Lessons From Financial Advisors For Small Businesses Regarding PPP Loans
As emergency federal loans became in-demand among small businesses, financial advisors not just aided clients but also applied for support to sustain their practices. The Paycheck Protection Program (PPP), which is the $349B small-business loan contribution, exhausted its funds on April 16 after opening for nearly two weeks.
Certified financial planner Benjamin Brandt stated that if the plight continues for over six months, even if the income and market plummets, he’ll still try to maintain full business. He chose Cornerstone Bank, a community money lender, and arranged a PPP advance of $40K—two months-worth of aid for himself and his two employees—for this reason. He wanted to ensure their future even if he didn’t need the loan at the moment.
The following are the three bits of advice from financial advisors if you find yourself in a similar situation:
Evaluate your choices
Although PPP is currently the most popular loan program, autonomous advisors and their organizations might be qualified for other more feasible options too.
Many employers have an approach to numerous refundable tax credits that contain worker retention credit and credits for paid family or sick leave. These are accessible through coronavirus relief programs. However, keep in mind that you can’t apply for the PPP if you have taken the employee retention package.
Borrow through local banks
If you make up your mind and move towards applying for the PPP loan, it helps if you know your local bank representative. A banker whom you’ve been in acquaintance with or have a simple banking relation can help you and your accountant smoothen the document-gathering process. Obtaining funds through the local bank is advised by almost every financial advisor.
Backup your funds
Similarly, as advisors remind customers to save money in case of any crisis that may come up, they also need to secure funding after all of their other options have been exhausted. Money put aside in a safe place, in addition to a credit extension that is set up early, could be a great backup in during times of crisis.
It may be an ideal opportunity to review your productivity as well as profitability along with stress-testing your business to perceive how you would deal with a drop in income. Organizations should go for a half net revenue and have a huge amount of cash put in a safe spot as customers rely on financial organizations to maintain a lucrative business.
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