PPP:
Getting the Best Out of a Not-So-Great Program
Main Street hasn't benefited as well as it should have, thanks
to some big corporate greedheads But there's still time to get a loan. Just
make sure you're using the funds for all the right reasons.
Every day I speak to startup entrepreneurs and
other, more established, small business owners who are asking for advice on the
Paycheck Protection Program (PPP). These are people living through their
worst nightmares, whose dreams included the desire to be free of the demands,
limitations and soul-deadening processes of the agencies and bureaucracies that
dominate our government.
As the politicians brag about the deluge of
dollars they claim to have released for millions of businesses and hundreds of
millions of consumers, the facts in the field - on Main Street, where the
rubber meets the road - are sadly different. Shuttered businesses, starved for
customers, revenue, and funding are closing down permanently because the
potential and promised funds are far too little and coming way too late.
Business owners are completely confused about the funds availability and loan
qualification criteria, disbursement procedures, spending timetables and
requirements, repayment terms and conditions, and other regulations regarding
the program.
The unfortunate entrepreneurs who are rapidly
supposed to make sense of this morass are also supposed to be running their
businesses, rehiring their laid off and furloughed employees, holding off their
lenders and creditors, and trying to keep their heads above the rising waters
at the same time.
Worse yet, their own attorneys, accountants,
and other professionals are reluctant to provide them with any concrete and
written guidance claiming, mostly correctly, that the government hasn't
published the relevant regs and directives to date. There are plenty of
simplistic suggestions like "take all the money you can get and worry
later," and anecdotes about how to maximize PPP applications and how to
minimize their repayment responsibilities. A lot of this advice
borders on the unethical or worse. They're all being invited to suck it up and
buy into the swamp of
situational ethics and muddled morality where our Donald Trump has
always lived and thrived.
There are still funds available; here are four
basic things to understand about PPP:
(1) Take whatever funds you can honestly get.
Cash will always be king and there's no telling how long we'll be in this mess.
You're looking at a long "L" recovery, not a "V". If you
eventually have to repay the PPP loan in the future at a very modest interest
rate, either you'll be here and happy to do it or your business will be gone
and you won't have to worry about it. New money (investments or loans) is going
to be expensive and very hard to come by for the next year or
two. Take the money when it's on offer.
(2) Don't let your pride get in the way
of the process. No one said life is fair and there's no sin in taking what
you're entitled to and what you've worked for and paid for in taxes over many
prior years. Just don't be a pig; make sure your application is accurate. Keep
in mind that there are two kinds of serious damage possible here and you want
to avoid both. First, you don't want to do anything illegal. That's obvious.
Second, you want to be sure that you don't do anything that sends the wrong
message to your team about how you conduct your business and your life.
Grabbing or saving a few bucks is never going to be worth the damage you might
do to your company's culture and your team's morale by cutting corners or
trying to be a little too inventive or "smart" and sleazy like Trump.
(3) Use the PPP money as quickly as
required (about 8 weeks) BUT do it wisely and remember that you can always
return what you don't use down the line. Don't rush to do stupid hires just to
get your payroll re-inflated; don't create "make-work" projects that
your own people know are a waste of time and money. And - in
fairness to everyone - don't hire people back for a few PPP weeks, especially
those already and successfully on unemployment, only to have to fire them
shortly thereafter.
(4) Get some smart and up-to-speed
accounting and legal help immediately so that you plan and document the way you
are spending every PPP dollar you borrow. It's really important that
you have a clear idea of how to honestly and accurately
complete your application for the loan forgiveness, which will be
required right around the corner. Here again, seek every single dollar of
forgiveness that you are fairly entitled to. Don't be lazy since it's not
really just your money - it's your investors' money as well. And don't fall
into the trap of trying to get too much improperly forgiven. Again, it may seem
easy and attractive and it may be urged upon you by various advisors and
others, but it's not worth the damage it's likely to cause.
And I understand that the government isn't
making things any easier - practically or morally. Treasury
Secretary Mnuchin just announced (with a virtual wink) that PPP loans under $2
million typically won't face audits which - for some owners who are desperately
trying to survive and feed their families - may be just too tantalizing an
invitation to wrongdoing for them to resist.
We're all being slyly invited and tempted to
be complicit - actively or passively - in the great new gold rush as the
government turns the printing presses loose and everyone tries to grab the
goodies until they're gone. The problem, of course, in rolling around in
the slop with pigs and politicians is that they love it, and you end up covered
in mud.