In the world of money, you have to be very careful with every decision that you make to ensure that you do not accidentally commit fraud. This is incredibly important when it comes to lending money in the form of loans and grants.
When it comes to grants and loans, avoiding committing fraud is incredibly important, because a lot of the loans and grants offered in the USA are federally funded. This means that you would be completing federal loan fraud if you were to fraudulently apply for a loan.
If you knowingly commit fraud in order to obtain an SBA grant, then you will face criminal consequences. This fraud could be as simple as supplying incorrect information in order to qualify, or it could be something a lot more deviant. Either way, you are breaking the law, and you will face charges.
In this guide, we’ll be taking a look at how you could complete SBA grant fraud, and what would happen if you were caught. So to find out more, keep on reading.
What Is An SBA Grant?
Before we take a look at what SBA grant fraud is, let’s first take a look at what an SBA grant is. ‘SBA’ stands for ‘Small Business Administration’ and this is a US Government backed federal agency that was set up in the 1950s to provide support, both financially and through knowledge, to small businesses.
The agency still exists today, and offers a variety of different loans and grants for small businesses. These are known as SBA grants.
To offer these loans, the SBA works with banks and lenders to make loans more achievable for small businesses. The money is not supplied by the SBA, if your SBA loan application is successful, then you will receive the money from the bank. But, the money is guaranteed by the SBA, so the bank will be at less risk when they accept your loan application.
There are quite a few different loans guaranteed by the SBA, but one of the most popular is the SBA 7(a) loan.
What Is Loan Fraud?
Now, let’s take a quick look at what loan fraud is. Compared to some other types of fraud, loan fraud is one of the easiest to complete, and this is why it is possible to unknowingly complete loan fraud.
When you apply for a loan, then you will notice that most agencies do not require a lot of information from you as the applicant. This means that it is fairly easy to enter incorrect information in the application process.
A lot of lenders, especially pay-day lenders, will not verify this information, they will simply hand out the loan. If you have entered incorrect information, then you will have completed loan fraud.
SBA grant fraud is a little more difficult to complete. If you have applied for an SBA loan, then you will know that it is a long and tedious process, and that you have to supply a lot of information about yourself and your business.
Despite this, some people will still complete SBA loan fraud, but they will do so knowingly. This could include fabricating a fake business and applying for loans for said business, or fabricating fake statements in order to be accepted for an SBA loan.
Can You Go To Jail For SBA Grant Fraud?
White-collar crime is no joke, and in a lot of cases it carries a higher penalty than other types of crime. Due to this, it is possible that you could go to jail for committing SBA grant fraud. But, in order for this to happen, a prosecutor will have to prove beyond a reasonable doubt that you completed this fraud knowingly or willingly.
If it cannot be proven that you knew you were committing SBA grant fraud, then it is unlikely that you will be prosecuted. You cannot be charged for an innocent mistake. But, if it can be proven that you faked figures on material supplied in your application, for example faking payroll figures or inflating value, then you could be found guilty of SBA grant fraud.
But, even if you are found guilty of committing SBA fraud, you will not necessarily go to jail. There are some other penalties for this crime. So, let’s take a look at what they are.
What Are The Penalties For SBA Loan Fraud?
If it is suggested that you have committed fraudulent activities in relation to SBA loans, then it is likely that criminal charges will be sought for one of the following penalties:
- False statements to the SBA
- False statements in a loan application
- False statements to a federal agency
- Bank fraud
All of these different charges come with different penalties. So, if you are found guilty of any of the above, the consequences will differ. Let’s take a look at the penalties which you could face.
- False Statements to the SBA: Should you be found guilty of making false statements to the SBA (regarding collateral, personal information, etc.), then you have committed a 2-year felony and will be subjected to a fine of up to $5,000.
- False Statements in a Loan Application: Providing false information in order to obtain a bank loan is a serious offense. This carries potential penalties including a fine up to $1,000,000 and up to 30 years incarceration in jail.
- False Statements to a Federal Agency: If there are material statements to prove your fraud, then this is likely what you will be found guilty of. A conviction of this crime will result in a maximum penalty of 5 years incarceration, or a fine of up to $250,000.
- Bank Fraud: Finally, bank fraud is another serious crime, and it carries big penalties. This includes a fine of up to $1,000,000 and up to 30 years incarceration, the same penalties as ‘false statements in a loan application’.
In short, yes, you can go to jail for SBA grant fraud. But, the penalty that you face will depend on the exact crime which you are found guilty of. In this guide, we have taken a look at the possible punishments that you could face if you commit SBA grant fraud.