An update on crisis relief for small businesses

Almost nothing went right in the launch of the Payroll Protection Program over the past two business days. The best advice is to keep trying and don’t give up. Don’t forget what’s happening on a state level. The state programs quickly oversubscribed but today but more relief is likely.

If you are sweating bullets to rush through a PPP loan to keep your business afloat then there is a good chance this is the wrong strategy for you. Rethink your crisis management strategy. You employees should probably be on unemployment and you should probably use a Section 139 tax free benefit plan to help employees help you rebuild your business.

We now have a better idea of the loan underwriting requirements if you expect to be approved for a payroll protection Program forgivable loan. It should not be surprising to learn that those who don’t need the loan will qualify and those businesses who need it most won’t be approved. Be ready to provide:

1. A plan on how the loan money will be spent (payroll, benefits, taxes, rent)
2. Two years business and/or personal tax returns
3. Payroll reports or other 3rd party reports to support the numbers submitted to the lender
4. Business financial statements that agree to tax returns

This raises the question of ‘cost/benefit’ for a loan program that covers only two months of payroll. That’s a topic for separate discussion.

We still have almost no useful information or practical advice on the Economic Injury Disaster Loan program yet.

It’s more likely than ever before that there will be a 4th federal crisis response law to give aid to small businesses. This is of course speculative. Still, it is clear and reasonable to say that many or most small businesses will not get any significant help unless an additional aid package is provided. The point is that this business recovery is a marathon, not a sprint.

There is so much more information that it is certainly confusing to small business owners.

The lesson we hope to spread now is this:

EVEN IF YOU HAVE NOT YET EVEN STARTED TO DEVELOP CRISIS MANAGEMENT STRATEGIES, DO NOT WORRY. YOU HAVE PLENTY OF TIME TO DO THIS.