You Took SBA Loan Funds for a Renovation Job You Didn’t Finish—Could You Face Federal Charges in PA?

November 13, 2026

Most contractors focus on getting paid fairly for a project. The source of that compensation is usually not a major concern. Yet if a customer paid you using funds from a U.S. Small Business Administration (SBA) loan and you face allegations of failing to complete the project, you may be the one federal investigators home in on.

While such disputes usually lead to civil lawsuits, disagreements related to SBA-funded projects can lead to the involvement of:

  • The SBA Office of Inspector General
  • The U.S. Department of Justice (DOJ)
  • The Pennsylvania Office of Attorney General (OAG)
  • Certain other authorities who take an unwanted interest in your activities related to the project

If you receive a letter or visit from a state or federal authority, or fear a disagreement could become a criminal matter, call the LLF Law Firm Criminal Defense Team today at 888-535-3686 or contact us online for experienced counsel.

With SBA Loans, Where Is the Line Between a Civil Dispute and a Federal Criminal Matter?

Some of the criminal offenses that may arise from a contractor dispute in Pennsylvania are:

  • Home improvement fraud (under state statute 73 P.S. § 517.8)
  • Theft by failure to make required disposition of funds (under state statute 18 Pa.C.S. § 3927)
  • Wire fraud (under federal statute 18 U.S.C. § 1343)
  • SBA Specific Fraud & Misrepresentation (under federal statute 15 U.S.C. § 645)
  • Theft or Conversion of Government Property (under federal statute 18 U.S.C. § 641)

A wire fraud conviction can result in up to 20 years in prison, and up to 30 years in certain circumstances, such as when a financial institution is affected. Even the “lesser” offenses listed here can warrant a substantial prison sentence under the sentencing guidelines. You can see how serious your situation is and why it makes sense to engage a trustworthy attorney from our team.

The elements of a particular offense will determine whether a civil matter can or will become a criminal matter, but the escalation may be based on one or more allegations that you:

  • Made false statements in interactions with a federal agency or representative (which might be related to a loan application or even an interview with a federal investigator)
  • Knowingly overvalued work to be performed
  • Submitted false or exaggerated invoices or documentation related to the project (or estimates related to the project)
  • Knowingly used federal loan proceeds for purposes other than the renovation project (which may qualify as embezzling or stealing those funds)

Intent and awareness are critical considerations in most of these and other criminal allegations that might arise from an SBA-related construction dispute. Even if a contractor’s conduct was imperfect in some way, disputing their intent to engage in or awareness of impermissible conduct may be a compelling defense strategy.

Have You Had a Hair-Raising Contact About an SBA Loan? You’re at Significant Risk Now.

In hindsight, contractors often see that a life-changing criminal prosecution began with a development they initially thought was harmless or even routine. The trigger might be:

  • A customer complaint to a state authority, like the Pennsylvania OAG’s Bureau of Consumer Protection
  • A complaint to a federal authority, like the SBA OIG Fraud Hotline or the National Center for Disaster Fraud (NCDF) tip line
  • An audit conducted by the financial institution that issued the SBA-backed loan
  • A flag raised by the SBA OIG’s automatic monitoring systems

If you have received a letter, call, visit, or discovered any other reason to be concerned about a potential criminal matter related to an SBA loan, you should prepare for a possible federal criminal defense now.

Keep in mind that you may face a clear and present risk of a potentially non-criminal matter becoming a criminal matter. One particular criminal charge—False Statements to a Federal Agency (18 U.S.C. § 1001)—may be used to justify a federal criminal prosecution even if you’re deemed innocent of the matter the agency was investigating you for.

Do not try to “explain” what happened to any investigator. Do not try to “settle the issue” with a client. Put your trust in an experienced attorney, as your freedom may depend on it. Call the LLF Law Firm Criminal Defense Team today at 888-535-3686 or contact us online for time-sensitive advice and counsel, should you require either.

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