By Joe Rubin
The Paycheck Protection Program (PPP) has provided billions of dollars in loans to millions of small businesses. Most of the recipients received relatively small loans (average size of $80,000 for the second tranche of loans), but there are a significant number of recipients who received $1 million or more, and 40,000 businesses received $2 million or more.
However, while the program clearly allows businesses with up to 500 employees to take out loans of up to $10 million, Congress and the Administration are rethinking that, and are promising to examine and audit those companies that have received more than $2 million in PPP loans. In addition to that scrutiny, however, the press is actively pursuing companies that have received loans of $1 million or more, often “naming and shaming” them and pressuring them to return their PPP funds.
Unfortunately for many businesses that do not have experience in dealing with reporters, the challenges of responding to press inquiries often go “sideways,” with business leaders straining to defend the reasons why they need this money. This has led many businesses to agree to return their PPP money, even if it is good for the business and their employees.
Specifically, while business leaders generally have time and resources to prepare for scrutiny from the government, dealing with the press presents a whole host of new and important challenges, such as dealing with hostile questions and an unknown audience, and having to respond real time.
These questions are also generally not based on legal requirements, but are often based on a reporter’s perception of “fairness” to other recipients, legitimate “need,” and simply the size of the loan. In addition, these new and novel questions and pressure are occurring in real time, and do not give business leaders time to prepare beforehand the best ways to react and respond.
As a result, companies are often forced to respond to public questioning and reporters with no support or training to help them get through these questions. It’s not surprising, therefore, that many of these companies simply give up and agree to return the PPP money, even if it could be a vital support for their business.
In other words, business leaders who accept larger PPP loans need to think carefully about how to respond to public inquiries about the loans, and why they’re important to their businesses, employees, and customers.
There are several “rules of the road” that business leaders should keep in mind as they respond to reporters:
1. It is all about employees and customers
The goal of the PPP is to ensure employers can afford to retain and rehire workers that may have been laid off as a result of declining sales, closed stores, or other adversity caused by the coronavirus. Therefore, when being questioned by a reporter about the need for PPP funds, a business leader should continually return to the benefit that the PPP money provides to their employees:
“We took PPP money because we care deeply about our employees and wanted to make sure that we have the ability and resources to continue to provide a regular paycheck during these challenging times.”
It is particularly helpful if an employer can point specifically to the number of employees who had been laid off but the company was able to rehire because of PPP funding.
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2. The size of the loan is not in and of itself relevant, though that may be the focus of the press
Some negative press that is being generated centers around the size of the loans that some PPP recipients are taking out, comparing the size of the loan to a “typical” PPP loan. For example, a $2 million PPP loan is going to be 25 times larger than the typical loan received in the second tranche of PPP loans ($80,000).
The way to respond is to not take the bait, but focus on the need to protect your employees:
“We are very fortunate and thankful to our employees and customers that we have been able to build a successful company with a significant number of employees, and the employees are the most important asset that we have. We based our PPP request on the legal parameters that we believe are necessary to try to maximize the number of employees that we are able to bring back. We did not use this in any way to disadvantage other companies, and only requested and received enough to cover our payroll for up to 10 weeks. We are proud that we were able to receive money that we can use take care of our employees.”
3. DO NOT commit to “giving the money back”
Some of the reporters’ questions are likely to try to push the company into returning the money that was received from the PPP.
DO NOT make that commitment. If you feel trapped, you can say you will consider returning money that you may not need under the PPP, and that you will examine the potential need for the money, but that you made a determination early on you would need this money to rehire and retain your employees, and that analysis has not changed:
“Giving the money back would be unfair to our employees and customers because it would mean that we would be forced to again lay off our valuable employees.”
Be prepared with your response
If your company has a PPP loan over $1 million, be prepared to respond to public and media pressure regarding the appropriateness of your loan. Think about your responses and plan ahead so that the press is not able to prevent you from protecting your employees and customers.
RELATED: New Treasury Guidance Provides Safe Harbor for PPP Loans
About the Author
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