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How to Spot and Avoid Paycheck Protection Program Scams

Reading time: 4 Minutes

April 28th, 2020

For Hawaii small businesses struggling to stay afloat during the COVID-19 pandemic, the federal Paycheck Protection Program has provided some amount of much-needed relief in the form of low-interest loans. Unfortunately, the program has also inspired a new wave of scams. Here's what you need to know to protect yourself and your business.

What is the Paycheck Protection Program?

The Paycheck Protection Program was established as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, the massive coronavirus relief bill passed by Congress. Under the program, small businesses, and some larger businesses, apply for forgivable loans from the Small Business Administration to cover payroll and other costs.

Businesses and nonprofits with fewer than 500 employees are eligible, including sole proprietors and independent contractors. And some businesses with more than 500 employees may also qualify, including hotel and food service, and franchises.

Qualifying businesses can receive a PPP loan to help cover their average monthly payroll costs, and all or part of the loan could be forgiven if you meet certain requirements, including keeping all your employees on payroll for eight weeks, or rehiring them by June 30, 2020.

As of April 28, 2020, the federal funds for the PPP have been renewed and the SBA is once again accepting applications through participating lenders. It remains to be seen, however, how long these funds will last before being exhausted.

Types of PPP Scams

There are several ways scammers are trying to take advantage of the Paycheck Protection Program to steal money or information. Here are some common scams:

Imposter Calls (or Vishing)

With imposter calls, scammers may claim to be calling you from the SBA, and ask for your personal information or private business information to help you apply for a loan or “verify" your application. They can then use this information for identity theft, such as applying for a loan under your name—which you'd then be responsible for repaying.

The SBA doesn't initiate contact with businesses or invite them to apply for the PPP, so if you receive a solicitation from someone who claims they're calling from the agency, it's fraud. All PPP applications must be made through a participating lender—you can find one near you using this official SBA search tool.

Fake Fees

Some scammers may contact you and claim that you need to pay a fee to apply for an SBA loan, or that you can get the money sooner if you pay a fee to fast-track the application. In other cases, scammers may offer you a high-interest bridge loan as an “advance" until the SBA loan comes through.

Remember that, under the Payroll Protection Program, you can only get a loan through a certified, participating lender, like a bank or credit union, and that there's no fast-track process that lets some people access the money sooner than others. And the SBA doesn't charge any fees to apply for the loan.


With phishing scams, you get an email that appears to be coming from the SBA, but is actually coming from scammers. When you click on a link in the email or download an attachment, it installs ransomware or malware onto your computer and steals sensitive information. Remember that anyone can copy the SBA logo and paste it into an email, so just because you see the logo doesn't mean it's coming from the government or that the information in the email is correct.

Tips for Avoiding Scams

Follow these tips to avoid a potentially costly PPP scam:

  • Never give out sensitive personal information to someone who calls you out of the blue, no matter who they claim to be.
  • Don't agree to pay any fees to apply for an SBA loan.
  • If you're applying for the Paycheck Protection Program, stick with the SBA's list of authorized lenders.
  • If someone contacts you and claims they can fast-track your loan or get you the money faster, hang up—it's a scam.
  • If you receive an email from the lender you applied with about your loan, double check to make sure that the application number referenced in the email matches your actual application number.
  • Check the sender's address on any emails you receive. Real emails from the SBA will come from an email address ending in
  • Don't click links or download attachments in an unfamiliar email. Instead, go directly to the SBA website for information.
  • Report suspected scams to the SBA's hotline at 1-800-767-0385, or file a complaint online.

It's not unusual for scammers to try to take advantage of people and businesses during a crisis. Fortunately, there are things you can do to protect yourself. By being prepared with information and using some common sense, you can avoid Payroll Protection Program scams and help your business avoid a costly mistake.

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