Wednesday, April 22, 2020

The Question Every Small Business Owner Need to Ask About the PPP Relief Funds

It's Deja Vu...

It's gotten to the point now where I don't even want to open up my Google Business News feed anymore. Usually, I like to catch up first thing in the morning on all the latest business news stories both nationally and internationally before I really get into the day. Well, it's been pretty much the same story for the past month or so. I guess I know what it feels like to be Bill Murray in the movie Groundhog Day...

Not in anyway attempting to be insensitive or callous to the plight of small business owners far and wide during this Covid 19 pandemic. True, I get it. We're in unprecedented times for sure. Things are happening that no one has every seen or experienced before unless you're a time traveler of course. Ok, I digress. Seriously, though, if I had a dollar for every article on my feed that states how small business owners were screwed over the first tranche of the PPP SBA relief funds, I'd be a pretty wealthy guy. Where am I going with this, you ask? Well, I'm glad you asked. Small business owners need to ask themselves this one question about their frustrations in not getting in on the first round of the PPP funds:

Were You Receiving Help From Your Bank Before the Covid 19 Outbreak? 

Relationship First...

Let's think about this question for a minute? First, let's set the context? Around mid March 2020, the U.S. shut down literally due to the projections and conversations about the coronavirus and it's pending impact and devastation. Again, I'm not making light of any of this. What happened next was something quite unthinkable. The U.S. government along with state and local governments began shutting down 'non essential' businesses which included a large portion of small businesses that employ a vast number of the U.S. population. What's the engine that keeps small business operational and in accounting verbiage a 'going concern'? It's money... and where does money come from? Here's a hint? It doesn't grow on trees. No, money comes from people (consumers) and other small businesses that spend money in order to make money. Plain and simple, right? Let's go back to our question for a moment and let me come from another angle. I wonder how many of the small businesses that are frustrated about the first round of the PPP SBA relief funds either had an existing credit relationship with their bank let alone had the wherewithal to entertain having a credit relationship. Not trying to be ugly here in any shape, form, or fashion. Logical and objective in a compassionate and empathetic approach. 

Here's the reality: even with the pending second round of PPP SBA relief funds coming, I don't foresee many small businesses being able to obtain these funds and there's a good reason for this. The banks are lending their own money with a guarantee from the SBA in the event of default. In other words, the banks are in this to make money (i.e. earn interest even if it's fixed at 1% although they are earning fees for lending out these funds as well), not lose it. Unless you have an existing credit relationship with a bank that's satisfactory, don't get your hopes up. Not being a downer here; naturally, I'm a pretty optimistic person, but I perceive what's about to go down and it's not going to be good. 

Are You Looking For Another Small Business Lending Option? 

Despite this reality, there are still available small business funding sources in the market that small business owners aren't aware of. For the PPP funds, I didn't even begin to talk about the restrictions and guidelines that you have to abide by in order to ensure there's no recapture of the funds or even worse penalties assessed for improper use of the funds. One specific source of small business funding available is from Innovative Capital Strategies through their Capital Ready Package program. Through this program, small businesses are guaranteed a minimum of $100,000 with no minimum personal credit score or minimum time in business. Prior to doing my homework on this firm, I thought it was just another fly by night hoax, but I was wrong. Again, as a realistic and viable alternative to waiting around to see if you and your small business will get in on the second round of the PPP SBA relief funds, hedge your bets and look into obtaining funds for your small business to help you to not only weather the current storm we're in, but to also position yourself for max market growth. If your small business is in need of funding, you need to check out the Innovative Capital Strategies website