- The most appealing feature of the Paycheck Protection Program is that your loan can be forgiven if you use the funds to keep your team.
- In order to be eligible for forgiveness, you'll need to document how and when you spent the money.
- Microbusiness consultant DeVan Curry told Business Insider how he not only helped 15 clients land PPP loans, but how he's working with them to make sure they get maximum forgiveness.
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Many small business owners who were fortunate enough to be approved for a Paycheck Protection Program loan now say they aren't sure how to spend the money in a way that ensures the funds will be forgiven.
Forgiveness, much like initial approval, depends greatly on providing adequate documentation about your business, and this can be especially difficult for solopreneurs and microbusinesses.
These smallest of small businesses often lack the organization and procedures that larger teams use, not to mention access to the social and financial resources of larger companies.
DeVan Curry has the utmost respect for one- and two-person small businesses. After all, if it weren't for his father's hard work as a "shade-tree mechanic," Curry says he couldn't have gone on to receive the business education and experience he's now bringing back to his community in and around Chattanooga, Tennessee.
Curry explained to Business Insider how he was able to get approvals for all 15 of his clients who applied for PPP loans, and how he's guiding them through using (and documenting) the funds so that they get the maximum amount forgiven.
Organize correctly and consider S Corporation
Experts always recommend separating your business and personal accounts, but that advice is especially important when proving to banks and the SBA that your loan is eligible for forgiveness.
"If people don't separate their personal from their business, they're not doing business," Curry said.
Beyond financial accounts, Curry is a strong proponent of organizing a microbusiness as an S Corporation, which can have several tax and legal advantages over remaining a sole proprietorship or registering as an LLC.
Curry says that his clients who had already dealt with this piece of the puzzle had a smoother time applying and receiving PPP funds than those who had co-mingled accounts and informal structures.
Subdivide your business into 5 pillars
In Curry's view, there are five core divisions within every business: management, accounting, finance, operations, and marketing.
"Even though you may be a one-person show, understanding those as having defined, separate functions… is crucial to running a successful business," he said.
Curry has his clients separate their payroll funds from other operations accounts. Through a partnership with the small business payroll platform Gusto, he is able to provide his clients with detailed information about their payroll and benefits expenses.
This can be especially important in getting a PPP loan forgiven, since you will more easily be able to show exactly how your business used the proceeds from your loan.
Consider bartering to conserve cash
Because at least 75% of a loan must be used for payroll, Curry and his clients have had to get creative about conserving cash. In some cases, that means bartering for goods and services.
"We love barter here. It's dollar-for-dollar, and we have to understand that our dollars need to be used for specific reasons," he said. "For example, someone needs a business plan written up — and they all do right now — well then I might need haircuts."
And when it comes to more traditional financing, Curry said that having a "boots on the ground" banking partner — in his case Pinnacle Bank— was indispensable. By working with the partners and tools that Curry offers, his clients are better able to adjust their spending and strategies as their situations evolve.
"Some of [my clients] had no clue what a cash-burn calculator was," he said. "Now they all have them."
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