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VALLEY — The City of Valley is sending out letters on Tuesday to anyone in the city who received a federal Paycheck Protection Program (PPP) loan but did not pay for a business license in the city.

“We have been working on this for several weeks now,” Mayor Leonard Riley said at Monday’s city council meeting.

PPP loans are being administered by the Small Business Administration (SBA) and were designed to keep a workforce employed during the COVID-19 crisis. It has been a very beneficial program for legitimate businesses and their employees. However, there’s also some level of fraud.

With so many of these loans being requested, some phantom businesses with no payroll to maintain have been approved for loans. Some PPP loans have been forgiven. This came from the first phase of the program in 2020. A second round that went into effect in January and February of this year is coming up for forgiveness, provided certain terms have been met.

Riley said that some accounts have been locked up pending an investigation. Any information the city uncovers on what does not look like a legitimate business will be turned over to the appropriate federal authorities.

Any legitimate business operating in the City of Valley should have a city business license. Anyone who got a PPP loan in Valley but does not have such a business will have some explaining to do.

“If anyone got free money, they have defrauded the government,” Riley said. “We don’t think that should happen.”

The COVID-19 relief bill that was signed into law in December had $325 billion in relief for small businesses that had been struggling due to pandemic-induced economic hardships. A total of $284 billion of that amount went to the SBA for PPP forgivable small business loans. Businesses that had 300 or fewer employees were eligible.