A caution from a woman who just received some pandemic aid money... to keep her small business afloat.
The problem: her bank has frozen her account!
We show how to be sure this doesn’t happen to you, so you don’t waste your money.
More than 5 million small businesses have stayed alive thanks to the Paycheck Protection Program this year.
But one woman has a warning for anyone applying for aid.
Kellye Thomas, who is a home day-care provider shut down for three months due to the pandemic.
She was saved by a paycheck protection loan, but that lifeline has become a nightmare.
“I applied for that through the Small Business Administration,” Thomas said. “I was granted the loan for $2,500.”
But before she could even begin using the funds, she says her bank shut her account down.
“The check was deposited, and a few days later I noticed there was a freeze on my account,” she said.
Panicked, she called the bank.
“They let me know I needed a business account to receive the funds from this loan,” Thomas said.
A lot of independent workers and small business owners use just one account for everything, because it is so much easier.
But if you are getting any sort of federal aid, doing that can be very risky.
Business Insider says PPP loans must be put into a separate account to prevent ...
- Payroll errors.
- Accidental misuse
- Questions from your bank
That's what happened here, where the bank's investigation locked Thomas from all her money.
"Are there some bills now that you can't pay this month? My mortgage, buying food, paying my credit card bills," she said.
So we contacted Fifth Third Bank for clarification.
A bank spokeswoman tells us:
"We take potential fraud seriously and are diligent stewards of our customer's money,” she said.
But since there was no fraud in this case, the bank has unlocked Thomas' accounts.
Now she's warning others.
"I have always had my day care money deposited into my personal account, no one ever said anything about it, or said I needed to open up a business account,” she said.
Business Insider says there is one more reason to keep PPP money separate: getting the loan forgiven.
Keep tight records, so you don't waste your money.