Despite applications to the Paycheck Protection Program (PPP) loan program closing in 2021, recent headlines involving various federal agencies and the Small Business Administration’s (SBA) enforcement activity related to PPP fraud have renewed attention to these loans.
Public discussion has primarily focused on high profile cases, whistleblower actions and government efforts to protect program integrity years after funds were disbursed. While these stories often highlight extreme examples, they have reinforced a broader reality: PPP oversight did not end when the program closed, nor when loans were forgiven.
For organizations and financial institutions that participated in PPP — either as borrowers or lenders — this environment has renewed attention on historical documentation, certifications and assumptions made during an unprecedented period of economic uncertainty.
PPP Background
To mitigate the economic effects of the COVID-19 pandemic, Congress passed the CARES Act, and the president signed it into law in March 2020. The PPP was among the assistance programs funded by the CARES Act, and was created to provide forgivable loans to small businesses to cover payroll and benefits costs.
The PPP was initially designed to cover eight weeks of payroll and benefits costs and was later modified to extend the forgiveness period to 24 weeks and allow for coverage of other non-payroll costs. Since its inception, the U.S. Small Business Administration (SBA) has administered PPP and is responsible for investigating potential fraud and abuse in the program.
PPP Loan Reviews: Initiation and Scope
PPP loan reviews are initiated by the SBA as part of its broader oversight of the program and may arise for a variety of reasons, including routine program monitoring, internal review requirements, referrals or other supervisory considerations.
From the perspective of borrowers and financial institutions, the existence of a review alone should not be interpreted as an indication of a specific concern or outcome. Many reviews involve no allegation of fraud or misconduct. Reviews may range from routine oversight activity to more detailed examination, depending on the facts and documentation associated with each loan.
Based on active review experience, SBA PPP loan reviews have increasingly concentrated on a small number of recurring areas. These focus areas align closely with issues highlighted in recent PPP-related enforcement activity and continue to surface across both borrower and lender reviews.
PPP Loans Review Focus Areas
Ownership and Affiliation
Ownership and affiliation remain a primary focus, particularly in situations where ownership interests, related entities, or control relationships were not reported, not fully disclosed, or not disclosed accurately at the time of application.
These reviews are not limited to high-profile cases and frequently involve privately held businesses with complex or layered ownership structures. In practice, affiliation issues often arose when borrowers did not understand how SBA affiliation rules applied to minority investors, indirect ownership interests or entities affiliated through ownership or control. SBA’s affiliation rules have been around for decades before PPP, and they were often confused with control group rules that apply under tax law or other affiliate rules.*
In some cases, ownership relationships existed but were omitted or only partially described; in others, borrowers did not recognize that an investor or related entity brought additional affiliates into scope for eligibility purposes. These disclosure gaps continue to surface during SBA review activities and remain a consistent area of focus.
*While PPP affiliation rules were derived from SBA’s longstanding affiliation principles, they were narrower in application, implemented under a PPP‑specific regulatory framework, focused on employee counts at the time of application, and applied through borrower certifications during an accelerated process. PPP affiliation rules also incorporated statutory waivers for certain categories of borrowers, reflecting the program’s emergency design.
Payroll Reconciliation
Payroll records themselves remain a significant focus of SBA PPP loan reviews. A common review area arises where payroll amounts used for PPP origination or forgiveness do not reconcile to authoritative payroll tax filings. SBA reviews frequently focus on whether payroll figures used in the PPP maximum loan calculation or forgiveness align with:
- Forms 941 and 940
- Forms W-2 and W-3
- State Wage Reports
Common issues include inconsistencies across filings, differences in gross wages reported between forms, or payroll amounts used for PPP purposes that cannot be substantiated by tax filings. In these cases, review attention centers on whether CARES Act rules governing includable payroll costs were applied correctly.
In practice, this includes failure to properly apply the $100,000 annualized wage cap per employee or owner, inclusion of payroll that is not attributable to the borrower entity, or inclusion of compensation that cannot be substantiated based on tax filings. This includes situations where owners were compensated through K-1 income rather than W-2 wages, or where payroll associated with an affiliated or parent entity under a different EIN was included in the borrower’s PPP calculations.
Payroll Documentation
More significantly, SBA reviews have also identified instances where payroll records were overstated, altered, or otherwise falsified to support PPP calculations. These cases may involve inflated wages, unsupported employee counts or documentation that does not correspond to filed tax records. While many payroll issues reflect misunderstanding or misapplication of complex rules, falsified payroll documentation continues to appear as part of SBA’s review and enforcement landscape and remains a key driver of heightened scrutiny in this area.
Multiple Loan Applications
SBA PPP loan reviews also focus on situations where borrowers applied for or received multiple PPP loans, either by submitting applications through more than one lender or through multiple entities within an affiliated group. Under the CARES Act, borrowers were subject to limits on the number of PPP loans they could receive, as well as caps on the total loan amount that could be received across affiliated entities.
Review activity in this area often involves determining whether duplicate PPP applications were submitted to different lenders or whether affiliated entities collectively exceeded the maximum loan amount permitted under PPP aggregation rules. These situations frequently arise where affiliation relationships were not fully disclosed or understood at the time of application, resulting in loans being evaluated on an entity-by-entity basis rather than at the group level.
Other Documentation and Response Challenges for PPP Loan Reviews
Long-open PPP loan reviews continue to be a notable feature of the current review environment. These cases may remain unresolved for extended periods, with significant gaps between communications, even after documentation has been submitted. Reviews may later resurface with additional questions or requests as part of ongoing SBA oversight. The extended duration of these reviews often reflects the volume and complexity of review activity rather than a single unresolved issue, but they remain a common experience for both borrowers and financial institutions engaged in PPP review activity.
Across all focus areas, SBA PPP loan reviews emphasize documentation quality, internal consistency, and the ability to substantiate historical representations. Challenges frequently arise not because documentation never existed, but because records are dispersed, systems have changed or institutional knowledge has diminished over time. Employee turnover, system transitions, and increased reliance on automated workflows have contributed to the need for borrowers and financial institutions to reconstruct historical context during reviews that occur years after the original PPP transactions.
What Should I Do If My PPP Loan Is Under Review?
In the current environment, where PPP-related fraud continues to receive public attention, reviews can carry heightened sensitivity even when they are part of routine oversight. This reinforces the importance of clear, well-supported responses grounded in historical documentation and program context. Borrowers should remember that initial PPP documentation called for record retention for six years after PPP loan forgiveness was approved.
For borrowers, PPP loan reviews may require revisiting prior assumptions, certifications and documentation long after loan forgiveness. For financial institutions, reviews often involve responding to SBA requests, retrieving historical records and coordinating communication between the SBA and borrowers — sometimes without the same personnel or systems that supported PPP during its initial rollout.
When notified of a review, borrowers and lenders should engage qualified professionals with SBA audit experience to review documentation and responses before materials are submitted.
Let Us Guide You Forward
Cherry Bekaert’s Collateral Examinations team provides specialized consulting and advisory services to support both borrowers and financial institutions navigating SBA PPP loan reviews. By working with both sides of the PPP ecosystem, we can facilitate informed, efficient responses and support progress toward review resolution.
Our experience spans PPP origination, forgiveness, and post-forgiveness review activity, allowing us to bring continuity and institutional knowledge to a process that increasingly extends across multiple years and stakeholders. For borrowers, Cherry Bekaert assists with understanding review requests, organizing and reconciling documentation, and responding to SBA inquiries.
For financial institutions, we support review response efforts by helping interpret SBA requests, contextualize historical documentation, and coordinate effectively with borrowers — particularly where PPP expertise has shifted, systems have changed or reviews involve legacy activity. In addition, Cherry Bekaert's Forensic & Dispute Advisory Services analyze records and calculations to satisfy SBA review requirements.
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