What Comes Next For Small Businesses And The Paycheck Protection Program

With the funds for the Paycheck Protection Program (PPP) depleted as of today, as we hope for another tranche of the same amount or more to be approved by the government, here are some of the issues I have had to address with small businesses I deal with and some of the recommendations I am making to those federal workers I am contact with. I would love to know what everyone thinks. All feedback is welcome in the comments.

1. Timing

The original goal was to get money into the hands of small businesses so they could retain employees. It is obviously cheaper to subsidize retained workers than for employees to go on unemployment. Unfortunately, because of the double whammy of the funding not being received for several weeks AND the continuing closure of businesses, small businesses were forced to layoff, furlough or fire employees. Very often they worked with employees, helping them go on unemployment in order for them to make as much, if not more, money that way.

Because of this current status, even as companies receive the PPP funding they find themselves with the big problem of whether or not to bring employees back knowing that they wont be able to immediately open back up.  So they will be paying employees not to work with the fear, and this is the biggest problem, that the PPP money for payroll will run out before they are able to open up.

Small businesses that qualify would prefer to delay use of the money until their authorities allow for them to open up for business. It is critical for them to be able to use the money to cover the 8 weeks of payroll when they are open, knowing that for the vast majority of the companies their businesses will be down significantly. So they will need the 8 weeks of PPP money for payroll while open for customers. 

2. 25% is not enough for non-payroll expenses

Its a fact that 25% of total PPP money is rarely enough to cover non payroll overhead. As a result they find themselves in a catch-22, they don't have enough money to stay current with their bills for the time when they are allowed to open up.

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