The COVID-19 virus crush is upon us at this moment.  Like in 2008 with TARP, the government has invited businesses around the country to apply for CARES Act relief to help survive this pandemic.  But the requirements are unclear, discouraging some would-be applicants wary of much later scrutiny from criminal and False Claims Act prosecutors.  Recklessly disregarding CARES requirements can trigger treble damages, and submitting false statements to obtain government funds may result in criminal penalties.  

Below are three things a business can do today to avoid being pulled into an expensive and disconcerting federal investigation later:

1.  Organize, Print, and Keep A “Reliance” File.  Gather all the articles, FAQs, internet searches, notes, emails, drafts, and other materials you are relying on to prepare your loan application.  Do this at or before you sign any certification, so you have information to demonstrate you thoughtfully considered your eligibility before asking for money.  These “pre-loan” resource materials can become useful evidence later to help explain what you understood at the time you applied for the loan.  It can also help you remember years later if an issue arises.  

2.  Contact Local Funders and Counsel, and Read FAQs.  Obtain hands-on guidance from your local SBA Office or an attorney.  In addition to getting some useful advice, following instructions of government agents can be a defense to government scrutiny, because the False Claims Act includes an element of an intent to act recklessly.  Contemporaneously write down what you are told, by whom, and when the conversation happened.  Agencies also are working hard to issue “Frequently Asked Questions.” If you consult and rely upon funder FAQs, take the same steps to memorialize your reliance. 

3.  Pause, Confirm, and Scrutinize Your Answers.  We all miss details when we act in haste.  Treat the certifications more carefully than the liability waiver you sign before renting skis.  Because signing a recklessly false certification may trigger later government investigations, we recommend you pause for a moment, carefully review the application, ask someone else to double check the contents,  and – most important – be sure your answers tell the whole truth about your business.  

For more information, please contact your Foley relationship partner or the Foley colleagues listed below. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization

Foley has created a multi-disciplinary and multi-jurisdictional team to respond to COVID 19, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form.