Many small businesses around Lake Tahoe have breathed a sigh of relief since receiving loans through the Paycheck Protection Program, one of the largest provisions under the Coronavirus Aid, Relief, and Economic Security (CARES) Act — but for some, it’s not without a tinge of concern. With strict and shifting guidelines for loan forgiveness, borrowers worry they may be strapped with debt they are not prepared to pay.

PPP launched on April 3 with $349 billion in guaranteed loans allotted for small businesses, individuals and nonprofits. Demand was so high for the program that after just two weeks, PPP lenders had approved more than 1,661,000 million loans totalling nearly $342.3 billion. On April 24, an additional $310 billion was added to the program. As of May 6, over 4.1 million loans have been approved.

“I increased my staff from 23 to 125 just for the program,” said Jeremy Gilpin, executive vice president of Greater Commercial Lending, a subsidiary of Greater Nevada Credit Union. “I set up a call center just for this program. My senior staff, a light week for us is 100 hours. We have set up swing shifts so we have people working 24 hours a day, seven days a week to approve loans.”

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At Greater Nevada Credit Union alone, 230 businesses in the Lake Tahoe region have received PPP funds totalling roughly $15.6 million, Gilpin reported. Nationally, the credit union — which has branches from Reno to Elko — has processed $630 million in PPP loans for roughly 6,400 businesses.

“There is still over $100 billion left in the second wave, so we’re still actively underwriting loans,” Gilpin added. “If you haven’t applied, apply. Just make sure you pick an institution that’s still offering them.”

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K & K Services, a construction company in South Lake Tahoe, was one of the businesses to receive PPP funds through Greater Nevada Credit Union.

“Our business completely came to a halt,” said owner Kenny Curtzwiler. “But they walked us through the process and made it an easy, easy thing to do.”

Curtzwiler is now able to pay his nine employees for the next eight weeks and says he has “no concerns whatsoever” about adhering to the loan terms for forgiveness.

According to the Small Business Administration, who’s administering the program, federally-backed PPP loans will be fully forgiven if at least 75% of the funds are used for payroll and the remaining 25% on interest on mortgage, rent and utilities during an eight-week period. Forgiveness of the loan, which has a maturity of two years and an interest rate of 1%, will be reduced if staff, salaries or wages decrease or less than the required percentage is spent on payroll.

Critics of the loan terms say the high percentage required to be spent on payroll makes the loan difficult for many businesses with high expenses outside of labor, like restaurants, to utilize the funds.

In a recent letter to the Treasury Department and SBA, a group of bipartisan senators asserted that a 50/50 breakdown would be more beneficial for small businesses.

But as the first round of PPP recipients near the end of the eight-week period and prepare to apply for forgiveness, the Treasury Department and SBA have not yet released the final detailed guidelines for turning the loan into a grant. Sen. Marco Rubio, the chairman of the Senate Small Business Committee, said Wednesday night, however, that they are close to releasing the application and guidelines.

Parker Alexander, who runs apparel brand Tahoe Heartbeat in South Lake Tahoe, received a loan during the second wave of funding.

With 60% of his sales coming from setting up booths at large-scale events, many of which have been canceled or have uncertain futures, Tahoe Heartbeat has been relying on sales of hats and clothing at its grocery store accounts.

“I woke up with PPP money in the bank totalling $15,000, which will basically cover salaries for myself and [my wife] Ali for the next eight weeks,” said Alexander. “It was a big blessing to be able to get anything in these times.”

Alexander has been working with Square Capital, the lending branch of mobile payment company Square, to make sure he is spending the funds correctly.

“That is going to be the next hurdle and confusing issue with this whole thing,” noted Alexander. “We are all going to want it forgiven.”

It’s a sentiment shared by Domi Chavarria, who owns Verde Mexican Rotisserie in South Lake Tahoe with his wife, Katy, and recently received a PPP loan.

“It’s a quick bandaid for the eight weeks, but if you misappropriate this money or misspend it, and it turns into a loan, it’s such a short payback that it would be more crippling than receiving the money for many small businesses,” said Chavarria.

After closing for nine days back in March, Verde reopened and, with the influx of funds in the second wave of PPP, was able to bring back more of its staff, which Chavarria said was a big motivator in reopening. Though he’s confident that Verde will get through this, he still has concerns.

“I think another one of the roadblocks is the timing of it and the eight weeks. As things slowly open up, we don’t know what business is going to be like here in Tahoe,” he explained.

“We don’t know if we are going to get flooded back with people. Is this money coming too soon? Am I going to have spent it all and then it’s gone and we have this weird summer? We really hold that getting the information to spend the money correctly and ultimately completely forgiven as our number one priority right now as business owners. It can’t be a loan. Not for us.”

The lack of detailed guidelines surrounding the nuances of loan forgiveness is troubling, said Marissa Fox, an attorney at MOBO Law’s South Lake Tahoe office, which has been offering pro bono legal advice on small business loans since the onset of the pandemic with the hopes of trying to expedite recovery.

“I think that [loan forgiveness] is going to be the next big challenge. As confusing as the rollout of the loan programs were, at the point where borrowers have to submit an application for forgiveness, it’s going to be way worse,” said Fox. “We get calls asking everything from how do I get forgiveness to what am I eligible for and what can I spend this money on? What should I do now that I got the loan proceeds? How do I navigate some of the different employment issues? What do I do if I have independent contractors not employees?”

Without the release of SBA’s official guidelines and application for forgiveness, Fox said they’ve been advising businesses to keep scrupulous records on spending and keep PPP funds in a separate account. Fox also suggested the Small Business Development Center through the Sierra Business Council and the local chambers of commerce as sources for information.

“We’re telling people to make reasonable choices based on the fact that they are getting really limited information,” said Fox. “It’s hard because these rules really do change every day. The good news is we have an incredibly supportive community at the lake helping businesses through this.”