Can the government still investigate my business’s PPP loan if it wasn’t forgiven?

A look at PPP audits, enforcement, repayments and collections, as the Trump administration comes to power.

Even now, years after the pandemic, PPP loans are scrutinized and audited. Managed by the SBA (Small Business Administration), these loans need a lot of audits and investigation. On top of it, there are issues in these loans that are starting to come due, particularly for those that haven’t been forgiven. Sometimes that is putting the survival of the business at risk. Sometimes the numbers can get enormous, with repayments in the millions. SBA and DOJ (Department of Justice) investigations pose big risks to borrowers. So, can they still look at a PPP loan that wasn’t forgiven? Absolutely. SBA can review any loan with or without forgiveness, and even the DOJ could investigate. The unforgiven ones still face collection and in some cases a fight for survival.

Created in the CARES Act early in the pandemic when much of the country was locked down, PPP loans were an instant hit with small business owners. The lockdowns and health orders closed entire sectors overnight. The money dried up at the same time, so business owners fell over themselves to get PPPs. They offered something else besides just cash: the possibility that they could be forgiven. About $800 billion was disbursed by the SBA. At the end of 2022, 10.5 million loans were forgiven, totaling $755 billion.

It wasn’t long after the first loans were disbursed that there were fraud reports, and in May 2023 the GAO had flagged nearly four million PPP loans with possible fraud indicators. Almost four million. The SBA Inspector General has reported that over $200 billion, about 17% of EIDL and PPP funds, may have gone to fraudsters.

The fraud was staggering. The government defends its push to get the money out fast as needed to stem some of the economic carnage of lockdowns, and says they are now using their broad powers to recover that money and go after those fraudsters.

A Very Real Debt

If forgiveness was denied, the owner owes the loan back. The SBA has over 10,000 delinquent PPP loans over $100,000 sent to Treasury for collection. A year earlier there were roughly $20 billion in loans, under $100,000, that were in collection. The PPP loan without forgiveness is a very real debt. Ignoring an unforgiven loan does not make the loan go away. That’s separate from the probes.

Those collections and threats of collections are likely a lot less than you hear, less than 3% of the money disbursed. The government is doing a lot to get money back, but what the government is really going for is fraud. Another program in the mix is ERC, a refundable tax credit on the payroll taxes a business with employees paid to the government. The money was meant to help the business keep employees. A law from 2021 meant businesses could get both. Those are likely to be audited.

The SBA May Review Any Loan at Any Time

Forgiveness doesn’t shield these loans. The SBA may review any loan at any time, even after it has been forgiven. The audits can check the loan amount, whether the business was eligible for forgiveness, and whether the money went to payrolls or non-payroll costs. Businesses could spend their loans on payroll as well as non-payroll costs. Auditors may look at how closely that divide followed the rules. An unforgiven loan is just as much at risk of this as a loan that has been forgiven.

At any time the SBA may write your lender to notify them your PPP loan is subject to an audit. Your lender has to notify you within five business days of that notice. It’s a good idea to start gathering records and documents if you ever got one of those loans, and it’s always smart to bring in outside counsel for something like this. Pull these things together and have them ready:

• documents that support how you calculated the loan amount,
• records documenting your PPP spending,
• and your forgiveness application and the documents you submitted with it.

Don’t ignore an audit request. The SBA may find you’re not eligible for the loan, the amount you got or for forgiveness; they may demand repayment or use other remedies. If you don’t agree with their final decision, you have 30 calendar days for an appeal to the Office of Hearings and Appeals. The moment you get a repayment request or other demand, get counsel. Here, silence is not always golden.

PPP Enforcement

SBA isn’t the only one. DOJ is leading an interagency effort to investigate and prosecute pandemic fraud. Those can be criminal or civil, and often they start with subpoenas or Civil Investigative Demands. Some of those are under the False Claims Act. A civil case like the False Claims Act can end in a large payment; a criminal case can end in charges; a subpoena or Civil Investigative Demand is serious and needs a lawyer at once.

According to an April 2024 report by AG Garland, in three years 3,500+ defendants have been charged with pandemic fraud, more than $1.4 billion has been seized or forfeited, and 400+ civil actions filed. Created in 2021, DOJ’s COVID-19 Fraud Enforcement Task Force works with partners such as the SBA to investigate and prosecute fraud relating to the pandemic.

My own take, PPP enforcement isn’t going anywhere any time soon. It’s not realistic for most borrowers to expect a sudden drop-off in enforcement. On March 12, 2025, the Department of Justice announced a $20 million+ consent judgment over False Claims Act allegations in PPP applications. On April 8, 2025, the Department of Justice announced a $10 million+ settlement involving a PPP loan over the 500-employee limit. Both of these cases happened after the new administration took over. PPP loans are still being investigated and prosecuted. It’s unlikely SBA audits are going to stop. President Trump’s repeated criticism of wasteful and inefficient federal programs and those of his closest advisors suggests PPP fraud remains an enforcement target, perhaps with a short delay as the new Administration ramps up. No PPP-specific plan has been announced by the Administration.

President Trump has highlighted the need to reverse recent overreach, waste and fraud and on February 20, ex-senator Kelly Loeffler, whom he nominated to lead the SBA, called the last four years unchecked fraud, waste and abuse. Accountability is one of her core priorities. It’s not realistic to think this new Trump Administration means the end of PPP audits and collection efforts. If you have a loan that wasn’t forgiven or is questionable, be vigilant, and cut your risk. Don’t let an unforgiven PPP loan take your business down. Keep your records. Respond fast. Hire counsel. Don’t count on politics to make it go away.