showing you made good-faith efforts to verify information before submitting it. Evidence that you corrected errors as soon as you discovered them, rather than continuing to conceal them.
When this defense works: When the false information was relatively minor, when theres no evidence you tried to hide or fabricate information, when you can show you had a reasonable basis for believing what you stated was true, and when you cooperated once the error was discovered.
Example: You certified that your business was operational and had employees on February 15, 2020, but you didnt realize that the employees you hired in late February didnt count for that certification. You thought “operational” meant you were running the business even if employees started a week or two later. This could be an honest misunderstanding of the eligibility requirements, not fraud.
Defense #2: Reliance on Professional Advice
If you relied on advice from accountants, attorneys, or other professionals in completing your PPP application, and the false information resulted from there errors or misadvice, that can be a defense:
How this defense works: You consulted with a qualified professional (CPA, attorney, business advisor), you provided them with accurate information about your business and circumstances, they advised you on how to complete the application and what to certify, and you reasonably relied on there professional advice in submitting the application. If the professional made errors or gave incorrect advice, those errors dont become your fraud.
Evidence that supports this defense: Documentation of your engagement with the professional (engagement letters, invoices, payment records). Communications showing you provided them with accurate information and asked for there guidance. The professional’s work product (if they prepared calculations, eligibility determinations, or draft applications). Testimony from the professional (if there willing to confirm they advised you). Evidence that you reasonably believed the professional was qualified and competent.
Limitations of this defense: This defense doesnt work if you lied to your professionals or withheld information from them—if you told your accountant you had 20 employees when you knew you had 5, you cant blame them for calculating payroll based on 20. It also doesnt work if the false information was so obviously wrong that no reasonable person would rely on professional advice (if your accountant told you to claim you had a business when you knew you didnt, thats not reasonable reliance).
Example: Your CPA calculated your average monthly payroll for PPP purposes. They made an error in the calculation that resulted in overstated payroll costs. You didnt know the calculation was wrong—you reasonably relied on your CPA’s expertise. If the government charges you with fraud for the overstated payroll, your defense is that you relied on professional advice and didnt have intent to deceive.
Defense #3: The False Information Wasnt “Material”
For fraud charges, prosecutors must prove that the false information was “material,” meaning it had the potential to influence the lender’s or the government’s decision. If the false information was trivial or didnt actually affect anything, it might not support a fraud conviction:
How this defense works: You can argue that even if some information was technically incorrect, it didnt matter because it wouldnt have changed the lending decision. For example, if you made a minor error in describing your business type (you said you were an LLC when you were technically a sole proprietorship) but you otherwise qualified for the loan and the entity type error didnt affect eligibility or loan amount, that error wasnt material.
When this defense works: When the false information was minor and peripheral to the lending decision, when you qualified for the loan anyway regardless of the error, and when theres no evidence you tried to use the false information to gain an advantage.
Limitations: Most false information on PPP applications will be considered material because PPP loans had strict eligibility requirements and any misrepresentation about eligibility, business operations, payroll, or number of employees could potentially affect the lending decision. This defense is harder to use for PPP fraud than for some other types of fraud.
Defense #4: Insufficient Evidence / Government Cant Prove Intent
Sometimes the defense is that the government simply cant prove there case. They might be able to show that something on your application was wrong, but they cant prove you knew it was wrong and intended to defraud:
How this defense works: Your attorney challenges the government’s evidence at every step. If the government’s case relies on circumstantial evidence or inferences, your attorney shows that alternative explanations are equally plausible. If the government relies on witness testimony, your attorney cross-examines witnesses and highlights inconsistencies or credibility problems. If the government’s theory is that you should have known something, your attorney shows that the information wasnt reasonably available to you or that the requirements were ambiguous.
When this defense works: When the government’s evidence of intent is weak, when there are innocent explanations for your conduct, when there’s no direct evidence you knew the information was false, and when the circumstances suggest mistake rather than fraud.
Example: The government says you claimed your business was eligible when it wasnt, but the eligibility requirements were confusing and contradictory, you made a good-faith interpretation that you qualified, and theres no evidence you deliberately lied. Your attorney argues the government cant prove beyond a reasonable doubt that you had fraudulent intent—uncertainty about guilt means acquittal.
Defense #5: Statute of Limitations
Federal fraud charges have statutes of limitations—time limits on how long after the alleged crime the government can bring charges. For most federal fraud offenses, the statute of limitations is 5 years from when the offense occurred:
How this defense works: If more than 5 years have passed since you submitted the allegedly fraudulent PPP application, the government might be barred from prosecuting you. Your attorney can move to dismiss charges based on the statute of limitations.
Complications: The statute of limitations can be extended if you took affirmative acts to conceal the crime (the “concealment tolling” doctrine), and for some offenses the limitations period might be longer. Also, the statute of limitations doesnt apply to civil actions (like False Claims Act cases), which have different time limits. But for criminal prosecution, if enough time has passed, this can be a complete defense.
Timing for PPP cases: PPP loans were made in 2020-2021. As of 2025, we’re approaching the 5-year mark for the earliest loans. If you applied for PPP in April 2020, the 5-year statute of limitations would expire in April 2025. If the government hasnt charged you by then, they might be barred from doing so (though consult with an attorney about tolling issues).
What You Absolutely Should NOT Do When Accused
If your being investigated or accused of providing false information on your PPP application, certain actions will destroy your defenses and make conviction much more likely:
Dont lie to investigators or provide additional false information. If the SBA OIG, FBI, or DOJ contacts you about your PPP application, dont lie in response. Lying to federal investigators is a separate crime (18 U.S.C. § 1001) carrying up to 5 years in prison. Even if the original allegation was weak, lying during the investigation creates new criminal liability and destroys any defense based on honest mistake.
Dont alter or destroy documents. Dont change your business records to make them match your application, dont delete emails or text messages related to the application, and dont destroy payroll records or other documentation. Obstruction of justice charges can be worse than the underlying fraud charges, and destroying evidence eliminates your ability to use documentation to support defenses like reliance on professional advice or good-faith mistake.
Dont ignore the investigation. If you receive a grand jury subpoena, a target letter, or a request for documents from federal investigators, dont ignore it. Ignoring an investigation signals guilt and eliminates opportunities for your attorney to negotiate a resolution before charges are filed. Respond through an attorney, but respond.
Dont try to “fix” the problem yourself. Some borrowers, when they realize theres false information on there application, try to correct it by submitting amended applications or providing explanations directly to the lender or SBA. This can backfire because anything you say can be used against you, and trying to explain away false information without attorney guidance often makes things worse. If you discover false information, consult with an attorney BEFORE contacting anyone about it.
Dont assume its too small to prosecute. The DOJ has prosecuted PPP fraud cases involving loan amounts as small as $10,000-$20,000. Theres no “safe” amount below which you wont be prosecuted. If theres evidence of intentional fraud, the government might pursue charges regardless of the loan size.
What Should You Do If You’re Accused of Providing False Information?
If your facing allegations of false information on your PPP application, take these steps immediately:
Step 1: Hire a federal criminal defense attorney with PPP fraud experience immediately. Dont try to handle this yourself, and dont use a general business attorney or a civil attorney. You need a criminal defense lawyer who has experience with federal fraud prosecutions and understands PPP-specific issues. The attorney will evaluate whether you have viable defenses and will protect you from making statements or taking actions that could be used against you.
Step 2: Gather all documents related to your PPP application and your business. Collect your loan application, supporting documents you submitted, communications with your lender, communications with accountants or attorneys who helped with the application, business formation documents, tax returns, payroll records, and anything else relevant. Your attorney needs to see exactly what you submitted and what documentation you relied on to assess whether defenses exist.
Step 3: Dont communicate with investigators without your attorney. If federal agents or prosecutors contact you, tell them you need to consult with your attorney before speaking with them. You have the right to have an attorney present during any interview. Dont try to “clear things up” or “explain” the situation without legal representation—anything you say can and will be used against you.
Step 4: Follow your attorney’s advice about cooperation. In some cases, cooperating with the investigation and providing information might help you avoid prosecution or reduce charges. In other cases, asserting your rights and not providing information is the better strategy. Your attorney will advise based on the specific circumstances—dont make this decision yourself.
Step 5: Understand that time is critical. The earlier you involve an attorney, the more options you have. If your attorney can engage with prosecutors before charges are filed, there might be opportunities to present defenses, provide explanations, or negotiate a civil resolution instead of criminal prosecution. Once charges are filed, your options are more limited.
Talk to a Federal PPP Fraud Defense Attorney Today
Being accused of providing false information on a PPP loan application is terrifying, and the potential consequences—federal fraud charges, years in prison, financial ruin—are devastating. But not every allegation of false information results in conviction, and there ARE defenses available when you can show the information was provided without fraudulent intent.
Our firm defends clients facing PPP fraud allegations including false information charges. We have experience with federal fraud prosecutions and understand the defenses that can work in these cases. We evaluate whether you have viable defenses based on lack of intent, good-faith mistake, reliance on professionals, or insufficient evidence. We negotiate with prosecutors when pre-charge resolution is possible. We defend against charges at trial when necessary. And we protect our clients from making the situation worse through inadvertent statements or actions during the investigation.
If your being accused of providing false information on your PPP application, contact us today for a confidential consultation. We’ll review the allegations and the evidence. We’ll assess what defenses are available based on your specific facts. We’ll advise on how to respond to the investigation. And we’ll develop a defense strategy to protect you from criminal prosecution and minimize consequences. Dont wait until charges are filed—time is critical in these cases.
Federal fraud allegations are serious, but defenses exist. Call us now.