Why woman’s bank account was frozen after she got her coronavirus loan

Paycheck Protection Program funds helped keep more than 5 million American small businesses alive through the first half of 2020, but one woman has a warning for anyone applying for aid.

Kelleye Thomas, who runs a home daycare, had to shut down for three months due to the pandemic.

Her income dropped to zero during the shutdown, but like so many small business and independent workers, she was saved by the government’s Paycheck Protection Program.

“I applied for that through the Small Business Administration, and I was granted a forgivable loan for $2,500,” she said.

That lifeline turned into a financial nightmare because of where she deposited the funds. Before she could even begin using the money, she said, Fifth Third Bank locked her account pending a fraud investigation.

“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.

Risk of using your personal account

A lot of independent workers and small business owners use just one account for everything because it is so much easier.

But doing that can be very risky if you are getting any sort of federal aid.

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 her out from all her money.

As a result, she was unable to pay some of her most essential bills.

“I couldn’t pay my mortgage or buy food or pay my credit card bills,” she said.

So we contacted her bank, Fifth Third Bank, where spokeswoman Laura Trujillo told us: “We take potential fraud seriously and are diligent stewards of our customers’ money.”

Because the bank found no fraud in this case, it unlocked Thomas’ accounts after our inquiry.

Now, she’s warning others about mixing pandemic aid with personal funds.

“I have always had my daycare money deposited into my personal account, and 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: Eventually having the loan forgiven. Getting forgiveness can be much tougher if all your funds are commingled.

So keep tight records, so you don’t waste your money.

John Matarese

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