On April 17, 2020, the FTC filed a complaint for a permanent injunction against a Rhode Island company claiming to be affiliated with the U.S. Small Business Association (SBA). The company, which is not an authorized SBA lender, has called small businesses to solicit loan applications and has been advertising itself as a “direct lender” for the Paycheck Protection Program (PPP). The FTC’s complaint alleges that the company violated the FTC Act by engaging in “unfair or deceptive acts or practices in or affecting commerce.”
Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), small businesses are eligible to obtain loans under the PPP. The loans can only be provided by authorized lenders. The Rhode Island company has not been authorized by the SBA, but has been targeting small businesses through direct phone calls, emails, and its website. Employees have called businesses claiming to be an SBA representative to solicit loan applications and its website has an immediate pop-up screen that says “we are a direct lender for the PPP Program.” The SBA issued a cease and desist letter to the company on April 10, 2020, but the company continued its practices. The complaint alleges that small businesses have been financially harmed, as businesses who have applied through the company’s program have not applied for the legitimate SBA program through authorized lenders.