When to payback SBA loan

Seems there are rules as to how it’s spent is t there?

 

I got some PPP money, spent it on what I was supposed to. Then proved it, and got the waiver. I won't lie and say I've never done anything shady. Stuff like this I follow the rules on. I'm allergic to financial penalties and prison, if we're being honest here.

Well that, and using cheaper money you borrowed when rates were low, versus a new loan that would be higher. I play this game with zero interest financing. Why use my money now, when I can use someone else's for free. Just have to read the fine print and not miss any dates or the penalties far surpass any benefit.

I'm with @Midwest Trucker: just pay it and get it off your back. Maybe with lesser priority than other things with higher rates or less favorable terms. I've got one line with 6 months interest free, and routinely pay it off sooner than that, cash flow permitting.

I've heard of many cases like this, trucking and elsewhere. A local guy made the news by getting $3.7M in PPP money on his motor carrier that was already bankrupt pre-covid and didn't exist. There was much more to it than the PPP loan, to be fair. But the program had to be there in the first place for him to rip it off.

Criminals blaming the victim for offering an opportunity. Not a new thing.

 

I was contacted by them. Just a basic question and answer. I also had to sign something or send some info, I forget exactly. I kept a copy. Some type of formality. Aside from a notice to voluntarily pay the interest accruing, I’ve yet to get an actual bill or statement. I didn’t qualify for ppp. Because I don’t do a formal payroll. I could have retroactively produced a formal payroll starting in 2020 to meet the criteria. Didn’t seem right though. Fair enough. I wouldn’t argue at all with them if they decided to forgive the loan. Maybe the criteria will be “ Didn’t qualify for PPP, only borrowed the minimum”
Sounds fair to Me. I’m no fool. Plenty of folks got the PPP, and pocketed more profits, since they’re payroll was covered. As soon as they got the money, they were squawking about their employees collecting Unemployment instead of returning to work. While their Own initial EIDL was converted to PPP and therefore didn’t need to be repaid. Kind of like the pot calling the kettle black.

 

I guess for me, the PPP deal was incredibly timely and my business situation was a perfect fit. It came at a moment when I was seriously considering throwing in the towel for a number of reasons. Being the chronic risk taker I am, I predicted the covid related circumstances I was facing were short term 2-3 months. Fortunately I was right. The PPP loan bridged the gap.

Did I put that money in a dedicated account for payroll? No. About half of it went right into some very immediate problem solving elsewhere. Basically making up for a sharp cash flow hit that occurred when my market dried up for a couple months following April 2020 thanks to covid-related effects on the food service industry.

However, the payroll requirements still needed to be met (minimum average gross pay) so it worked out over time, and I had the payroll reports to prove I complied. And that payroll likely would not have been as fat as it was without the PPP loan. Saying I had payroll covered to pocket more profit would be disingenuous. I know you're not saying that "to me" but it's worth mentioning. I think there's some misunderstanding that prevails about how PPP works, and the massive fraud it's attracted did not clear any of that up at all.

So I'm not totally disagreeing with what you say. I'm just saying there were many business cases where the PPP money was a lifeline and served the intended purposes. Was it too much easy government money to be offered? I'd agree, for most of the negative reasons I've seen since. That is, even though I benefitted from it.

 

I did the same with EIDL. Used it for payroll. My pay. Depending on how easily a Business was able to get back up and running, determined if they profited or not. Pretty simple. Not all made a profit, but it was definitely a windfall for many. Along with the EIDL and the $600wk pandemic unemployment. All adds up to money pumped into the system. The effects of which are still being seen.

 

Because of what I do (refrigerated) I tend to watch the food industry more closely. Seems like restaurants are the second most popular business ventures people go into thinking it will be easy, right behind trucking. Many cases where the covid money kept them from closing for good. Then, probably just as many that should have been left to go out of business. It's a hard call. One thing I noticed, is that Sysco, Gordon, and the like (wholesale suppliers to retail food service), don't seem to be suffering much as the second-hand recipients of that gov handout.

 

Makes me wonder. Seems like a lot of restaurants saw a way out of an already failing Business. My favorite places all have done well. They have regular Customers that are Loyal, because their good Establishments. They don’t seem to have a Employee problem either, because their good Employers that pay well. I’ve delivered to a lot of local restaurants, for 7 yrs. dealt with all types. It’s a tough Business. Like Trucking, high overhead.