How a Community of financial Professionals and their Clients Came Together to Solve the PPP

By PRETTY BOOKS ON November 3, 2020

BEHIND THE SCENES is a  collection of stories about relationships, challenges and wins in the day to day world of accountancy.

There is no typical day in the office for an accountant. They might start each day at the same time checking a work email, but after that, anything goes. Between business emergencies, problems emerging with books, reconciliation issues and beyond, accountants become much more than just number crunchers. They’re also firefighters, shoulders to lean on, friends, and allies.

It takes a community of great minds coming together to solve problems. When the Small Business Association released loans under the CARES Act, financial professionals, bankers, and their clients had to come together with their own perspectives to solve the issue of the Paycheck Protection Program: what to submit.

When the Paycheck Protection Program (PPP) was released on March 27th, small businesses and financial professionals were left with one week to understand the nearly 500-page document outlining the PPP loan. The loan program was rolled out to help struggling businesses make payroll and retain their staff, promising a 100% forgiveness incentive if at least 75% of the loan was used for payroll. While it clearly stated a requirement of submitting the average cost of 12 months of payroll, the rest of the guidelines remained unclear and changed every day.

The scramble to understand the loan and prepare for application began March 27th, the minute the PPP loan was released. Financial professionals across all industries had to immediately try to digest the loan document. Most banks started accepting applications April 3rd, and it was first-come, first-served with no indication that funding would last more than a couple days.

The accountant jumped in headfirst to try and get ahead of the applications by researching the loan document, reading through financial forums, and reaching out to her network of finance professionals.

“It was a lot to try and figure out and quickly. There are several ways to calculate the average of payroll. The CARES Act didn’t spell out the exact way to do it, so we had to figure out the best approach for each of our clients.”

A lot of components determine the cost of payroll depending on the type of business and its employees. For businesses that are seasonal, the average cost of payroll would change depending on which year is used: fiscal or calendar. Some of the accountant’s clients had employees that were paid on commission, were part time, earned tips, or received large bonuses. There was a huge variation in how people were paid, which threw more challenges into calculating payroll.

“No one is really the expert in a situation like this.”

At the same time the accountant was trying to decipher the PPP, everyone else in her network was, too. She called on her relationships with bankers to see what they were requiring for their PPP loan, which they were still figuring out themselves. She could prepare all she wanted based on her interpretations of the PPP loan guidelines, but whether the loan was successfully submitted to the government depended on each individual bank’s own guidelines. She asked other accountants and professionals for their perspectives and ran through forums for more insights. Then she started calculating.

The accountant began running numbers and projections to measure the risk of submitting certain payroll costs. When she wasn’t calculating, she was running into a meeting with one of her several clients, who had their own insights and perspectives on the loan guidelines. As a team, the accountant and each of her clients would discuss and propose alternate strategies, and the accountant would jump into another meeting to share her findings with her coworkers. For six days, she ran back and forth between her research, analysis, and teammates, who were all in their own various stages of the same chaotic cycle. The phones were ringing and messages were pouring in nonstop to share knowledge, advice, and insights within the accountant’s community.

“No one is really the expert in a situation like this. Accountants have insights into the ideal process, but there are always gray areas that someone else might be able to see more clearly.”

Over six chaotic days of sharing approaches, researching changing requirements, and calculating hundreds of average costs of payroll to find the best result, the group of accountants and their clients came to a consensus and applied within minutes of the banks opening up for submission.

“It was a frenzy, and it was chaotic. But during this chaos we found out just how much we’re able to come together and figure problems out as a business community. My team did a lot of research, analysis, and poking and prodding from top to bottom and back again, but we weren’t the only ones. At the end of the day, our community coming together with their own perspectives and thoughts and was the real reason we were able to solve this problem.”

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The information provided in this post is for general informational and educational purposes only and is not a substitute for professional advice. Consult your financial, business, or tax advisor with respect to matters referenced in this post. Pretty Books assumes no liability for actions taken in reliance upon this information.
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