PPP fraud means lying to get a Paycheck Protection Program loan or to have one forgiven. EIDL fraud is the same thing for COVID-19 disaster loans from the Small Business Administration. Both are federal crimes, usually charged as bank fraud, wire fraud or false statements, with up to 30 years per count. Prosecutors have 10 years to bring borrower-fraud charges.
What does the law make illegal?
There is no single "PPP fraud" statute. Prosecutors use general fraud and false-statement laws, chosen to fit who made the loan and how the application was sent. A case often has several of these counts:
- Bank fraud (18 U.S.C. § 1344): a scheme to defraud a financial institution, or to get its money by false statements. Up to 30 years.
- False statements to a lender (18 U.S.C. § 1014): knowingly making a false statement to influence an FDIC-insured bank, a federal or insured state-chartered credit union, or another lender the statute lists, on a loan application. Up to 30 years.
- Wire fraud (18 U.S.C. § 1343): a scheme to get money by lies, carried out with an interstate wire, such as an online application or an electronic deposit. Up to 20 years, or 30 if a financial institution is affected.
- False statements to the SBA (15 U.S.C. § 645(a)): knowingly false statements to get a loan or anything of value under the Small Business Act. Up to 2 years.
- Aggravated identity theft (18 U.S.C. § 1028A): using another person's identifying information during and in relation to certain fraud crimes. It adds a mandatory 2 years, served after any other sentence. The Supreme Court limited it to uses that are at the crux of what makes the conduct criminal (Dubin v. United States, 599 U.S. 110 (2023)).
Which laws fit depends on the facts. Section 1014 and bank fraud depend on the lender being one the statutes cover, so a loan from a lender outside those definitions may be charged differently. When loan money is spent in transactions over $10,000, prosecutors can add money laundering counts. An agreement between two or more people can be charged as a conspiracy, which under 18 U.S.C. § 1349 carries the same penalties as the fraud itself (see our federal conspiracy page). Other fraud and financial charges are listed on our white collar crime page.
What were the PPP and EIDL programs?
Congress created the Paycheck Protection Program in the CARES Act, Pub. L. 116-136, signed March 27, 2020. PPP loans were made by private lenders under the Small Business Administration's loan program, and the SBA backed 100 percent of each loan (15 U.S.C. § 636(a)(2)(F), (a)(36)). First-draw loans could be made from February 15, 2020 through June 30, 2021 (§ 636(a)(36)(A)(iii)). Congress later added second-draw loans for businesses that had used their first loan (§ 636(a)(37)).
A PPP loan could be forgiven if the money was spent on payroll and other covered costs, such as mortgage interest, rent and utilities (15 U.S.C. § 636m). When applying, the borrower had to certify in good faith that the loan was needed to support ongoing operations and that the money would be used to keep workers and pay payroll, mortgage, lease and utility payments (§ 636(a)(36)(G)).
COVID-19 Economic Injury Disaster Loans (EIDL) were SBA disaster loans for small businesses, sole proprietors and independent contractors hurt by the pandemic, made from January 31, 2020 through December 31, 2021 (15 U.S.C. §§ 636(b)(2), 9009(a)–(b)). The SBA also paid EIDL advances, which the statute calls emergency grants, and later targeted EIDL advances (15 U.S.C. §§ 9009(e), 9009b).
How are PPP fraud cases usually charged?
Most cases turn on what the application, the supporting papers or the forgiveness request said. The allegations usually fall into a few groups:
- Payroll and employee numbers. Saying the business had more employees or a larger payroll than it did, since the loan amount was based on payroll costs.
- Records. Submitting tax forms, payroll records or bank statements that were made up or changed.
- Eligibility. Applying for a business that did not exist or was not operating, or for more loans than the program allowed.
- Use of the money. Spending loan money on personal items instead of payroll and other covered costs, and then certifying otherwise on a forgiveness application.
- Other people's identities. Applying in another person's name or with another person's information, which can bring an aggravated identity theft count.
These are general patterns, not a forecast for any case. Many cases involve honest disputes about how to count employees, which costs qualified, or what an applicant was told by a lender or preparer.
What is the statute of limitations for PPP fraud?
Ten years for borrower fraud. In August 2022, Congress passed two laws that say, "notwithstanding any other provision of law," any criminal charge or civil enforcement action alleging that a borrower engaged in fraud must be filed within 10 years after the offense was committed (Pub. L. 117-166; Pub. L. 117-165). The 10-year rule covers:
- PPP loans: 15 U.S.C. § 636(a)(36)(W);
- PPP second-draw loans: § 636(a)(37)(P);
- COVID-19 EIDL loans: § 636(b)(16);
- EIDL advances and targeted EIDL advances: 15 U.S.C. §§ 9009(e)(9) and 9009b(i).
The general federal limit is 5 years (18 U.S.C. § 3282(a)), so these provisions double it. As written, they cover fraud by a borrower, not every fraud connected to the pandemic. Separately, bank fraud and false statements to a lender already have a 10-year limit (18 U.S.C. § 3293).
Can there also be a civil case?
Yes. The government can also sue under the False Claims Act, which allows a civil penalty for each false claim plus three times the government's damages (31 U.S.C. § 3729(a)(1)). A civil case and a criminal case can be pursued at the same time, so what is said or paid in one can matter in the other.
What are the penalties?
| Charge | Maximum prison | Maximum fine for a person |
|---|---|---|
| Bank fraud (18 U.S.C. § 1344) | 30 years | $1,000,000 |
| False statement to a lender (18 U.S.C. § 1014) | 30 years | $1,000,000 |
| Wire fraud (18 U.S.C. § 1343) | 20 years (30 if a financial institution is affected) | $250,000, or twice the gain or loss |
| False statement to the SBA (15 U.S.C. § 645(a)) | 2 years | $5,000 in the statute; up to $250,000 under 18 U.S.C. § 3571 |
| Aggravated identity theft (18 U.S.C. § 1028A) | 2 years, mandatory and consecutive | Under Title 18 |
- Mandatory minimum: none for the fraud counts. A § 1028A count adds 2 years that must run after any other prison term.
- Restitution: judges generally must order the person to repay the victims' losses (18 U.S.C. § 3663A).
- Forfeiture: the government can ask the court to take property traced to the loan money (18 U.S.C. § 981(a)(1)(C); 28 U.S.C. § 2461(c)).
- Supervised release: up to 5 years after a 30-year offense and up to 3 years after a 20-year offense (18 U.S.C. §§ 3559(a), 3583(b)).
How does sentencing work for this charge?
Bank fraud, wire fraud, false statements to a lender and § 645(a) are all sentenced under USSG §2B1.1. The base offense level is 7 when the statute of conviction has a maximum of 20 years or more, and 6 otherwise, so it is 6 for a § 645(a) count. Levels are then added from the loss table, plus increases for things such as the number of victims and sophisticated means.
In most PPP cases the loss figure drives the range. How it is measured, including what was repaid or spent on real payroll, is often the most contested issue at sentencing. A § 1028A count is sentenced under USSG §2B1.6: the guideline sentence is the 2-year term the statute requires. A timely guilty plea usually earns 2 or 3 levels off (USSG §3E1.1).
Scheduled change, November 1, 2026. Amendments the Sentencing Commission sent Congress on April 30, 2026 are scheduled to take effect November 1, 2026, unless Congress acts. They raise every dollar amount in the §2B1.1 loss table for inflation and replace the multiple-count rules with a single guideline, §3D1.1. A judge generally applies the manual in effect on the sentencing date (USSG §1B1.11). (U.S. Sentencing Commission, 2026 amendments)
Pending at the Supreme Court. In Beaird v. United States, No. 25-5343, set for argument on October 13, 2026, the Court agreed to decide whether Stinson v. United States (1993) still states the rule for how much weight courts must give the Guidelines’ commentary, the notes that follow each guideline. The answer could affect rules on this page that come from commentary rather than from the guideline text itself.
Guideline numbers on this page are from the Guidelines Manual in effect since November 1, 2025, which no longer uses “departures”: the judge calculates the range, then weighs the factors in 18 U.S.C. § 3553(a). For more depth, see How the federal Sentencing Guidelines work, at Sentencing.net, a Criminal Center site.
Statutes covered on this page
Each federal law this page covers, listed by how often it was a statute of conviction in fiscal year 2025 (U.S. Sentencing Commission data). For each one: the official section heading, what the government must prove, the penalties, and the sentencing guideline the Commission's Statutory Index assigns to it. See all statutes by title and section.
15 U.S.C. § 645(a): False statements to the Small Business Administration
Official heading of 15 U.S.C. § 645: “Offenses and penalties”
What the government must prove
- The person made a statement knowing it was false, or willfully overvalued a security (collateral).
- The person did it to get a loan (or an extension, deferral or change to one) for himself or another applicant, to influence the SBA's action, or to get money, property or anything of value under the Small Business Act.
Penalties. Up to 2 years and a $5,000 fine under § 645(a). As a felony, it can also bring a fine of up to $250,000 or twice the gain or loss under 18 U.S.C. § 3571. For PPP and COVID-19 EIDL borrower fraud, the time limit is 10 years (15 U.S.C. § 636(a)(36)(W), (a)(37)(P), (b)(16)).
Sentencing guideline. Appendix A assigns USSG §2B1.1. With a 2-year maximum, the base offense level is 6, plus the loss table.
Section 645(a) can be charged together with bank fraud, wire fraud or § 1014, which carry much higher maximums. Those statutes are explained on our bank and mortgage fraud and wire fraud pages.
What happens if you are investigated for PPP loan fraud?
PPP and EIDL investigations are often run by the SBA's Office of Inspector General, the FBI, IRS Criminal Investigation or other federal agents, working with a U.S. Attorney's Office. They usually start with the paperwork: the application, the lender's file, tax filings and bank records showing where the money went. Agents may compare what an application said with what was filed with the IRS.
Many people first learn of a case from a lender's letter, a grand jury subpoena, a visit from agents or a target letter. A "target" is someone the prosecutor or grand jury has substantial evidence linking to a crime (Justice Manual 9-11.151).
What to do now
- Talk with a lawyer before answering agents' questions. Lying to a federal agent is its own crime (18 U.S.C. § 1001; see our false statements and perjury page).
- Keep loan files, payroll records, bank records and messages as they are. Deleting or changing records after learning of an investigation can be charged as obstruction.
- Get advice before contacting the lender or the SBA about the loan, or before making a payment meant to resolve the matter, so it fits the rest of your plan.
The usual stages of a federal case
- Investigation. Agents gather records and interview witnesses, often using grand jury subpoenas. Someone the prosecutor views as a "target" may get a target letter before an indictment; a "subject" is anyone whose conduct is within the scope of the grand jury's investigation (Justice Manual 9-11.151, 9-11.153).
- Charges. A federal felony is usually charged by indictment: a grand jury decides in private whether there is probable cause (Fed. R. Crim. P. 6, 7). Some cases start with an arrest on a criminal complaint.
- First appearance and detention. After an arrest, the person goes before a magistrate judge without unnecessary delay (Fed. R. Crim. P. 5). The judge decides whether they are released or held until trial (18 U.S.C. § 3142).
- Evidence and motions. The government must turn over certain evidence (Fed. R. Crim. P. 16). The defense can ask the court to suppress evidence or dismiss charges (Fed. R. Crim. P. 12).
- Plea or trial. Many federal cases end in a guilty plea, which the judge must find knowing and voluntary (Fed. R. Crim. P. 11). At trial, the government must prove every element beyond a reasonable doubt, and a jury verdict must be unanimous (Fed. R. Crim. P. 31(a)).
- Sentencing. A probation officer writes a presentence report, and each side can object in writing within 14 days of receiving it (Fed. R. Crim. P. 32). The judge then decides the sentence under 18 U.S.C. § 3553(a).
More on what to do at each stage: Facing federal charges? What to do now.
What defense issues come up in these cases?
- Intent and good faith. Did the person know a statement was false, or rely on a lender, accountant or preparer who filled in the numbers? The program's rules changed several times while it was running.
- Who made the statement. Applications were often prepared by others. Who entered the information, and who knew what?
- Materiality. Was the statement the kind that could affect the lender's or the SBA's decision?
- Which statute fits. Was the lender a covered financial institution for bank fraud and § 1014? Did an interstate wire carry out the scheme?
- Identity theft limits. After Dubin, was another person's information at the crux of the fraud, or only incidental?
- Loss. How was it calculated, and what credit was given for money spent on real payroll and covered costs, or repaid?
- Time limits. Was each count filed within the time the law allows?
Every case turns on its own facts. These are issues to look at, not predictions about how any case will turn out.
What happens after a conviction?
- Appeal. A notice of appeal is usually due within 14 days after the judgment is entered (Fed. R. App. P. 4(b)(1)(A)). Many plea agreements waive the right to appeal, but in Hunter v. United States (2026) the Supreme Court held that a waiver can’t be enforced when doing so would cause a miscarriage of justice, a high bar. See how federal criminal appeals work and federal appeals at Sentencing.net.
- A § 2255 motion. A motion asking the sentencing court to vacate, set aside or correct the sentence, for example for ineffective assistance of counsel. It is usually due within one year after the conviction becomes final (28 U.S.C. § 2255(f)). See 2255motion.com.
- Compassionate release. A motion asking the judge to reduce a prison sentence for extraordinary and compelling reasons, filed after the person asks the warden and either exhausts BOP appeals or waits 30 days (18 U.S.C. § 3582(c)(1)(A)). It can’t be used to attack the validity of the conviction itself (Fernandez v. United States (2026)). See CompassionateRelease.com.
- Clemency. The President can pardon a federal offense or commute (shorten) a federal sentence (U.S. Const. art. II, § 2). See Clemency.com.
Common questions
What is PPP fraud?
PPP fraud means lying to get a Paycheck Protection Program loan or to have one forgiven, for example by inflating payroll, using made-up records or misusing the money. It is usually charged as bank fraud (18 U.S.C. § 1344), wire fraud (18 U.S.C. § 1343), false statements to a lender (18 U.S.C. § 1014) or false statements to the SBA (15 U.S.C. § 645(a)).
What is the statute of limitations for PPP fraud?
Ten years. Federal law says any criminal charge alleging that a borrower engaged in fraud with a PPP loan must be filed within 10 years after the offense (15 U.S.C. § 636(a)(36)(W) and (a)(37)(P)). The same 10-year rule applies to COVID-19 EIDL loans (15 U.S.C. § 636(b)(16)). The usual federal limit is 5 years (18 U.S.C. § 3282).
Is PPP fraud a federal crime?
Yes. The PPP was a federal program run through the Small Business Administration, and the charges are federal: bank fraud and false statements to a lender carry up to 30 years per count (18 U.S.C. §§ 1344, 1014), wire fraud up to 20 years (18 U.S.C. § 1343), and false statements to the SBA up to 2 years (15 U.S.C. § 645(a)).
What happens if you are investigated for PPP loan fraud?
Agents usually gather the loan file, tax filings and bank records, and may serve subpoenas or interview people. Some people receive a target letter, meaning a prosecutor has substantial evidence linking them to a crime (Justice Manual 9-11.151). Anything said to agents can be used later, and lying to them is a separate crime (18 U.S.C. § 1001).
Related federal charges
Sources
- 15 U.S.C. § 636 (PPP: (a)(36), (a)(37); EIDL limit: (b)(16))
- 15 U.S.C. § 636m (PPP loan forgiveness)
- 15 U.S.C. § 9009 (COVID-19 EIDL)
- 15 U.S.C. § 9009b (targeted EIDL advances)
- 15 U.S.C. § 645 (SBA offenses and penalties)
- CARES Act, Pub. L. 116-136 (Mar. 27, 2020)
- PPP and Bank Fraud Enforcement Harmonization Act of 2022, Pub. L. 117-166
- COVID-19 EIDL Fraud Statute of Limitations Act of 2022, Pub. L. 117-165
- 18 U.S.C. § 1014 (false statements to a lender)
- 18 U.S.C. § 1028A (aggravated identity theft)
- 18 U.S.C. § 1343 (wire fraud)
- 18 U.S.C. § 1344 (bank fraud)
- 18 U.S.C. §§ 3282, 3293 (time limits)
- 18 U.S.C. §§ 3559, 3571, 3583, 3663A
- 31 U.S.C. § 3729 (False Claims Act)
- Dubin v. United States, 599 U.S. 110 (2023)
- USSG §2B1.1 (2025 manual)
- USSG §2B1.6 (aggravated identity theft; 2025 manual)
- 18 U.S.C. § 3553 (imposition of a sentence; safety valve)
- 18 U.S.C. § 3142 (release or detention before trial)
- Federal Rules of Criminal Procedure 5, 6, 7, 11, 16, 32
- Federal Rule of Appellate Procedure 4(b)
- 28 U.S.C. § 2255
- 18 U.S.C. § 3582(c)(1)(A) (compassionate release)
- U.S. Constitution, art. II, § 2 (pardon power)
- Justice Manual 9-11.151 and 9-11.153 (targets of grand jury investigations)
- U.S. Sentencing Commission, Guidelines Manual (Nov. 1, 2025)
- U.S. Sentencing Commission, Amendments effective Nov. 1, 2026 (submitted to Congress Apr. 30, 2026)
- Beaird v. United States, No. 25-5343 (docket)
- Hunter v. United States, 608 U.S. 713 (2026)
- Fernandez v. United States, 608 U.S. 411 (2026)
Law checked against these sources on . This page is general information about federal law, not legal advice for any case.
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