On December 22, 2020 Congress passed the stimulus bill which provides for new Paycheck Protection Program loans and other small business relief. Read more about that legislation and apply for a PPP loan here.
This article was updated June 5, 2020 to reflect changes in the Paycheck Protection Program Flexibility Act of 2020.
The Paycheck Protection Program (PPP) offers a loan that may be completely forgiven if funds are spent correctly—mainly on payroll. Some small businesses have applied for it as a lifeline only to discover it’s not the perfect fit for their business and may want to return their PPP loan.
Here are 5 reasons you may want to pay back your PPP loan right away:
1. You Won’t Likely Qualify for Forgiveness
One of the main appeals of the PPP is that the loan may be forgiven in full if proceeds are used properly. But the rules around PPP forgiveness are confusing and there are many remaining questions the SBA and Treasury have yet to answer.
Here’s a comment a business owner named Jackie shared on the Nav blog:
“I have received the ppp loan. As a school-age childcare provider, the business was shut down. I applied for the loan and advised my staff to sign up for unemployment while the loan process moved slowly forward. Now, I have the loan and many of my employees are receiving a $600.00 increment which allows them to collect more than if I pay them as usual. The school year has ended and I will not be hiring back until September.”
Some employers will discover they do not qualify for forgiveness and will instead be taking out a loan. While a 1% interest rate on any balance is attractive, the loans carry a two-year repayment period (five years for loans made after June 5, 2020), and in this period of economic uncertainty many business owners are wary about taking on debt. Returning the funds may feel like a safer option.
Update: The PPP Flexibility Act which became law on June 5 2020 makes it easier to obtain forgiveness. It gives employers up to 24 weeks to spend funds and still be eligible for forgiveness. It also allows employers to avoid a reduction in forgiveness in certain circumstances, including if they are “able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID– 19.”
2. You May Lose Employees Anyway
The primary purpose of PPP is to help employers keep employees on their payroll so they can be ready to return to work when business resumes. But some employers are finding that difficult to achieve, due to financial concerns, health concerns or both.
Traci shared her dilemma in response to a Nav article about PPP loans:
“My employees are all part time – and with the PUA and unemployment, they are making double being on this assistance. I was just approved for a PPP loan and no one wants to come back to work. What do I do? HELP!”
Some employers have reported their employees stand to make more through Pandemic Unemployment Assistance than they would if hired back and paid using PPP funds. Other employees are afraid to come back into a workplace where they may be exposed to coronavirus.
And of course some workplaces are closed, or business is so slow that employers can’t find meaningful work for their employees to do anyway. It’s confusing and frustrating to employers to pay their workers not to work, or to try to find something for them to do.
If you offer employees their job back but they don’t accept the offer to come back to work, they may lose unemployment benefits. (Note they may qualify for Pandemic Unemployment Assistance under specific circumstances, even if they do not return to work.) Even if you do bring them back and they are making less money than they would have on unemployment, they may be resentful enough to look for another job in the future. It’s a tough decision many employers are facing— especially those with lower-wage employees.
3. You’d Rather Get the Employee Retention Tax Credit
In addition to other programs, the CARES Act created the Employee Payroll Retention Tax Credit. Employers whose operations were fully or partially suspended due to government orders, or who experienced a major decline in receipts, may be eligible for a employee retention tax credit against Social Security wages for up to 50% of $10,000 in qualified wages (including health plan expenses) paid after March 12, 2020 and before January 1, 2021.
Eligible employers can get immediate access to the Employee Retention Credit (ERC) by reducing employment tax deposits they are otherwise required to make or even get an advance payment from the IRS if the employer’s employment tax deposits are not sufficient to cover the credit.
But employers can’t get both a forgivable PPP and this tax credit. Some employers who applied weren’t aware of the Employee Retention Credit, or didn’t discuss the two options with their accounting professional before they applied for PPP.
In its latest guidance Treasury has stated:
“An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020 – note: later updated to May 18, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.”
If you have any questions about the ERC and whether it is a better fit for your business, now is the time to consult your accounting professional.
Update: The PPP Flexibility Act permits employers and the self-employed that received a PPP loan to also qualify for payroll tax deferment. This allows employers to defer the deposit and payment of the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes. (This is different than the Employee Retention Tax Credit.)
4. You Aren’t Sure Your Business Will Survive
A survey by Thryv and America’s SBDC found that slightly over half of business owners surveyed said they were likely to recover completely or 75% of their business one year from now and 7% do not think they will survive at all.
“My restaurant was just notified we did receive the PPP today but our lease is over July 1st and we need to relocate the restaurant. We are not sure when we will be able to open for sure. Should we not take the PPP loan offered? We are not sure what to do because we can’t start using it right away for 8 weeks in a row.” – Jennifer
If you cannot qualify for forgiveness, it might make more sense to return your PPP loan, rather than wind up with additional debt. Granted, it’s a pretty attractive loan. Unlike other SBA loans, PPP loans carry no personal guarantee, no collateral is required, and are non-recourse loans if the funds are used for authorized purposes. (See The CARES Act section 1102.)
But what if you never reopen your business and can’t or don’t repay a portion of the balance in authorized ways: could you be on the hook personally for that balance? It seems entirely possible. Even if you aren’t, defaulting on a federal loan of any type is serious business. At a minimum, it typically means you aren’t eligible for any other federal loans for at least several years.
5. You Didn’t Really Need the Funds
When applying for PPP, the CARES Act requires borrowers to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Initially that didn’t seem to be a huge deterrent as most businesses are facing economic uncertainty, but after a backlash due to a number of publicly traded businesses who obtained PPP loans, the SBA has indicated it will audit businesses that received more than $2 million in funding in addition to “other loans as appropriate.”
What are they looking for? According to Treasury guidance:
Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification…
In the Interim Final Rule published in the Federal Register on June 1, 2020, Treasury and the SBA stated loans of any size may be reviewed by the SBA. Specifically it says:
For a PPP loan of any size, SBA may undertake a review at any time, at SBA’s discretion. For example, SBA may review a loan if the loan documentation submitted to SBA by the lender or any other information indicates that the borrower may be ineligible for a PPP loan, or may be ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower.
And it goes on to say:
If SBA determines that a borrower is ineligible for the PPP loan, SBA will direct the lender to deny the loan forgiveness application. Further, if SBA determines that the borrower is ineligible for the loan amount or loan forgiveness amount claimed by the borrower, SBA will direct the lender to deny the loan forgiveness application in whole or in part, as appropriate. SBA may also seek repayment of the outstanding PPP loan balance or pursue other available remedies.
6. You Applied Fraudulently
If you saw this program as a gold rush of free money and decided to take advantage of it by filing a false application, you may be in trouble. Investigations are already starting. The Justice Department has announced it has charged two businessmen in the District of Rhode Island with allegedly filing bank loan applications fraudulently seeking more than a half-million dollars in PPP loans. If you applied fraudulently you’ll likely want to return the funds— and call a lawyer.
How To Return PPP Funds
If you have already received PPP funds and changed your mind, talk with your lender. There is no prepayment penalty if you pay back one of these loans early though interest will accrue.
This article was originally written on May 8, 2020 and updated on January 20, 2021.
Thank you for all of the information. My husband received a small PPP loan and can easily prove it was used for payroll. The problem is he was trying to be super responsible so he repaid it before we found out it could be forgiven. The lender (and SBA) are now telling my husband the only reason they won’t forgive the loan is because it’s been repaid. Do you know if he has any recourse? Thank you.
It would be wise to check with the SBA. This is not a question we’ve received before and we hadn’t seen guidance for it.
Worng ppp loan amount change my mind rule changes a lot last of forced. I can’t find my lender
Lorenzo – If you can’t reach your lender I suggest you contact the SBA. It may not be easy to get the information you need but that’s the next step.
If u are approved. But u haven’t sent in the paperwork and have changed your mind about getting it what should u do
If you do not complete the paperwork you are not likely to get funding. Not sure if you are talking about EIDL or PPP but you can also talk to the lender (in the case of EIDL that’s the SBA).
I got a PPP loan and no it won’t be forgiven because my lender says I should not have been approved because I had a negative on line 31 ! I used that money to pay my rent and until while my shop was closed for five months what was I approved ifi didn’t qualify for this loan! I also recently received the second draw based off the same information I don’t understand this at all .
Tracie – I’d recommend you try contacting your local SBA office to see if you can find someone to help.
What do I do if I can’t get a hold of the lender and I really need to talk with someone. Can the SBA really provide guidance and acknowledge efforts to return the money?
Carmen – I do not have a simple answer for you unfortunately. It’s worth at least trying to talk to the SBA if you can’t reach anyone at the lender.
I USED THE MONEY TO HET MY BUSINESS BACK UP AND RUNNING I JAVE TO BUY BEDS AND MOVE TO A PLACE THAT WASNT UP STAIRS IN ORDER TO START GETTING CLIENTS BACK WHAT DO I HAVE TO DO TO START PAYING MY LOAN BACK
This article talks about how to repay your PPP or EIDL.
Call Bank that funds were delivered to and ask for a reversal. They will send funds back within 6 days as long as funds are still available in the account
They did me the same way now I got to get in touch with the Lender in the morning
Hello do you know if I return the funds, will be information will be removed off the ppp public records list ? I don’t like that my address is on there. Scared that my abusive ex will find me
That’s a great question. I don’t know the answer. I’d suggest you contact your local SBA office to see if they can help.
My lender is not answering.. how do I return? My lender,blueacorn or sba?
Monica – The SBA says you must repay your lender. Lenders are likely still overwhelmed with PPP applications. But if you can’t get them to respond you may want to try reaching out to your local SBA office to see if they have suggestions on how to proceed.
Will the sba loan affect my child ssi
I don’t know the answer unfortunately.
Can you get a ppp loan to start a business in 2021
Janie – PPP is not a startup business loan.
my ppp loan was approved and later my funding instructions was marked off fromm the green mark what do i do now i need help
Anita – You will need to reach out to your lender.
What if someone received a ppp loan, and used the money to actually start a business. Is that considered fraud? Should they have returned the money? Will they receive jail time or get the option to pay the money back?
Shae – I don’t know how the SBA will handle that but I would recommend you get legal advice. This article describes some of the actions being taken by the Department of Justice for PPP fraud.
If u are approved. But u haven’t sent in the paperwork and have changed your mind about getting it what should u do
I received an PPP loan and don’t need it. I have been trying to reach my lender since March and no luck! Is there away I can give back my PPP loan to Treasury Dept without lender?
Shonte – I am not aware of a mechanism that would allow you to do that directly. We’ve written an article on this topic. Please reach out to your local SBA office. Perhaps they can advise.
Update did u make return
Shonte, did you ever get in contact with your lender to return funds?
So my freind lied and told me the ppp loan was to start a business , I did research and it was the opposite, the money hit my bank account and he took 5k already now I’m scared cuz I don’t wanna get in trouble
Henny, My best advice is for you to talk with an attorney familiar with these programs asap. PPP fraud is a serious offense. Make sure you block this person from taking any more of those funds.
Henny,
Did you ever figure out about your ppp loan? Curious as to I was put in the same situation. Hit my account but needing to know how to send back.
Have you read this article Mindy? You must pay it back through your lender.
So my application was approved and I received the money in my account and a week later the bank refund my money back to River Crossing today, why is that? I’m a baker. It’s the weekend so I can’t find out
I’m sorry we don’t know. You’ll have to reach out to your lender to find out.
Suk I’m cuz did you get to talk with a leaner if so what happened cause im having the same problem Please help
How do I return ppp loan back ? It has not hit my account yet and I have change my mind because I didn’t fully understand what it was for I was told all I need was a bank account and I can get a loan well I don’t know how to stop the money from coming and the person that did my loan want help me out at all I think all they want is money . I am on social security and I’m not trying to mess up my life I have kids
You must work with your lender to decline it. If the funds are approved and disbursed you can pay it back to the lender immediately. But only the lender you are working with can help you here; the SBA does not make PPP loans or collect payments on PPP. We wrote this article that may help.
I’m having the same problem asRose
Rose did u find out how to stop it ?
I just called my bank and they sent the money back to the lender.
So when i call my bank to send it back it’ll be cleared? Or do i still have to contact the lender?
Matthew – I am not sure. I would encourage you to talk with your lender as well.
Did the lender accept the funds back
This happened to me as well and the lender has no contact information to return it. My application was submitted by a third party person and they lied of the details. I am not trying to get in any legal trouble. What can I do? I don’t mind returning the money and I spent some on actual business product and needs.
Melanie – What a tough situation! I’m sorry to hear it. I would recommend you reach out to your local SBA office and see if they can help you.
Did you ever get in touch with your lender to send funds back?
So just got my ppp loan as a independent contractor and spent half the money on rent? I want to return it rest of the funds from it and make payments of what I’ve spent. I misunderstood the guidelines and put misinformation and did my best to understand the guidelines. I thought honestly wouldn’t get approved but I did and now I want to return it and make it right because i honestly made a mistake and thought this would help me paying my rent of almost 9,000 in debt? What can I do? I don’t want to get into legal trouble?
Adam – before you return it I’d encourage you to learn more about the program and get advice. I am certainly not trying in this article to scare off business owners who qualify and can legitimately use the funds. If you qualify this funding may be help your business survive these challenging times.
Using it for rent it’s necessarily a problem; however, a portion of the loan may not be forgiven. In addition, if you are self employed as an independent contractor you likely filed Schedule C. In that case you can get owner’s compensation forgiven (which may be the full loan amount), and then you can use your compensation to pay necessary expenses. That loan may still be entirely forgivable.
This article describes some places to get help with your PPP loan. I’d suggest you get some advice– it’s enough money that it may be well worth it.
I’m a sole proprietor who just received a PPP loan for $5K two weeks ago. After realizing the rules and risk of using this loan, decided to return it and pay the small interest two weeks later. Am I still going to get audited?
Of course I can’t speak for the SBA but unless fraud was involved it doesn’t seem likely. There may be some spot checks of smaller loans obtained using gross income (instead of net profit) however.
I applied for a ppp loan and it was approved I changed my mind the funds were never disbursed into my bank account what can I do. I should be good as I never received the funds
Ashley – I would still recommend you try to reach the lender that approved you for the PPP loan to make sure it is cancelled so you don’t run into any issues down the line.
How you return it
Hi which lender did you use and how do I return mine please.
Good morning, I applied for a PPP loan as a sole proprietor. I wasn’t going to, but the last few weeks I saw that they wanted more sole proprietors to apply and they were trying to use the funds, especially for businesses run by women. I was out with Covid for a few weeks and have only just gotten back to earning money since October. Now that things are back up and running, I don’t need it – but I was figuring it could be used for lost income over the time I had COVID. After reading this, I may just not accept it (I haven’t received it yet) but wondered your thoughts.
Hi Jen – If you lost income due to covid it seems you would meet the reasoning for the loan – to keep people (including sole proprietors) on payroll…? But it’s an individual decision and I don’t feel comfortable advising one way or the other.
ok, i just got funds in my account for the ppp loan but i am collecting unemployment benefits, i was just made aware that i can not get a ppp loan and collect unemployment at the same time, if i contact the lender and return the ppp loan (which i have not used a dime of) am i alright with still collecting unemployment? i don’t want to cheat the government and i certainly don’t want to get in trouble, so, would returning the ppp loan set everything right again? on the other hand , if i keep the loan with the intention that it is a loan and i will pay it back, would it affect my unemployment benefits i am currently collecting? thanks joe
Joseph – The only specific guidance we’ve seen here is a sentence or two that says that PPP can affect unemployment benefits. We don’t have any detailed information on that unfortunately. You can try seeing if your state unemployment agency has published anything about it, or reach out to them (if you’re in a state where you can get through to them!) This article may be helpful to you.
Hey Joseph
I have the same issue did u find out anything
I got approved for my PPP loan it was deposited in the wrong bank account of mines and my bank has returned the money back to them, I cannot get in touch with my bank loaner to have them the correct it so they can deposit it in the right account what do I do help please!!
Tiffani – I wish I had an answer for you (!) but you’re going to have to deal with the PPP lender. You need them to resolve it – I don’t know anyone else who can unfortunately.
My father has a business and has around 50-60 employees. His lender (Frost Bank) called and told him they strongly recommended my dad apply for the loan. My dad applied on 2 separate occasions and received a total of 500k. He is worried about using funds and not having money to payback the loan. He has had numerous of employees test positive for covid-19 and have had to quarantine for 2 weeks but he has given them 100% pay on their leave. Would this mean that he is more likely to qualify for the forgiveness since he is keeping employees and paying them while on quarantine due to Covid-19?
Keeping employees on payroll is the goal of this program and can him with forgiveness. He should understand that it isn’t necessarily all or nothing. He may qualify for partial forgiveness, for example.
Two suggestions Maggie: 1. Is he talking with his accountant to make sure he’s spending the money properly? 2. The SBA has released a comprehensive guide to forgiveness that I’d recommend he or whomever is helping him with the loan spending read. It seems a bit long, but if he maximizes forgiveness that’s free money for his business. (The Table of Contents starts on page 9 and what’s before is background.) If he doesn’t, it’s a 1% loan that he can pay back over 2 or 5 years (depending on when he got it) or just pay back.
I received a PPP loan in April 2020 for our S-Corp small business. It is just my wife and I working for the company and uncertainty at that time drove us to apply for the loan.
Although we applied the proceeds accordingly, it has become apparent that we could have survived without the loan. I do not want to apply for forgiveness now, but now my banker is telling me “The forgiveness is part of the program…it is locked in”. I would like to keep the loan and just start making payments when required (Around August 2021 I think) for the two year period. Am I missing something? I don’t have to apply for forgiveness?
Lenders don’t want to keep these loans on their books so I am not surprised by that reaction. But I’m not aware of a requirement to apply for forgiveness. I’m not sure what to suggest given the lender is telling you that you must apply for forgiveness.
Ok I know someone who got the pop loan and didn’t really know that if u on social security your benefits might get cut off. He’s 75 years old. What can he do. Please tell me what to do to help him. He will be homeless . This is his only income.
Sheila – I don’t have any expertise on this issue. You may want to help him contact his local SBA office for assistance. Another option would be to help him reach out to his elected officials in Washington (Representative, Senators). They have staff members who provide constituents with assistance with government programs and they may be able to help.
How can I return the loan no one picking up my calls?
Are you talking about your PPP loan? Your lender is not answering calls I assume?
I received ppp loan as one owner and no employee in 6/24/20 and also working with a group home and due to my age and covid19 I have to file for unemployment in May and did not received until September 1st, so does it have to have anything to do with the ppp, do you think I should return the ppp which I really want to return. I called my lender but they never get back to me. My business as a delivery is not that making it and will not need the ppp money. Help
We just wrote an article that may be helpful: How to Pay Back an EIDL or PPP Loan
If i applied for the ppp loan n got approved, got the money sent to my acct, n hadn’t used it, then applied for self employed unemployment, n receive 4 checks… n got the ppp money taken out of my acct, can I stop my unemployment n applied again for the ppp instead?
Currently you cannot get another PPP loan unfortunately.
When it says rent mortgage and utilities is tht also referring to personal utilities an mortgage. We don’t have a legit business just yet but we sell plates from our home do we qualify
No – they must be business expenses not personal.
My friend on Friday applied for the PPP. Today, Saturday after reading the documents she feels she made a mistake. The bank told her they had to submit her application to Sba, but they were sure she would qualify. She is an independent contractor. Can she return to the bank on Monday and cancel the loan request even though she signed the document?
I did nt use my ppp and I want to return the whole amount. But my lender is not helping me returning the ppp .and I dnt know how to and where to return it .please. help me what do I do .
Arun – I am not sure what to advise as you are supposed to contact the lender who gave you your loan. The best thing I can suggest is to try contacting your regional SBA office. You can find them here.
hello,
I want to know how I can return all my ppp loan money.
Yes, here is the article I wrote about returning PPP. You must contact your lender who gave you PPP.
I received a deposit in my account for 10, 000 dollars. I did not apply for a loan like this and do not have a business. I am trying to contact SBA and find out how and why it was deposited. Who do I return this money to in full. It is not for me.
It sounds like EIDL and may be fraud or a mistake Bessie. I’d recommend you contact the SBA Economic Injury Disaster Loan hotline 800-659-2955 or email disastercustomerservice@sba.gov.
I work Wednesday through Sunday i was saked by employer to work on Monday my day off because the employee that works that shift is on 14 day quarantine i was not on the clock it was to be paid in cash at the end of the day my employer said that since he was paying part of my wages with ppp that the hours i worked went towards the wages he was paying with the ppp loan how is that right?
TT – This is a wage issue. PPP doesn’t address it. I recommend you contact your state labor department or the federal Department of Labor.
I am an employee of a business that, due to the recent unexpected death of its young founder/owner I am in a position to purchase the company, and would do if I could obtain a PPP loan under the latest guidelines. Can I do a pro forms application to determine the likelihood that I would qualify. The company lost about a 3rd of its workforce as a result of the economic slowdown but I can see the need to immediately add employees back to close to or over the previous level.
Who can I approach for an expert opinion?
Thank you so much. rjs
I received the PPP loan but after getting the money on my business bank account, my bank told me that the bank that gave me the loan is asking the money back and they comply, but I already use some funds, what should I do now ?
We applied a few months back. We assumed that we were not approved for the loan because we never heard anything. Now we notice there was a deposit into our account for $6000. We have never received any communication, and we don’t know who to contact to pay the loan back. The deposit came from the treasury. Any suggestions?
This sounds like it could be an EIDL grant. Have you tried contacting the SBA? You can read out to the Economic Injury Disaster Loan at 800-659-2955 or email disastercustomerservice@sba.gov.
I applied for the PPP loan but I was approved for unemployment well before the loan was distributed to me. By the time I received the funds, I was already collecting unemployment and continued to do so until returning to work on the 22nd of June. My question is now that I’m back at work, am I able to distribute the payroll portion of the funds to myself because due to restrictions, I’m only able to see approximately half of my clients per day that I saw prior to the shutdown. Although I worked all week, I haven’t distributed any of the income to myself as payroll because it’s all going to bills to catch up.
Hi I have applied for a ppp loan to keep my cleaning business up and running during this pandemic and hard times we all experiencing. I also got approved and even received an email saying the funds will be deposited in 2-3 business days to my account. Anyway my bank account was closed on that same day due to monthly fees I was charge and NSF fees. So my question is what happens next?how do I receive that money? Do I get a check in the mail? Can I reroute or redirect it to a different account or open new account? because I really need the funds to keep business open.
The PPP loan funds come from the lender who approved you. You’ll need to check with them to find out what your options are. I’m sorry I can’t be of more help.
I applied for the ppp as a sole proprietor and unemployment was terrible and didn’t come through/ but they both came at around the same time but I would rather have unemployment than the ppp. My question is: Can you just use the loan for other things (not payroll) and pay it back (if you pay it back do they care what you use it on, I want to make sure to do it right) or should I give it back since I’m getting unemployment finally? (Id rather have unemployment)
Deejay – We haven’t seen specific guidance on this but EIDL can be used for expenses other than payroll. We’d recommend checking with your state unemployment agency.
Hello I have received the SBA Covid relief, I’m a sole owner, no employee, but after clearly looking through this, I don’t think I need the loan, can I return it?
Yes. We wrote this article about that.
Hi. I am self employed in a LLC Partnership. Our business had to shut down due to covid. I applied for and eventually received an eidl loan. I also applied for and eventually received unemployment dating back to mid march. I’m still receiving unemployment as we haven’t been able to open back up yet. My accountant said we could also qualify for PPP loan so I just applied today June 25th for that. Obviously I would have to stop unemployment if I receive PPP loan. My question is will unemployment come back and say they want money back if and when they find out I accept PPP finding, even if I stop unemployment at the time I receive PPP funds? Thanks.
We aren’t aware of any rules that require you to return unemployment for the period prior to when you received PPP. You can check with your unemployment office to clarify.
We were approved for our loan, and received our loan, but our business actually soared thru this crisis (actually surpassed last year’s sales). We have ten employees, and actually hired another (didn’t lay anyone off). Am I required to pay back the loan?
Jose – I would recommend you consult an attorney to make the right decision given the circumstances.
Hello Gerri!
I have a problem with the PPP loan and I didn’t realize I couldn’t get unemployment also. I’ve already paid myself for the PPP loan as a sole proprietor but I found out you cant have both.
I haven’t received money from Unemployment yet. I’m a travel agent and I know that the business is so slow and cancelling cruises up to Sept and beyond. Can I give back the PPP loan?
Is the PPP loan a one time thing? My loan officer is no help! I do use a schedule C
Paula, there is no prepayment penalty if you want to pay back the PPP loan early.
The guidance has been extremely sketchy on PPP versus unemployment. My guess is that if you took a PPP loan and paid it back right away and didn’t use it for payroll then you don’t have to report that as income. But that’s my guess – I can’t point to any guidance and I’m not an unemployment expert.
I’d imagine your loan officer is dealing with the same limited guidance as everyone else. (Unemployment versus PPP versus EIDL is one area where I feel they have not done a good job delivering helpful guidance.)
I want of give my ppp loan back to the bank which happens to be Chase. When I went in to the bank no one could tell me how to go about that. I called chase business they gave me a e-mail address ppp.cancellation@chase.com, which did not work. Called the SBA they told me to contact my lending institution, which is back to where I started. very frustrated, what should I do?
My employer received the PPP Loan on May 2nd and had us return to work on May 25th. I’ve worked a full 40 hours each week for the past four weeks and am being told now, that half of my wages are being withheld to make up for the weeks I didn’t work but was paid through the PPP loan (between May 2nd and May 25th). Can my employer withhold future wages to make up for what he paid me from the PPP Loan?
Will banks have the option of extending the two years to five years?
If I’m self employed currently receiving PUA unemployment benefits through July 31st, can I apply for a PPP Loan now and since the eligible period was extended from 8 weeks to 24 weeks, would I then be able use the PPP Loan funds starting August 1st once my unemployment benefits have ended and only claim those 18 weeks starting August 1st for the forgivable period?
Hi Gerri, thanks for your wonderful article, very helpful.
We got PPP loan from lender this April, but the same reason you mentioned, #2 & #3. We returned it April 14th for ERC.
SBA didn’t make the clear rule and didn’t make sense to small business because all of our business went to down and almost zero sales.
No employees (part time) didn’t want to come back because they got x4 times higher money from government (UI).
But my question is…THIS.
After changing the rule of forgiveness, it works for my business. We can use it until end of this year. So…
Can I apply PPP again? even I got the loan, but returned back full before May 14th. Technically, no loan for me as I returned all.
Could you help getting answer on my question?
I asked to lender (WF), but no reply almost 4 weeks. My CPA couldn’t give the right answer.
God bless you.
KL
my client received a PPP last month/May & she applied & got approved for unemployment benefits on Monday 6/2. I know found out she cannot receive PPP & Unemployment. If she return the PPP money can she continue with the unemployment?
Please advise.
The time has come for me to apply for forgiveness. I got my taxes done last week and my line 31 Schedule C is one third of what it was in 2018 because of expenses purchased for the business. They also took away a lot of the things I was told I could claim. I was funded on April 5 and received funds on April 8. I would have made twice as much money on unemployment. Can I just pay the loan off and collect the unemployment?
If a small business got the loan because of uncertainty but ended up not really needing it because revenues did not decrease, will they be forgiven for the loan? I have not seen anything written up regarding will they need to show that they did not have enough income coming in to pay the payroll. Most of the small businesses that I do work for that received the PPP loan put it in a separate account and are using the funds to pay the payroll and covered bills but there other business accounts are growing due to the revenue staying as normal. Most are assuming since they are using it on the payroll that they will be forgiven and will come out ahead with this. I am not so sure. Honestly, I feel like it should be paid back with no penalties since they truly were uncertain when they received the funds but after the 8 weeks or 16 if extended, they were not adversely effected.
Hi!!
What Happens if my job received and ppp loan and started paying us the 8 weeks, but now the governor opened our business and we are back to work with 3 weeks left of our ppp. Our employer told us they will keep paying the ppp until it runs out because they won’t have to pay it back but will deduct that same amount from our normal salary we worked for the next three weeks. Is that legal? They are deducting our salary and keeping the money in their account since essentially the goverment is paying us anyways.
What if a small business (4 employees) applied for PPP due to “economic uncertainty,” was approved and received the funds, is currently using the funds strictly for employee payroll and retention, but is finding that their revenues during this time may ultimately be very close to typical month’s revenues afterall?
When I applied for the loan I calculated my two 1099s employees. Later I find out that I couldn’t do that but how did I get approved for 17.000? Called the lender and emailed them but no success. I changed my two 1099 guys to w-2 employees. I’m using the loan to do weekly payments. I’m not sure if this would solve the problem. I’m afraid the FBI can knock on my door any day.
I am a sole proprietor, I applied for a PPP and received a small distribution. The amount was only $2400. I am currently receiving EDD. I thought I can use the money to pay business expenses. Which 2400 covers 1 month rent. It doesn’t leave me with any thing to pay myself. Will this affect my EDD benefit? I can’t pay myself if the expenses took all the money from PPP. What should I do? The distribution was on May 18th. I can’t get an answer from the lender. They send me around and around. I can’t afford to lose my EDD, please advise. Thank you
We received the PPP loan. Some men decided after the fact to go on unemployment. They did come in to work 1 or 2 days and did not collect those days. Question is we don’t need the entire amount of our PPP loan now. Can we return a portion of it if we don’t use it and still get
forgiveness?
I am still waiting for unemployment to kick in for the time period of March 30th until now. I am a self employed childcare provider..just found out I am eligible for the Ppp loan..if unemployment kicks in and pays me all the back pay then I am approved for the loan..am I able to take the loan and just stop unemployment when I am approved, Would I need to pay unemployment back for what I received before loan starts or do I not take the loan
small business owner- recently received a PPP. 8 employees, all but two are 100% commissioned sales reps. Overall business and territories were down 60-80%; some reps more than others. Are there any guidelines, rules or advise on how the required 75% minimum towards payroll is to be allocated to each individual employee; specifically those on a 100% commission structure? Should payouts to commissioned reps correlate to their territory value/ average monthly paycheck prior to the pandemic? Do trace amounts of commissions during the pandemic affect this? We used a tailing 12 month commission average of each rep to apply, value, and ultimately receive, the PPP funds.
As a sole proprietor, I applied for a ppp and received a distribution. I realized I made a mistake, counting myself (owner) as an employee so my ppp was calculated at my net profit of $128k, rather than the $100,000 cap. Should I sort this out when I apply for forgiveness or consider other options
James do you have other employees besides yourself? Do you file Schedule C?
As a FTE will I or should I be compensated for covid-19 quarantine? I am very sick and have been tested awaiting results. We are a small business and the owner was in fact approved for PPP loan. Am I entitled to pay? If so what percentage of my earnings? Thank you for your time I am a mother of 2 who is struggling like so many other’s.
Hello James i made the same mistake!!!
So were you able to return the PPP loan without penalty or any further issues????
Thank you for the valuable information. I find these articles very informative.
My boss got the loan and determined he should not have been approved. Wells Fargo (the lender) is UNABLE to take the money back. The loan was issued with no repayment information and two days of phone calls have not provided any answers. The return deadline is tomorrow. A poorly planned, poorly executed loan program.
The repayment deadline was extended to May 18 2020. Please let us know what happens!
Is returning the PPP loan by May 14th the same as just going into my back account and paying the loan off via “paid balance”?
I do not have to notify the SBA about it?
You now have until May 18 2020. You should work with your lender.
If a PPP loan cam across finally after unemployment started for a self employed worker can they just give back the loan and keep the unemployment since at the time of application for the loan there was no unemployment being paid and no word on for sure if it would be given at all.
You don’t have to accept a PPP loan.
So I can give it back and still receive unemployment?
I got my PPP loan si$1108.00 simply because the UI application process in Florida was a mess to say the least.
Now that the UI has been finally approved I want to return or repay the loan. I’m getting NO answer from the bank. Kabbage
I already deposited money in to my account.
Can I return it to the bank and get unemployment? I already submitted unemployment forms, did not know that I cannot have ppp at the same time.
What should I do?
Thank you for your answer
If I am self employed and independent contractor I applied for ppp loan and unemployment . I was approved for unemployment and received unemployment for 6 weeks while shut down. it helped me pay my bills and home expenses. . Now I’m back to work for the last 6 weeks and was just approved for the ppp loan. I now owe my rent for the 6 weeks I was out and my phone expenses,gas, and vehicle expenses. Can I accept the loan since I’ve been offered after my unemployment is over?
I haven’t seen clear guidance describing exactly how PPP and unemployment interact but from what I understand you can’t collect both at the same time. It doesn’t appear to me that PPP is a problem at a time when you are not collecting unemployment however.
Hi, I’m a CEO for a german company in Charlotte, NC and we employ about 100 people. We applied for the PPP loan and received the money. Unfortunately the rules have changed constantly since and we basically have decided to return the money. The questions about being actually entitled to keep the money and use it what it was intended for (payroll and utilities) got cloudier by the day and so we decided to give it back. As a consequence, we will have to lay off approx. 50 people by the end of this week. The PPP loan would have avoided all the stress to the company and employees. Too much politics around a good idea killed it. Many honest companies I know got loans and are now giving it back due to the same reason. Sad but true.
Thanks for sharing your story Stefan. I’m sorry to hear that for your business and for your employees.
I mistakenly received multiple PPP loans and have been calling one of the lenders to return theirs but in vain. I understand they might be extremely busy. I tried calling SBA for guidance but to no avail. I applied for different loans. What should I do?
If l know someone got a loan but they didn’t use it and because they’re on Sect 8 and they said they did hair out they’re house are they going to get in trouble waiting for the lender to call them back