ppp loan scams

The Paycheck Protection Program (PPP) of 2020 was designed to help small businesses keep people employed during the unprecedented times of the COVID-19 pandemic. Instead of getting quick cash loans, payday loans, cash advance loans, or other potentially risky forms of funding, small business owners could rely on PPP funds to help keep their businesses staffed. Government officials from the Small Business Administration or SBA outlined these policies.

Unfortunately, with most types of government funding and financial assistance comes people trying to exploit the situation. For example, after the national student loan pause at the beginning of the 2020 COVID-19 pandemic, there was a rise in student loan forgiveness scams.1 

Similarly, with the introduction of the PPP, there was a corresponding spike in fraudulent PPP loans directed toward small businesses looking to obtain PPP loan money. On the flip side of that, many people used this taxpayer money for unnecessary expenses, but that is a different fraud topic altogether. 

Here, you will learn about PPP fraud and scams to look out for. The more you know, the better you can protect yourself from loan fraud! 

What Is the Paycheck Protection Program?

In April 2020, the U.S. government established the CARES Act, which was set to provide approximately $349 billion in public loan forgiveness to help small businesses keep people employed.2

“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level,” said SBA Administrator Jovita Carranza. She went on to say, “We remain committed to supporting our nation’s more than 30 million small businesses and their employees so that they can continue to be the fuel for our nation’s economic engine.”

One part of the CARES Act was the Paycheck Protection Program, which provided loans (PPP Loans) for small businesses through the Small Business Administration. As the name suggests, the Paycheck Protection Program helped businesses continue running and retain employees during the pandemic. 

How To Protect Yourself From Scams for PPP Loans

The best way to protect yourself from any kind of potential fraud is to be extremely cautious about where and with whom you share your personal information. Core information you should usually always keep private is your Social Security Number, bank account information (account and routing numbers), your full birthdate, and passwords used for your important financial accounts (bank account, credit card account, etc.). 

IMPORTANT NOTE: The Paycheck Protection Program (PPP) ended on May 31, 2021. So, at this point, any loan offer claiming to be a part of the PPP is most likely a scam. 

It may also be a good idea to become familiar with the different types of loan scams. You will find more information about some common PPP fraud schemes below, as well as how you can protect yourself and your finances against them! 

Common Fraud With PPP Loans

The Consumer Financial Protection Bureau has identified 12 different types of fraud with PPP loans, many of which involve bank fraud. 

Charity Scams

A charity scam involves scammers claiming to be a legitimate charity or collecting funds for a charitable cause with no intention of actually contributing funds toward that cause. Unfortunately, this type of scam becomes increasingly popular during the winter holiday seasons and after natural disasters and emergencies (storms, fires, earthquakes, etc.). 

You may receive these fake charity offers via phone calls, emails, or even text messages. These types of scammers may contact you to give you phony information about a fake charity or pretend to follow up and confirm the information on a donation you did not make. 

To prevent yourself from falling victim to a charity scam, always ask for detailed information before making a donation to any charity you are unfamiliar with. Ask for addresses, phone numbers, and website URLs where you can speak to representatives or perform your own research. 

Debt Collection Scams 

A thief trying to pull off a debt collection scam may contact you to discuss real or made-up debts you may owe. It’s also common for debt collection scammers to try and get your information to pay off debts you have already taken care of. 

If you get a call from someone claiming to be a debt collector and you are either unfamiliar with the debt in question or know you have already paid it off, do not give out any of your personal information (full name, birth date, Social Security Number, etc.). Instead, request a detailed breakdown of your debt. If the person you are speaking to cannot provide that, it may be a scam. 

Debt Settlement and Debt Relief Scams 

Similar to debt collection scams, debt settlement scammers may also contact you regarding real or imaginary debt. However, instead of claiming to collect funding, these scammers will try to convince you they can help lower or eliminate your debt. Dealing with legitimate debt settlement agencies can be risky, and debt settlement scams can be absolutely detrimental to your finances/credit score. 

Some ways to spot debt settlement scammers are if a company claims they can completely eliminate your debt without affecting your credit score or if a company wants to charge you an up-front fee before performing any debt settlement services. There are many legitimate nonprofit credit counseling agencies that provide free services, so you do not have to pay for legitimate credit counseling or advice. 

Foreclosure Relief or Mortgage Loan Modification Scams

Foreclosure is essentially the process of someone’s home or property getting repossessed. Homeowners who default on their mortgage loans or home equity lines of credit risk going through foreclosure. 

Foreclosure relief scammers claim to be able to help homeowners save their property and often ask homeowners to sign the title to their property over. Remember to never sign contracts that you don’t fully understand. Other common signs of foreclosure relief scams are if the “company” asks for payment upfront or if they say they can 100% guarantee a loan modification. 

If you are having trouble making payments on your mortgage or home equity line of credit, there are legitimate steps you can take to try and save your home (the Consumer Financial Protection Bureau suggests finding a HUD-approved housing counseling agency). 

Grandparent Scams

Scammers will stoop so low as to pretend to be a grandchild or relative of an elderly person and ask them for money. These scammers may pretend to be in trouble and request cash, wire transfers, or even gift cards. 

If you have a grandparent or elderly/vulnerable family member or friend, be sure to check up on them and inform them about these types of scams. 

Imposter Scams

Similar to a grandparent scam, an imposter scam involves someone claiming to be a friend/family member or even a person of authority and requesting funding. If you randomly receive a call from someone claiming to be a sheriff, with the local, state, or federal government, or of any other position of authority, be sure to ask for credential confirmation before providing them with any money or personal information. 

Keep in mind that caller ID alone is not a valid form of identification. Scammers can alter their caller ID to appear as a legitimate person of authority or organization. Instead, verify information using badge numbers or other official employment credentials. 

Mail Fraud

Mail scammers will send out letters or flyers asking people to send in money or private personal information in order to get additional money or prizes later. Mail fraud scams can look like legitimate credit card offers, sweepstakes/contest opportunities, or other exciting offers to claim items or services of value. 

To receive more information about mail fraud scams, check out the U.S. Postal Service’s website/resources. 

Money Mule Scams

A mule is a person who transports illegal substances or stolen goods from one place to another. Sometimes, people will willingly partake in this criminal activity and volunteer to be a mule. Other times, scammers will trick unknowing bystanders into being money mules. 

Common forms of money mule scams can look like postings for easy jobs online that promote quick money with little to no effort. If you come across a job listing that seems too good to be true, it might just be. This is why it is so important to research employers and companies when searching for jobs. If a potential employer asks you to send in money or other goods in order to receive employment, this is another red flag sign you may be dealing with a money mule scam.  

Money Transfer or Mobile Payment Services Fraud

If someone you don’t know well or a company you are unfamiliar with asks for your checking account information, debit card information to hack it, or other personal financial data, beware; they may be trying to commit bank fraud or wire fraud. 

Money transfer scams involve someone trying to trick another person into sending money in exchange for an undisclosed prize or service. Furthermore, these scammers may send victims text messages claiming to offer a prize, service, or opportunity they can redeem in exchange for money. While it can be safe to use mobile payment services with trusted friends or family, you should be wary about sending mobile payments to people you do not know well. 

Mortgage Closing Scams

Purchasing a home is often a lengthy and complicated process. Some scammers take advantage of this and target homebuyers who are nearing the closing date on their mortgages. These scammers might try to outright steal the homebuyer’s closing funds or trick them into thinking they need to make additional payments. Mortgage scams may come in the form of emails or phone calls from scammers pretending to be the homebuyer’s real estate agent or a representative from a settlement agency. 

To avoid mortgage scams, be sure to only work with trusted individuals when it comes to drawing up contracts and making payments. 

Lottery or Prize Scams

Lottery or prize scams can involve scammers calling or emailing victims and trying to trick them into thinking they won the lottery, a prize, or a kind of sweepstakes. In this type of scam, the scammer will usually ask the victim for money upfront in order for them to receive their “prize,” claiming it is for tax purposes. 

To protect yourself from prize scams, always ask for the name of the company or organization claiming to offer you a prize and then research them on your own. See if they have a website or other platform that lists their credentials before you accept any kind of prize or payment.

Romance Scams

Romance scams involve scammers trying to manipulate others into falling in love or entering into personal relationships and then asking for money. These scammers will put in the time to get to know their victims and trick them into feeling like they can trust and confide in them. 

Romance scammers work mostly via the internet, which is why it is so important to be cautious about who you share your personal details with. While you should absolutely never share core personal information like your Social Security Number, you should also only share other private information like your address, last name, or birthdate with people you know well and trust. 

How Does the Small Business Administration Handle PPP Fraud?

The U.S. Justice Department’s Criminal Division, specifically the Criminal Division’s Fraud Section, had a whole team of federal prosecutors dedicated to PPP fraud investigations as of September 2022. 

If you believe you have fallen victim to a loan scam, identity theft, or another type of fraud, there are several steps you can take to rectify the situation. They are: 

  • Submit a complaint with the Federal Trade Commission online. 
  • Report the incident to your local police. 
  • File a report with your state attorney general. 

Thoughts From CreditNinja 

Whether it is PPP Loans, bank fraud, personal loan scams, etc., there are ways you can protect yourself. By knowing what to look out for, you can ensure that your finances and personal information are safe. To learn more about loan fraud and other financial scams, check out CreditNinja’s blogs.


  1. Student Loan Forgiveness Scammers Making Thousands With Trick Phone Calls | Newsweek
  2. Acting Assistant Attorney General Brian Rabbitt Delivers Remarks at the PPP Criminal | Justice.Gov
  3. Paycheck Protection Program | U.S. Small Business Administration
  4. What are some common types of scams? | Consumer Financial Protection Bureau
  5. Scams and Your Small Business: A Guide for Business | Federal Trade Commission
  6. Fraud Enforcement Action Press Conference | OPA | Department of Justice
  7. With $349 Billion in Emergency Small Business Capital Cleared | U.S. Small Business Administration
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