Businesses across Louisiana are struggling to reopen. Besides added restrictions on restaurants and other businesses trying to reopen another hurdle, small business owners are stumbling over it the legal details of the Paycheck Protection Program.
The $659 billion PPP loan is a forgivable SBA loan if the business can show it used 75% of the money for employee payroll with the remaining amount limited to rent, interest, or utility expenses.
But navigating the specifics of the loan has shown to not be worth the financial risk for some business owners. One loan caveat is, the borrower has only eight weeks to use the money appropriately to miss out on it being forgiven among other loan restrictions.
Gulf Coast Bank and Trust President Guy Williams joined Newell Normand to explain what business owners need to know before signing the dotted line and answers your questions about the PPP loan.
“It’s interesting because, in government form, there are a couple of little things that you need to be aware of,” said Williams. “There are the documents you need to provide in order to have the loan forgiven and then there is a separate group of documents that you have to maintain but they are not required to submit. So, it is easy to overlook that. You fill out the form and think you are done.”
Williams continues, “One of the challenges, the government has said below two million dollars there is sort of a safe harbor. We are going to take your word for it that you deserve the money, above two million we are going to audit to make sure you maintained the money. Except below two million they still reserve the right to audit selectively, and the Department of Justice reserves their right regardless of SBA guidelines. So, the safe harbor is a good thing but I wouldn’t rely too heavily on it.”
You can hear more from Guy Williams as he answers your questions about the PPP loan by clicking below.