DALLAS (CBSDFW.COM) – Many small business owners are banking on forgivable federal loans to keep their businesses afloat even as Texas begins to relax restrictions.

But after qualifying for a loan under the Paycheck Protection Program (PPP), some owners are now reluctant to spend it.

“I’m absolutely terrified to use it,” said Leslie DeGracia, the owner of Trinity All Stars Cheer in Roanoke. “I can’t get a clear-cut answer as to whether it will be forgiven and how to use it correctly to make sure it is forgiven.”

Under the guidelines for the PPP, for the loans to be forgiven, at least 75% of it must go towards payroll.

The other 25% can be used for rent, mortgage interest, and utilities.

DeGracia said many of the coaches who work at her gym are independent contractors.

Trinity All Stars Cheer in Roanoke (CBS 11).

She said it has been difficult to find the answer as to whether paying them is considered a forgivable use for the loan.

In an interview with the CBS 11 News I-Team, Rodney Johnson, the director of the Small Business Development Center at Tarrant County College, said paying independent contractors, or 1099 employees, is not considered a use of the PPP loan that is forgivable.

“Before the ink dries on the paperwork, you should do the due diligence as to whether this is the right vehicle for your business,” Johnson said.

Businesses who qualify for a PPP loan have ten days to decide whether to withdraw the money. Johnson said this should be the time when owners consult with their CPA, attorney, and lender to ensure they understand the guidelines and have a plan in place to document their spending.

The money must be spent in an eight-week period and businesses are required to present evidence of how it was spent to their lender.

Even if all the guidelines are not met, small business owners can get some level of forgiveness on the amount used on eligible costs.

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