This is the first in GrowthLab’s series. Subsequent to initial publication, we explored, “Cash Flow Planning & Your PPP Loan,” and “Tracking & Documenting your PPP Loan Forgiveness.”
You got the PPP loan. Congratulations. Now what?
You’re probably breathing a sigh of relief. But don’t relax too much — the process has just begun.
If you want that loan to be forgiven (essentially making it a grant), you’ve got to spend the money on the right things at the right time. If you don’t, best case is you’ll have to pay some or all of it back with interest. Worst case is you’ll face potential criminal penalties. How you use those PPP funds and the records you keep can make a huge difference to your bottom line. (And, to raise the stakes even more, we’ll hit on not spending in a black box…you need to ensure you are driving business value, not just employment numbers.)
First, let’s agree that this is not free money. Let’s face the truth…more likely than not, your loan will not be 100% forgiven. Coming out of this, you will be increasing your debt load. But, that is OK as long as you spend the money on the right things (per SBA guidance), at the right time (the 8-week period), to achieve the right outcomes (your strategic planning objectives).
You are not alone. We have tools to help you think and succeed. Our number one objective is to ensure that the day the PPP loan money runs out and you need to start repaying the debt, you feel and see the business value that the PPP loan has provided. Let’s face it, if you don’t make the right moves, you will be facing your own “Small Business Black Monday” — the day you wake up realizing you’ve spent all the PPP loan money on unproductive employee hours and have no business value to show for it and, worse yet, more debt.
We want to help ensure that you avoid your own “Black Monday.” We want to make sure that you maximize your likelihood of surviving — not just 8 weeks — but 6 months! Thus, GrowthLab is laying out a 3-part series of articles on Strategic Planning & Execution with Your PPP Loan. In the three part series, we will cover:
First and foremost, you need to ensure that the money is spent strategically to drive business value (not just employment) — that’s what we focus on in this article. Secondly, you need to plan cash; optimize where and when you spend the money to ensure that you can get an optimal forgiveness amount balanced with optimal value for your business. Lastly, you need to keep track of the PPP money to document your forgiveness which is what we’ll focus on here.
Let’s look at this as 10 ways you can protect & grow your business with the PPP Loan:
You can’t pursue all ten of these within eight weeks, but you can choose two which resonate with your business. These two areas of focus are the places where you should re-allocate people’s time (aka, payroll dollars = forgiveness) from unproductive to productive work. If you still have employees driving revenue, don’t change their course. But for the people whose responsibilities are not able to drive direct value to the business, those are the people you try to re-allocate to your two chosen initiatives during the 8-week period. Make their time an investment in your business so that you can optimize the forgiveness component of your PPP Loan.
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