What cannot an entrepreneur do with the federal aid received by COVID?
Many small businesses affected by the pandemic have doubts about what they can do with the funds they received as a loan from the Payroll Protection Program (PPP) created under the Coronavirus Aid, Relief and Economic Security Act. , known as the CARES Act.
It is important to remind those who received these loans that this money must be directed to a specific purpose, such as the payment of monthly business obligations, mortgages, rents, accounts payable, payroll, and operating expenses that, due to the impact of the pandemic, the small business has failed to run.
These funds cannot be used to expand the business, create new business operations, pay bonuses to partners, much less to acquire a house, buy private cars or luxury objects, as we have seen in the media some entrepreneurs have done, who now they will have to face justice.
Although obtaining this money has been really easy and fast to help the small business in such a difficult time, it must be borne in mind that this loan is received under penalty of perjury, in which the applicant himself claims to be eligible for the loan. Misuse of the fund is punishable by immediate reimbursement of 150% of the fund, in addition to other federal charges such as bank fraud, which can carry penalties of up to 30 years imprisonment.