One banker in Austin, Texas, whose community bank has facilitated 202 PPP loans, totaling over $37 million in funds, talks about the best ways for small businesses to use their loan for optimal results.
Maintain Your Staff
Utilize the funds to continue paying staff, or hire them back quickly, to turn the loan into a grant. It is important to note that for the loan to be fully forgiven, certain criteria must be met including using 75% of the loan on payroll expenses within 8 weeks. Your business will also need to prove that the funds were used in that way.
Keeping your PPP funds in a separate account and maintaining and detailed record of transactions will likely make this process easier.
Stockpile Cash
Companies who have been forced to completely shut down may need to evaluate their situation a little differently to determine what the best use of the loan will be for their business to survive long-term. Saving the money and paying it back may be more beneficial for some businesses.
Achieve Partial Loan Forgiveness
Having partial loan forgiveness while repaying part of the loan may be the best option for some small businesses to maximize their benefits and survive past the pandemic.
Again, the achieve partial forgiveness, it is suggested that businesses keep PPP funds in a separate account and track and record spending carefully.
“The PPP is designed to encourage resilience for small businesses in our local communities during this very difficult time. No matter how your organization chooses to utilize these funds, take note of how your financial institution treated you throughout the PPP process and remember that going forward. Did they support not only you, but your friends and neighbors in the community during this challenging time? Because it’s not about how we behave when times are good that really matters — it’s how we support one another and our community when times are tough that defines our character.”