Companies that are thinking about repaying their loans ought to make their decisions prior to May 7, because as a Bryan Cave blog points out, FAQ #31 provides a safe harbor for companies that repay their loans by that date. The blog also addresses the liabilities that companies may face if they received a PPP loan to which they weren’t entitled — and the risk that employees may blow the whistle:
In addition to the risk of governmental regulatory or enforcement action, impacted companies and lenders may face other litigation and reputation risk. Companies may wish to consider whether their employees may believe that other sources of funding were available and may raise those concerns internally and externally as purported whistleblowers, possibly resulting in assertion of False Claims Act claims.
Of course, one of the fun things about the False Claims Act is that it provides for treble damages. The blog says that companies may also face reputational scrutiny and adverse impact on business performance, particularly if Treasury and the SBA publish borrower information — which the Fed has already announced that it will do under its CARES Act lending programs.
-John Jenkins, TheCorporateCounsel.net April 24, 2020
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