Pandemic and PPP Loan Efforts Bring New Perspective

Pandemic and PPP Loan Efforts Bring New Perspective

by Michael F. De Stefano, CPA | Sep 01, 2020

As the COVID-19 pandemic erupted this past spring, our businesses were thrown into an environment that we had not previously experienced. There were the rapidly changing facts and circumstances, and each day seemed to bring new challenges to navigate. A question that kept popping into my mind during those early days was, “What should we be learning through this process so that we are not caught off guard next time?” But before I could digest that question, new information came at us once again – this time it was the Paycheck Protection Program (PPP) loan process and the mad rush to pull together information and prepare the application.

The PPP loan application process produced long days for our finance team; we worked until 2:30 a.m. leading up to the day we filed (and the day the applications went live for acceptance). Information needed to be pulled from multiple sources and then paired with known limitations ($100,000 salary limitation on individuals, for example) using the information at hand. We did not know that the guidance would change again, and again, and again. High-profile, otherwise profitable businesses, such as Ruth’s Chris Steak House and the Los Angeles Lakers, would bring scrutiny to all companies applying for the loans. Rumors began circulating that if you borrowed over $2 million you will be audited and must justify the economic need for the loans, otherwise they will be deemed not forgivable or, worse, you could be prosecuted. A few weeks later, that rhetoric calmed down a bit (not the audit part) as more guidance was issued. The reason the loans were made available in the first place was brought back into focus, and the effort to protect jobs and stabilize the business community was front and center again.

So, back to the teachable moment: What should we be learning through this process so we are not caught off guard next time? Here are some of the lessons that I learned from this process.

Be prepared for the unexpected – Set aside some time in the future to play the “what if” game. Be bold in your potential scenarios: it’s doubtful many predicted a scenario where we all closed our doors with days’ notice and then tried to retain 100% of the workforce. Then throw on top of it a race to apply for assistance funds before they run out (and not knowing if there would be refills). Time spent preparing for high-impact events will be a more important part of our planning in the future.

Cash flow projections – This is something our business had developed over the past year that involved a detailed analysis of all incoming and outgoing sources of cash. That analysis has become the base for our 13-week (and longer) cash flow projections, which are analyzed weekly at multiple levels within the business. What started as a way to understand the business better for newer employees turned into the basis for a rapidly built model that was grounded in historical data reaching back 18 months. There is no easy way to predict cash three months out, but it is an invaluable exercise that every business should be doing.

Disaster recovery plans – Every company should have had a disaster recovery plan in place. So, how did you do? We were fortunate that our employees all had laptops as standard issue; this made it easier to set up remote work conditions in short order. What was not so quick to turn around was access to printers, copiers, postage machines, and, in some instances, stable-enough internet to not slow down the work pace too much. While there was no “disaster damage” to our facilities (as would be the case with fire, earthquake, or lighting strike), we were unable to access our buildings and familiar work environments. If you have not focused on a disaster recovery plan, the COVID-19 quarantine should give you all the reasons in the world to start tackling this project.

Communication channels – Can your firm communicate with team members and external third parties when not together? Zoom and Microsoft Teams became household terms when only days before few in the office may have been using them. These programs became a lifeline, a way to stay in touch that was more personal than a conference call where you can’t see faces. Perhaps the answer here is to try out new technology while in a quiet state so it is easier to embrace when absolutely needed.

Communication from the top – It can be tough for coworkers to wade through conflicting information and rumors to find the facts. That is why it is vitally important that senior leadership shoot straight and deal in facts. It’s OK to be factual and open even if there is uncertainty. Share success stories and missteps; that is how we learn best. It’s the sharing of knowledge and passing that along to team members that aides in dispelling the uncertainty that can become an undercurrent of the organization. Rumors about layoffs, impacts on clients, and changing expectations can be dispelled through the clear sharing of information.

Documented roles and responsibilities – Shame on all of us who do not have our employees’ roles documented.
In times of crisis, it may be necessary to shift responsibilities around to free up time (perhaps to work on PPP applications and tracking). Having roles and responsibilities documented in advance makes it easier to transition people into roles on a temporary basis.

Reduce burnout and stress – Crisis situations involve more than just work; they also affect our personal lives. Kids are out of school and in need of structure. Perhaps a parent is at high risk and in need of care. Spouses’ jobs are in jeopardy and personal plans are disrupted. Families face the same chaos that businesses do. In times like this, you can learn a lot about people and how to help them. Pay attention to the signs that they may be giving off that indicate stress points. It’s OK to have open conversations as long as you are coming at it from the perspective of trying to help them manage their workloads.

This is by no means the end of the list of things we could learn from this process. But perhaps the biggest takeaway is the value of relationships. For example, our PPP application process tested those relationships in many ways. Internally, we needed to lean on people at greater levels without much notice, and these relationships span departments and service lines. We are a team, and teamwork is always easier when you invest the time to build relationships.

Relationships extend beyond the internal teams. External relationships are vital too, especially during a crisis: we had constant communication with our bank (and boy were they busy), attorneys, landlords, and insurance advisers. Then there are our clients, which is why we are in business after all. All of these touch points inside and outside our organizations benefit from trust, which can only come from the relationships we have invested in.

I challenge you all to think hard about how your organization reacted and what you may have done differently. Now is the time to take these lessons and act on them so we are that much closer to being prepared for the next unexpected event, because it’s only a matter of time before it will occur. 

Michael F. De Stefano, CPA, is chief financial officer for RKL in Lancaster and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at

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