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How to Avoid PPP Small Business Fraud Schemes

By Citizens Bank Staff

Criminals have been quick to develop scams to take advantage of the millions of small businesses applying for financial support through the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). The PPP provides loans which don’t have to be paid back if the money is used to compensate existing staff or cover rent, mortgage interest, or utilities for eight weeks.

Current scams are focused on collecting fees, as well as bank and financial information, from small business owners during a time when they may be looking for information and applying to the program.

Review the common scams listed below to protect your business and its financial health. Since fraudsters are continually evolving their schemes, you should also be on the lookout for variations on them.

1. Upfront fee for PPP loan

Fraudsters may ask for payments for access to PPP loans. The U.S. Small Business Administration (SBA) doesn’t charge PPP loan fees and reminds businesses that the SBA logo on something doesn’t necessarily mean the contact is from a legitimate source. A variation on this scam is bogus outreach from the U.S. Department of the Treasury asking for a PPP fee, sometimes via the purchase of a gift card.

2. SBA social media posts

Scammers posing as the SBA post offers for access to grants or loans on various social channels. The SBA emphasizes that government agencies don’t reach out to business owners via social media.

3. Proactive outreach offering PPP loan

Criminals pretend to be the SBA or other government representatives by making contact, out of the blue, and offering assistance with PPP loan access. The SBA, IRS, and U.S. Department of the Treasury have stated that they won’t contact anyone directly related to the various relief programs. While a lender you’ve applied with, like Citizens Bank, may well contact you in response to your application, legitimate organizations don’t typically contact you proactively via phone or email to ask for sensitive financial information.

4. Access to a loan while you wait

The offer of a short-term, high-interest “bridge” loan while you wait for PPP payment is another common scam. While some businesses might make financial arrangements with a legitimate lender for short-term relief, you should regard any contact that isn’t from your primary bank or other institution you’ve contacted as highly suspicious.

5. Offers to “jump the line”

In exchange for a fee, criminals claim to help businesses access PPP funds quickly, or to increase loan size. The reality is that, as a government-issued loan, no one can rush payments or modify the amount you’ll receive beyond what is specified by the SBA based on your payroll and expense amounts.

Think twice before giving out sensitive information

To protect your business, be skeptical of emails, calls, texts, and social media posts related to PPP. If you’re applying for PPP relief, expect contact from your lender, but remember that legitimate lenders won’t typically ask for financial information, credit card numbers, Social Security numbers in full, or other sensitive information via email or text.

Citizens Bank is here to help

If your business has been impacted by COVID-19 and is facing financial hardship, please reach out to us to discuss the ways we can help provide relief for you. In addition to accepting applications for the SBA Paycheck Protection Program, here’s what we’re offering Citizens Bank Business customers:

  • Payment deferrals for up to 180 days with no credit bureau impact
  • Cash management service fee waivers for up to 90 days
  • Late fee and overdraft fee waivers
  • Small business referral facilitation for SBA Economic Injury Disaster loans

If you’re in need of assistance, please contact us. Please note that we’re currently receiving higher than normal call volumes as we help our customers during this difficult time. To expedite service, please identify yourself using your account number. Thank you for your patience!

Business Banking: 1-800-862-6200

Client Services (for Cash Management service fee waivers): 1-877-550-5933

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