I still get PTSD, remembering October 10, 2008. Maybe you do, too: That was the day the US credit system basically froze. Lehman Brothers, Merrill Lynch, Bear Stearns and Fannie Mae had failed or nearly failed, and the liquidity crisis created a run on money market accounts. Reserve Primary Fund broke the buck. The memory is raising my blood pressure as I write.
As a survivor of those terrifying days, I’m intensely grateful that in March, the Fed pulled out all — or most of — the stops to ensure market liquidity. Sure, the rollout of the CARES Act was rushed, and naturally, there have been abundant hiccups. But we should all be glad that the federal government is doing everything it can to get cash into the hands of individual taxpayers and small businesses, avoiding the type of panic that nearly shut down the financial system in 2008.
Like many of yours, my advising practice is a small business. As soon as the Paycheck Protection Program was announced as part of the CARES Act, not only was I advising my small business clients to apply; I was also trying to figure out how to take advantage of it myself. I read everything I could find about how it was being implemented and what the application process required.
After contacting my bank (one of the big four) to indicate my interest, I started gathering documents: IRS Form 941 (and Form 940, as it turned out in my case), payroll tax withholding forms, 1099s, my statement of income and expenses for the business.
My bank informed me that the process was online only and they would email me a link to get started. Once I got the link (after a considerable wait because of the number of inquiries queued ahead of me), I completed the application, uploaded my supporting documents, and then … I waited.
Going through this process myself not only gave me empathy for the thousands of small businesses doing the same thing; it also helped me as I reached out to my clients who were small business owners. We were all in this together, and it made a difference in my communications with them and also with the credibility of my advice.
Like my clients, I waited, receiving multiple emails from my bank, assuring me that they were processing applications as fast as possible and would get to mine in due course. Day after day, I haunted my email inbox, hoping to see the magical indication that my loan was approved — or at least being considered. I knew that any government program rolled out as quickly as this one and involving this much money was bound to have some imperfections. And so, I continued to wait.
Some clients who worked with smaller, local banks actually received their funds quicker than others who used larger banks.
One big takeaway is the importance of a quality relationship with your bank. Some of my clients who worked with smaller, local banks actually received their funds quicker than others who used larger banks. This was an important reminder that, even in these days of increasing globalization and economies of scale, sometimes smaller is better. It also helps me remember how important it is to keep giving all my clients the personal touches that differentiate our firm from some of the larger, more institutional companies.
Finally, one late evening after helping my son with a homework assignment for virtual school, I checked my email a final time before heading to bed. On my screen appeared the words: “A secure email message from [Your Bank].” Was it possible? Holding my breath, I clicked through and logged into my account. I quickly scanned through the header and the opening lines until I saw the words, “…you are conditionally approved for $...”
The total indicated was not quite the amount I had applied for, but it was still a welcome sight. We have been more fortunate than many small businesses during this pandemic; we have been able to work remotely, reassuring, managing accounts, providing accurate information and doing the things my clients have come to expect. Certainly, like many of you, our fee base took a hit when the market dropped 30% in March.
While we were by no means on the brink of going out of business, receiving these funds through the PPP has nevertheless alleviated some significant stress and provided a greater level of assurance that we will be here, taking care of our clients and each other, until this crisis is over.
As advisors, our clients are our #1 job. But sometimes, we need a little care ourselves, right? Even though the PPP application process was confusing at times, involved an amount of waiting that would test the patience of Job, and was fraught with procedural and administrative potholes, I can honestly say that the peace of mind it bought me was worth the trouble.
