Between April 2020 and August 2020, the PPP gave out over $523 billion in government-backed forgivable loans to the 5.2 million small businesses to help them keep their business open during the economic crisis of the pandemic.
However, it has now started again after the US Congress decided to add $284 billion for new funding in the stimulus package approved in December 2020. Basically, these PPP loans were a chance for even the worst businesses to get a second loan.
If you have noticed that you want to know more about these PPP loans and how you can avoid any type of problems in the future, Adam Winston James shares strategies to protect your business from any fraud.
Keep records of all of your PPP loan expenses.
It doesn’t matter if your business is new or not. Keeping records is essential. I did not keep correct records for my PPP loans, and even with the strict stipulations to follow, I ignored them. You must keep records of what you are spending. Do not give yourself a chance to end up in federal prison, rocking an orange jumpsuit, eating bologna because you did not keep records of your expenses.
Payroll should be more than the mandatory minimum funds needed.
Getting a PPP loan comes with strict regulations, and one of the biggest ones is to put 75% of the funds aside for payroll if I wanted complete loan forgiveness. I was able to add in my salary, but it does not matter if you cannot hire everyone back; 75% still goes towards payroll, which means people who actually still work for you.
Give Yourself a Typical Salary!
Listen, we all want Lambos and 5-star dining, but do not give yourself a salary that is more than you typically make when it comes to a PPP loan. The government will want actual records of how much you have been making, and that means if you go overboard stating that you are making six figures, well, you will end up paying everything back and then some. Not to mention those felony charges that never go away and will keep you from making six figures.
1099 Workers Do Not Need to Be Included
1099 workers are independent contractors, and their wages are not covered by payroll. They will get their funds and loans during the economic crisis. The only people on the payroll are the ones with W-2s. Adam Winston James shares more tips about PPP loans.
Independent Purchases Are Not To Be Made with PPP Funds!
Again, we all want nice things. However, do not let that idea pop into your head that you can add more stuff to your corporate card during this time. If it is not business-related, then PPP funds will not cover it. It does not matter if it is an emergency. Bookkeeping will show everything, and if it is not up to par, you can find yourself on the front page smiling for the camera in your mugshot.
Consequences of Fraudulent PPP Loans
You have to be honest about everything, including your records. However, you are looking at fines, criminal charges, and jail time if you commit fraud. That means any government funds to help the economy, such as FEMA, SBA loans, and PPP loans. The Inspector General and FBI will charge you.
If it is unemployment fraud, then you can expect to be prosecuted by the local and state officials and even have a nice little FBI raid to your home to be arrested. Plus, there is a minor issue of tax evasion, which comes from lying to the IRS to get more money. No one wants to get on the wrong side of the IRS. Not only will you face jail time, but you will also end up with not a penny to your name and just the clothes on your back.
Keep Your Business Secure
Criminal action is serious, and criminal defence lawyers can help with false fraud charges. Just remember, if you keep accurate records, then you may not have to worry. Follow the regulations around these loans, especially if you are trying to be a trustworthy business.
If you commit PPP fraud, then contact Adam Winston James and take responsibility for your actions. Some banks have a period for you to return the funds without any questions asked. You can do that without getting jail time.
Jail time is not worth it, believe me.