Although the COVID-19 crisis has been financially devastating for the U.S. economy as a whole – hence our recession – small businesses have been among the hardest hit. It is estimated that more than 100,000 small businesses have already closed their doors during the pandemic, and many more risk a similar fate if further lockdowns are imposed.

Fortunately, help is available. In April, the Paycheque Protection Program (P3) was rolled out, providing small businesses with approximately $ 350 billion forgivable consolidation loans. While that first round of funding ran out in just a matter of weeks, an additional $ 310 billion was made available in a second round, allowing more companies to win a piece of this pie. In total, PPP loans have saved millions of jobs and prevented the recent record unemployment figures to climb even higher.

The problem, however, is that many companies have exhausted their PPP loans and are struggling without additional funding. But what if your business received a PPP loan and you think you can’t use it all? That’s a good problem to have in theory, except for one thing: it puts you at risk of not having that loan canceled.

How to manage the remaining PPP funds

PPP loans have been capped at two and a half times a company’s monthly salary costs, and they are repayable provided 60% of their proceeds are used for salary costs. Initially, small businesses only had eight weeks to spend their loans, but that time was later extended to 24 weeks to give businesses more flexibility.

Some businesses, however, may run into a scenario where they cannot use all of their loan proceeds within that time frame, or at least in a way that makes their loans repayable. This may be the case if you have minimal labor costs, but your other operating costs are greater. What should you do

You have several options. First, you can still pay off your loan amount that you don’t use. You may owe a modest amount of interest on this part, but you will also stop earning interest once it is returned. If you go this route, you may still be eligible for a partial cancellation of your loan.

Another option is to keep your remaining loan proceeds and spend them on business needs outside of payroll or other qualifying P3 expenses – even if that means having to repay your loan. The interest rate on PPP loans is extremely competitive at just 1% so it is definitely an affordable way to borrow money for your business. PPP loans issued before June 5 have a two-year maturity, while loans issued after June 5 have a five-year maturity.

Having said that, if you are To keep your excess P3 loan funds and pay that money back over time, make sure that you expect to be in a good enough financial position to do so. Defaulting on this loan (any loan, really) could have serious financial consequences, so think carefully before you take the risk of increasing your business debt.