22 Jun What We’ve Learned From Navigating The PPP
We passed a major milestone in pandemic economic recovery recently — the closeout of the loan application period for the PPP, which ended May 31. It’s a good time to reflect on the profession’s role in making this historic business relief program a success and to consider what comes next.
Almost 12 million businesses received critically needed loans through the PPP. Those proceeds collectively amounted to around $800 billion, which dwarfs the $475 billion in outlays under the 2008 financial crisis’s signature rescue initiative, TARP. It’s important to remember the context in which the PPP was launched. In March and April 2020, more than 21 million employees were laid off due to government-mandated shutdowns, and the economic upheaval affected small businesses in particular.
As we look back, however, the public-private partnership did come together to help drive a common approach to meet the program’s goals. As with all large programs, there will be plenty of reviews, questions, and lessons learned, but it’s extremely important to remember the broader perspective and historic impact of what was achieved together in supporting these small businesses.
As CPAs, we provided essential advice and advocacy for our clients throughout the PPP and other related relief programs. At the firm level, we’ve been financial first responders during the pandemic. And our combined voices made a major impact on policy discussions and were a prime source of information for policymakers as they rolled out business relief programs.
Over the past 15 months, we’ve experienced the seemingly never-ending tax and audit seasons and the squeezes smaller firms like ours sometimes faced with many of their clients in flux. But the tight bonds we’ve built with our clients during this crisis are incredibly valuable. The ability to advise, educate and protect so many of them was huge!
Through the end of this year, our clients will need help with PPP loan forgiveness applications and guidance on the implications of the ERC. We will also help clients use the recovery period as a reset, sparking strategic discussions about potential business model transformations.
There are several broader lessons for the CPA profession as we move forward:
1. The best business models are relationship-based, not transactional.
2. Agility is not a one-and-done exercise. Don’t expect a return to pre-pandemic norms.
3. Technology adoption and firm innovation are critical.
4. Business funding advisory is a need that will outlast the pandemic.
Our profession’s relevance has never been stronger, particularly when it comes to sustaining small businesses. Through our work with the PPP and other relief programs, we’ve built a strong foundation for future opportunities. I hope you’re as optimistic as I am about what the recovery will bring.
Daniel. DeHoek CPA | ABV | CFP®