Last April, like many of you, I applied for the first round of Paycheck Protection Program (PPP) funds. My company had taken an immediate hit in revenue from the shock of the pandemic, and there was no certainty that it would rebound anytime soon. The only point of comparison I had was the 2009 financial crisis, and from that experience, I knew the dark path that could potentially lie ahead. So, the CARES Act and the PPP brought me some comfort.
In the end, we were one of the fortunate companies that did receive funding—and it went far to help my company not only survive, but to stay on track with our strategic plan for the year. But that doesn’t mean the process of getting that funding was easy. It began badly due to major tech failures on the part of the banks, and it got worse before it got better. If I hadn't been prepared, EMyth might not look the same today.
As I write this, you may already be deep in the process of applying for a Phase Two PPP loan. I’d like to offer the three proactive actions that I took to prepare my company for the application process. They continue to guide me in how I manage money in my business, and I hope that they will serve you as well.
Take the time to get to know an officer at your bank so they can get to know you. Simply opening and maintaining a banking account—even if it’s for 15 or 20 years—doesn’t put you at an advantage. In other industries, being a longtime customer often comes with some benefit; but in the banking business, longevity doesn’t mean better service. So, you need to proactively work on building that connection.
Get on a Zoom call with your banker (or go down to your bank if it’s safe) and actually build a connection. You should do this even if you’ve never had an account before and this is your first time working with them. That way, they’ll come to understand your business, mission and culture. They’ll see what you're trying to accomplish, and you’ll become so much more than just numbers on a financial statement. During the first round of PPP funding, I was able to engage my banker in regular dialogue about the process, which came with updates and the sense of security that he was personally shepherding my application through. Banks have rules and procedures that don’t give bankers a lot of latitude, but whatever discretion they have can work in your favor—if you have a personal relationship.
Every business owner needs someone who’s more financially knowledgeable than they are to guide them. My director of finance was instrumental. She helped me understand what information we needed to provide, and spearheaded the effort to complete the application. It freed me to run my company because I knew she was taking care of the application process.
Make sure you have someone in your life who you trust—a bookkeeper, a controller, a CFO—someone who knows the numbers of your business, who can navigate the financial environment in which you operate, and who you can depend on to give you information and guidance when you need it most.
[Graphic CTA: Financial Planning Guide]
For many business owners, the impact of the pandemic has shown them the importance of systematizing their business. To be ready for moments that can determine the survival of your business—like applying for emergency funding—having a financial system that generates the information you need is critical. You want to be in a good financial position and have clear visibility of the elements that shape your position, like up-to-date and accurate records.
Create a financial reporting system that makes it possible for you to access all the financial information you need in order to assess the well being of your business, submit financial information to third parties, and minimize your anxiety about where your business stands.
Have you already applied for the second PPP loan? I’d love to hear about your experience or any advice you have for fellow business owners. Please share in the comments below.