SBA COVID-19 PPP and EIDL Loans: SBA Ramps Up Audits and Investigations

‍SBA Turns Up the Heat on COVID-19 PPP and EIDL Loans: What Honest Borrowers and Guarantors Need to Know After A Recent Indictment

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On August 5, 2025, federal prosecutors unsealed an indictment charging small business owner, Jabari Kadar Long, with conspiracy, wire fraud affecting a financial institution, and money laundering tied to fraudulent Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL)applications. Authorities allege Long and unnamed co-conspirators siphoned more than $3 million in COVID-relief funds by inflating payroll figures and the number of employees for his small business, “Priceless Preservations Construction.” Source:(Department of Justice)

‍Key Allegations at a Glance

• $2.19 million PPP loan: The defendant’s application claimed 50 workers and an $875,000 monthly payroll that investigators say were wholly inaccurate. Source: (WDIV)
• $150,000 EIDL loan: The defendant’s application was approved days later using similarly false revenue and head-count figures. Source: (Department of Justice)
• Disbursements & transfers to personal bank accounts: Prosecutors detail six-figure wire moves to personal accounts after funding, triggering a money-laundering count and allegations of misuse of proceeds. Source: (CBS News)

The defendant is presumed innocent, yet his case adds to a growing wave of COVID-relief prosecutions—and a clear message from the Department of Justice (DOJ) that it intends to investigate, find and prosecute fraudulent borrowers and guarantors well into 2026 and beyond.

Why This Matters For Legitimate SBA Borrowers & Guarantors

1. Expanded  Enforcement Resources – Congress extended the statute of limitations for PPP and EIDL fraud to 10 years, giving investigators ample time to comb through loan files.
2. Artificial Intelligence, Data Analytics & IRS Matching – The SBA, DOJ, and IRS is now using AI software to cross-check Form 941 payroll tax filings, banking records, and unemployment data to spot discrepancies.
3. Business Closure Reviews – SBA conducts its investigations of small businesses which have defaulted on payments and ceased operations through Business Closure Reviews (aka Loan Compliance Reviews). Information document requests and written questions are sent to the business owners and officers. Inaccurate or false statements and/or ignoring the requests for information can quickly escalate – potentially prompting referrals to the Office of Inspector General (OIG) or other federal authorities.
4. Civil & Criminal Exposure – Even if criminal charges never materialize, agency actions before the SBA Office of Hearings & Appeals Court (OHA) through the Administrative False Claims Act (AFCA), civil False Claims Act actions in Federal District Court, treble damages or personal guarantee enforcement can follow.

What Can Trigger a PPP / EIDL Investigation

1. Payroll claimed without matching IRS filings - Data mismatch is an instant audit target
2. Large wire transfers to owners and officers via personal bank accounts - Signals potential misuse of funds
3. Missing or copy-paste supporting documents - Lenders and Borrowers must maintain files for several years; forged documents stand out
4. Second-draw PPP requests, EIDL Hardship applications with inconsistent revenues - SBA algorithm flags revenue swings vs. first-draw or previously supplied figures

Five Steps You Can Take

1. Centralize Documentation – Retain payroll registers, tax returns, bank statements, and vendor invoices for at least a decade.
2. Perform an Internal “Audit” – Compare reported payroll numbers to IRS filings before the SBA does.
3. Engage Legal Counsel Early – An experienced SBA Attorney can negotiate with the assigned Trial Attorney representing the SBA during proceedings before the SBA’s Office of Hearings & Appeals (OHA) if administrative charges are filed.
4. Proactively Amend Errors – Voluntary repayment or correction can mitigate penalties if innocent mistakes—not fraud—occurred.
5. Plan for Possible Treasury Referral – Understand Administrative Wage Garnishment (AWG), Treasury Offset Program (TOP), and CAIVRS impacts if an SBA loan is declared in default.

How We Can Help

Our seasoned SBA Attorneys blend white-collar defense experience with knowledge of Paycheck Protection Program compliance, COVID EIDL regulations, and SBA administrative procedures. Whether you face a COVID EIDL Business Closure Review, an OHA case, or need a proactive compliance check-up, we marshal document reviews, conduct legal research and outline settlement strategies to protect your business and personal assets.

Final Thoughts

The Long indictment shows that “self-certified” COVID-relief loans are under a microscope—and mistakes can morph into criminal accusations of SBA loan fraud. Don’t wait for an information document request, an FBI target letter or federal subpoena to get your house in order. Schedule a confidential strategy session with our SBA loan defense team today to safeguard the future you worked so hard to build.

If you receive a “business closure review,” “post-funding compliance review,” or any sudden SBA document request:

Contact experienced SBA loan defense attorney immediately.

Our SBA Attorneys have guided thousands of small businesses through reviews, contested or negotiated debts assessed against owners, officers and guarantors, and litigated cases at the SBA Office of Hearings & Appeals (OHA) Court before presiding Administrative Law Judges (ALJs).

Schedule a confidential strategy session today → keep your success story from becoming the next SBA nightmare tale. If you believe your SBA COVID PPP or EIDL loan could be targeted for enforced collection, business closure review, audit, investigation or an AFCA claim, contact us at SBA-Attorneys.com for a confidential Case Evaluation.

‍This article is provided for informational purposes only and does not constitute legal advice. Consult a qualified SBA-Attorney for advice regarding your individual situation.

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