Shed the Shame: Taking a PPP Loan Is Not What You Think

The relief of receiving a loan under the Paycheck Protection Program (PPP) came fast and furious for many business owners, especially in the wealth management industry. According to the Small Business Administration, more than 1,400 investment advisory firms applied for and accepted the money. But what followed just as fast and furious was the industry and media’s pace to shame those who accepted it.

Regardless of whether firms decided to keep or return the money, they were exposed to the same thing: shame. But why? Unless you’re a big business who accepted funds intended to support small businesses (fewer than 500 employees), why feel wrong about something that was used as a lifeline when it was needed most?

As firms grapple with this dilemma, it’s important to note that PPP is not a bailout. Unlike 2008 — which ripped the covers off seemingly healthy businesses that were instead barely getting by — PPP is designed to give small businesses a fighting chance by protecting the paychecks of their people.

It’s also meant to give owners the financial confidence they need not only to keep their employees but perhaps even invest in their company while pivoting to succeed in the current environment.

So when the PPP loan became available, my firm, FiComm Partners, appreciated the opportunity to participate in the program. Megan Carpenter, our CEO and co-founder, felt that it was a significant shot in the arm that we needed to weather the storm.

“As a business owner, you hope that you make the best decisions for your business, but under stress, it’s hard to see clearly,” Carpenter said. “The PPP loan enabled me to invest in FiComm and then pivot to help the industry during this unusual time. As a result, our business is more secure, and our clients are reaping the benefits.”

In a nutshell, here is what the PPP money means for the wealth management industry:

• Confidence to face the fear factor: No one knew the long-term financial and health consequences of COVID-19. This fear led the owners and leaders of many firms to become conservative overnight in an effort to protect their business. However, PPP gave business owners peace of mind that they have the capital to weather the storm. Without it, they may have made drastic decisions based on fear, hampering their business and stymieing their growth.

• Capital to grow: PPP represents more than just an infusion of capital. It’s a potentially forgivable loan (within terms) with a low interest rate that owners/leaders can use to invest back into the business. Five years from now, let’s look into companies who took the PPP money and those who did not, and compare their respective rates of growth. For those who invested the money wisely, it may make all the difference.

 Regardless of the reasons for accepting PPP money, some firms may not be able to escape internal and external pressure. When the shaming goes from raised eyebrows to a public outcry, there are some measures you can take to mitigate the risk to your business:

•  Power of Partners: If you’re feeling the pressure and seeing stress fractures within your business as a result of your decision to accept PPP money, gather your “inner circle” (i.e. leadership team, third-party partners, legal/compliance, communications, etc.) to discuss your position on the matter.Provide them with a clear understanding of why you took the loan and your plans for using it. Then work together to establish an action plan to address the issue both internally and externally. The first step in crisis preparedness is actually taking a first step, and making a plan with trusted partners is a good solid first step.

• Be transparent: This doesn’t mean you need to provide the industry with a deep dive on your business operations and balance sheet, but being open, authentic, and “real” goes a long way in helping people understand what was behind your decision to accept the PPP money. And — most likely — they are in the same boat, so hearing a fellow business owner be vulnerable about their situation can potentially help open both hearts and minds.
•  Don’t make yourself a target: Be careful about taking that selfie from your yacht and posting it to your social channels, because people will target you and your business if you make yourself a target.

If your firm accepted PPP money, be confident in your decision to infuse the capital into your business. If you’re feeling conflicted, know that many other business owners are in the same shoes trying to do what’s best for themselves and their employees.

But when your business is feeling pressure as a result of your decision, utilize your inner circle and partners to address the issue proactively in an authentic, transparent and humble way.

Just remember: As a business owner, you’re doing everything you should for your business. And that should stand for something.

Kirsten Plonner is president of FiComm Partners, an integrated public relations and marketing agency servicing the independent wealth management industry and broader financial services community.