Small business owners frustrated over loan forgiveness requirements
NEW ORLEANS, La. (WVUE) - In less than two weeks, many small business owners who received some of the first PPP loans will have to submit to an audit, if they want their loans forgiven.
Small business owners say they can't afford to pay the money back but they're worried, they might have to.
"It was just a lot of sleepless nights, to be honest," said Benjamin Thomas Academy Owner Alicia Winter.
For six weeks, Winter waited for financial relief. If she couldn't get money from the Paycheck Protection Program, Winter says she likely would have had to close permanently.
"We are a small business. We depend on that and if we didn't have it, we would've not been able to re-open. And, a lot of our parents, I mean all of our parents are working parents," said Winter.
Winter had applied for a small business loan when the money first became available. After missing out on first round funds, she opted for a different lender and was approved within 24 hours.
"If I would've known from the beginning, if we were a little bit more educated on the whole process of the PPP, we would've saved a lot of stress for our parents, our teachers and our school," Winter explained.
Yet, financial advisors say that was difficult, even for the professionals.
"As the money was being handed out by the government, bless their heart, it was trying to get that money out as fast as possible. They were also setting the rules and there was a little confusion," said Financial Advisor Mike Martinez.
Mike Martinez has a small investment firm and, working with his CPA, was immediately approved for a loan. But his accountant says it wasn't the kind of government document she was used to reading and the guidelines were unclear. They say it's why the two used the wrong income information to apply.
"Some of us ended up receiving more money than what we were entitled to so, be prepared you're going to have to pay that money back at the end," Martinez explained.
When information was released May 15 about how to have a PPP loan forgiven, many small business owners learned the government's free money wouldn't be as easy a get, requiring detailed schedules and receipts of all expenses and when they were paid. Some were faced with unexpected concerns over staffing, how much they spent or their spending timetable.
"You're desperate," said Winter. "You trust that this is what it's for and now I'm starting to learn there are other regulations so, you might have to end up paying it back, which puts you back in that same situation you were before you had the PPP."
Winter's doors are open for now, her full staff still employed.
Congressional leaders said, just last week, more changes could be coming to the PPP rules, though they would likely make them less restrictive. Martinez advises small business owners to keep a strict schedule of when and how much money was, and should be paid out. Any leftover funds must be returned or the money will be treated as a low-interest loan.
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