Restart or reinvent?

The PPP loan program was designed to provide paychecks and not save your business directly. There are three goals for you to consider how to use the funds:

  1. How do I save my business or better yet, how do I make it thrive?
  2. How do I best protect my employees’ livelihood?
  3. How do I maximize the forgiveness amount in the program?

These three goals are intertwined and picking one will not serve you well. If your business has shut down or greatly slowed, then bringing back employees for no work helps no one and will only lead to later layoffs. This kills trust and longer-term plans for using the funds as a two-year loan with partial forgiveness may be your best strategy. Remember that you certified in your application that you need these funds, but you do have some discretion in how to use them. Some companies are returning funds as they find they do not need them.


Analyzing your options and goals.

Your new normal is yet to be discovered as your customers and supplier habits have changed. Things going back to the way they were is not likely. Think about how we travel has forever changed since 9/11. Consumer habits, government controls and internet based human interaction have changed for the long term.


If you serve businesses, contact them and ask about their plans for insight on how quickly your sales will pick up. If you are a consumer-based business, look for information on the internet on how consumers are starting back up in other countries such as China, South Korea, Sweden or Italy. Knowing how quickly you need your staff back is a critical decision factor. It may make sense to use 40-50% of PPP funds on employees now and save 50-60% as a two-year loan that is not forgiven to provide capital needed for a slower restart.


Cash flow is strength.

We recommend putting together a detailed 26-week cash flow spreadsheet. This level of detail gives foresight to survive payroll weeks, know how tightly you must collect from customers and how many employees you can afford. You can create scenarios based on assumptions for business growth and trigger points. Our analysis with clients has discovered that some do not need cash today but will in 90 days, so they opt for a slower return of employees knowing that less of their PPP funds will qualify for forgiveness. Others have decided to go for maximum forgiveness by bringing back as many employees as available and hoping business picks up quickly. (This is a higher risk approach) Some businesses are doing well now but still have received PPP funds. They are looking at this as “free capital” and are looking for ways to maximize the forgiveness amount by using funds quickly to boost their business. Some are looking at the opportunity to improve their staff through new hires of great people out of work. All these options appeared after their cash flow planning for six months.


C Squared Solutions provides fractional CFOs and COOs for businesses in nearly all industries. We offer four hours free consultation to help you with the analysis and planning of these steps. Give us a call and let us discuss your concerns.

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