Alert
Borrower Beware: U.S. Companies With Foreign Affiliates at Risk for Clawback and Repayment of Previously Forgiven Paycheck Protection Loans
Since the fall of 2024, the United States Department of Justice (“DOJ”) has released a continuing stream of press releases across the country describing settlements it reached with Paycheck Protection Program (“PPP”) borrowers to resolve allegations that these borrowers, many with foreign parents or affiliates, violated the False Claims Act by obtaining PPP loans for which they were ineligible due to employee headcount limitations. While some of these press releases involve First Draw loans, the vast majority involve Second Draw loans. And, importantly, these settlements generally involve loans where the borrower applied for and utilized the PPP funds for payroll and other forgivable expenses, and the SBA already granted forgiveness of the loans.