No fee for Payroll Protection Program applications

I am not charging fees – and you shouldn’t need to pay for anyone else’s fees either – for preparing small business Payroll Protection Program applications in accordance with federal law and the guidance of both the AICPA and the NJCPA¹. Specifically, the CARES Act states: ‘‘FEE LIMITS. — An agent that assists an eligible recipient to prepare an application for a covered loan may not collect a fee in excess of the limits established by the Administrator.” Additional SBA guidance issued Tuesday, March 31, 2020, the Department of Treasury released additional lender guidance: “Agent fees will be paid out of lender fees. The lender will pay the agent. Agents may not collect any fees from the applicant.” That approach is consistent with my current engagement agreement so no modification of work plan is necessary.

I plan to submit at least a handful of these applications this week for new and existing small business clients  week without a fee. Next week when the program opens to wider range of applicants, I plan to do the same but the details are not clear yet.

Since my small business services are offered as advisory or planning engagements at the entity level, this arrangement fits perfectly. The intent of value-based pricing that we use in this type of work is to be flexible on specific transactions and situation that may involve. There isn’t any way to know in advance what transactional work is needed.

We expect to be flexible in negotiating engagements with new contracts during the changed market conditions during and after the pandemic shutdown. The usual initial retainer for a small business client, typically $1,000, can be modified to match current cash flow. We already have some new business clients who suddenly find the need for an experienced crisis management adviser who do not have the cash reserves to hire this extra help. In this case, we understand that the industry standard advice is to avoid these businesses but I don’t think that is realistic in South Jersey that was already struggling economically before the pandemic. In response, I have offered to match fees to business cash flow.

¹We presume the same for the Economic Injury Disaster Loan but have less information so far on that application process.