RALEIGH, N.C. -- There is increasing worry from small business owners about the federal Paycheck Protection Program.

What You Need To Know


  • Rules over PPP loan forgiveness have been and continue to evolve

  • SBA released the loan forgiveness application late last week, providing some clarity

  • Congress still debating changes to spending guidelines

  • Businesses that have received loans are worried lack of clarity could leave them on the hook for tens of thousands of dollars in loans they thought would turn into a grant.

"The terms seem to be changing frequently. I can't get clear guidance on exactly what to do, but the clock's already ticking," Victor Lytvinenko, co-owner of Raleigh Denim says.

He's among the more than 100,000 businesses in North Carolina that have received over $12 billion in loans from the Small Business Administration's Paycheck Protection Program.

The key attraction of those loans is forgiveness. To keep the money, businesses have to spend it on qualified expenses, but there's growing concern because the spending guidelines remain ambiguous.

The SBA just released an 11-page forgiveness application last week, which did provide some clarity. For example, those who don't spend at least 75 percent of the funds on payroll as required can still keep some portion of the money.

There had been apprehension if a business had spent 70 percent on payroll then it could have completely lost out on forgiveness.

To maximize the amount you can keep, the other 25 percent is supposed to go to expenses like mortgage, rent, and utilities, but it's not clear what utilities are included. Take cell phone or waste removal bills for example.

Companies that received the coveted loans have eight weeks to spend it upon transfer, but Congress is currently debating whether to extend the spending timeline. Business owners have said the funds would be far more beneficial if they can spend it when more restrictions are lifted.

That puts those who have already gotten the money in a bind, especially if their eight weeks are coming up.

As rules continue to evolve, financial experts urge business owners to keep a paper trail of how they use the loan based on the information at the time, and stay in touch with their financial advisors.