Before I get into some of what we have learned over the weekend about the SBA payroll program, I want to speak to you — business owner to business owner.
To survive in this hour, you will NEED two major qualities: Clarity and Patience.
The SBA payroll program offers a lifeline of hope to many of my Inland Empire clients and business friends. In fact, we’ve been INUNDATED with questions and requests for help (from clients and non-clients alike).
But it is always a good idea to plan that you might not get the funding. Or at least not in a timely fashion.
You must not place all of your eggs in the PPP basket, because we don’t yet have a clear picture of how quickly and effectively it will get disbursed.
Now … I don’t say that because I have particular inside information that it won’t occur. I AM getting plenty of inside scoop, which I’m sharing as I learn, but that’s not what drives me to say this to you.
What drives me to say this to you is that it’s simply wise business stewardship to control for worst-case scenarios.
The fact is that we’ve seen the details of this financing change multiple times in the week+ since the legislation was passed.
Big banks (and small), as well as non-bank SBA lenders are learning as they go, and each of them have varying standards for whose PPP application they will accept.
For instance, the last I heard, BofA and Chase are both only working with businesses with whom they already had an established “business” relationship with on February 15, 2020 (through business accounts, business LOC’s, etc.). This is similar to how other institutions are triaging the flow.
Non-bank lenders are slightly more flexible, but you HAVE to get your ducks in a row, and make sure every part of the application is completed EXACTLY to their standards. Else, from what I am hearing, your application gets pushed down the queue.
I heard this from the head of a large, non-bank SBA lender on Sunday morning (the 5th):
While some lenders are saying they can “process” these PPP loans now, the IFR from SBA left a lot open-ended. While we may be able to “process” a submission to get a loan number, nothing else happens. NO evidence of guarantee or note or anything … no guidance on how/what to close to fund these for you. Anyone who claims otherwise is a fool.
Again … we can help navigate you through this. And feel free to send this along to your Inland Empire business owner associates. We are in your corner:
Please allow for some greater amount of time in communication, as we are, indeed, VERY busy helping our clients.
So, my suggestion: plan like you’re not going to get ANY funding and adjust accordingly if you’re one of the lucky ones that do.
There’s nothing worse than making plans for something that doesn’t come to fruition as it leaves you angry, distracted, and in a weaker position to act going forward.
Unmet expectations are the source of all disappointment.
What Can You Do While You Wait For Funding?
It comes down to this:
Prepare, execute, innovate, and reduce the noise.
Every business and industry is being affected differently right now. That’s why I suggest you do some very practical “if this, then that” planning. Perhaps you have flexibility around your COGS, and if you DON’T get speedy funding, you make particular shifts in how you deliver — with an emphasis on keeping your most valuable assets (your employees and clients) retained. Watch your 30-day billings, and sales data like a hawk, and put some tripwires into place that you plan for IN ADVANCE.
I’ll have more to say about this in a moment, but you should only be making changes based on reality, not what the news says “might” happen. This is mostly just the step that follows from the first. Watch what *is*, not what you *think* … and execute accordingly.
If your sales are falling through the floor, then you HAVE to innovate, even if you’re not 100% sure how to fulfill or price that innovation. This is a time that you build airplanes in the air, realizing that this is the only way through this season — uncomfortable innovation. But you have to do it right now. Peter Drucker once said that there are only two basic functions in a business: to innovate and then market that innovation.
Reduce The Noise.
It’s likely that if you’ve already read this far, you have a higher tolerance for information than a normal human. But this can be a disadvantage.
We’re already seeing so many predictions become false, and conspiracy theories are now only a click away (sometimes less). Most information coming at us right now is wildly unreliable and negative, especially when it’s found in social media feeds.
Stay out of the debates; they will only distract you from your primary mission right now — your family and your business.
Let Us Help You Navigate These Waters.
Again, we are VERY busy right now … but prepared for this, and we are innovating as we go. That means we CAN still help you.
So if you want help from experts who get it, and who have YOUR best interests in mind…
… you know where to find us.
Garrett & Associates, CPA
I’m grateful for our chance to serve you and your business — and we are dedicated to its success, in every season.
Feel free to forward this article to a business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.