How these investigations start
EIDL investigations are often run by the SBA's Office of Inspector General, sometimes with the FBI, the Secret Service, or other agencies, and prosecuted by the Department of Justice. They frequently focus on statements about revenue, the number of employees, or whether the business existed, and on how the loan proceeds were used. Congress extended the time the government has to bring charges in pandemic loan fraud cases, so an older application can still be examined. Some matters are pursued civilly rather than criminally, and some involve only collection on a defaulted loan. Telling those apart is the first step.
Protecting yourself at the start
Should an agent call or show up at your home, it is fine to say politely that you will respond through a lawyer. Lying to an agent, knowingly, is its own federal crime, even when the loan application itself is never charged. Gather your application, loan documents, bank records showing how the funds were spent, and correspondence with the SBA. Do not create or backdate documents to support the application, and do not move assets in a way that could look like hiding them. If someone else helped prepare the application, such as a preparer or a relative, do not coordinate accounts with them.
Weighing the options
We find out whether you are viewed as a subject, a target, or a witness, and what the government appears to be examining. Errors made in good faith are different from knowing misstatements, and the evidence about what you knew matters. In some matters, repayment or a civil resolution may be discussed, but that depends on the facts and the agency's position. If you also took a Paycheck Protection Program loan, the investigation may look at both. An EIDL fraud investigation is serious, and careful handling from the start usually leaves you more choices.
