This is how you will defend your company’s reputation and avoid being hit by shake shacks

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The second round of funding in the Paycheck Protection Program (PPP), the federal government’s crisis aid for small businesses, has begun. If your business has been or will be given a loan, what new issues should you expect?

My last few articles included instructions from former federal criminal prosecutors and from Small business lawyers, examine legal risks related to the PPP loan hardship test and make recommendations to help you meet the conditions that make the loan forgivable.

But now there are more questions to consider. After the riot about PPP lending to larger, publicly traded “small” companies like Shake Shack and Ruth’s Chris Steak House, rest assured that the news media will be closely following the second round of PPP lending for similar potential controversy.

Even if your small business has drawn up all of the PPP loan certifications in good faith and has all of the requirements that make it forgivable, you should still be ready to defend the loan under media scrutiny if the reasons your business received it are out to anyone are not obvious. This article contains some tips from a public relations professional.

New funds could quickly run out

In approving the second round of PPP funding, Congress failed to fill the loopholes in this well-intentioned law. The US Small Business Administration, through which lenders provide finance, does just a number of something cloudy interpretations. Therefore, if the demand for PPP loans continues at their original rate, we can expect the additional $ 310 billion to rise Paycheck Protection Program Increase Act could be used up as quickly as the $ 349 billion of the first round of PPP. Article by CBS news and CNBC, along with a story about New York restaurant owners in The Atlanticto expose some of the shortcomings in PPP legislation that have created controversy.

What would have helped? Adding objective criteria for the Hardness certificate to qualify for the loan, such as B. a decrease in turnover by X% compared to the same period of the previous year and a reduction in the standard for the company size (currently up to 500 employees per location). Also, too much of US small business innovation (along with talented lawyers and accountants) is being wasted trying to maximize the forgivable loan amount (up to 75% of labor costs).

The Shaming Campaign: PPP Backlash

In the first round of PPP funding, many small business owners were left out, while some larger, well-connected companies received millions. Spurred on by outcry on social media, news coverage sparked a Public shaming campaign with investigations and data published by the SBA (see reporting from Associated press, CBS news, CNBC, and NBC news). Acknowledging the media watchdog role for getting some of the larger corporations to repay their loan proceeds and for getting the SBA and Treasury to issue new guidelines on eligibility.

However, an act played off by companies that have received funding with those that haven’t received funding may be too enticing to local news media and other independent sources of information. Reporters can be expected to be careful about which companies are receiving PPP loans, as well as reviewing lists of political donations in their regions and data on executive and director compensation in the SEC filings of nearby companies. Jon Chesto, a distinguished business reporter and columnist The Boston Globe who wrote about small businesses that are longingly waiting PPP loantold me he hadn’t investigated this yet. “But maybe, according to your story, maybe I could,” he added.

Your credit information is readily available

Most of the small businesses receiving PPP loans have never applied for government crisis aid and are unaware of how easily information about it is published. The data protection that you would get with a personal bank loan does not apply. It doesn’t always take Freedom of Information Act request to receive the data. The Wall Street Journal reported that for the time being the SBA is too busy to respond to these requests.

Michael Minnis, Professor of Accounting at the University of Chicago Booth School of Business and the Creator of Calculation tool for the paycheck protection program, offers some insight into the 7 (a) credit program of the SBAthat publicly provides information about borrowers. “If I were a small company applying for the PPP funding, I would expect it to be disclosed. While public companies with disclosure requirements are now being invoked, private companies receiving funds will be exposed when it is in accordance with the standard SBA credit protocol.

He points out that the SBA’s database for corporate loans is at the ProPublica data storage. According to information on the website, it “contains information about the company receiving the loan, including address and industry code, the money-lending bank, the amount borrowed, and (if applicable) whether the loan was fully repaid or withdrawn. Other PPP tools and online studies of data include Covid credit tracker, Covid Money Tracker of the Committee for a Responsible Federal Budget and a report by SBALender.

7 tips from public relations and crisis management professionals about PPP loans

Large companies often have PR agencies on duty. Assuming you don’t and need to use all of your credit funds to run your business or nonprofit and pay your employees, what should you do when a reporter calls or emails? I asked Barry Wanger, President of Wanger Associates in Newton, MA, a boutique PR agency specializing in crisis communications and media relations. He’s the kind of PR sage to turn to if you’re looking for timeless wisdom about media perception and narrative.

He sees seven keys to answering reporters’ questions about small business PPP loans:

1. Always focus on the business benefits, especially the impact on your employees and the community.

2. If there is strong human interest, play it up. For example, talk about the business being your life’s work and without it you would have closed the shop. Or how happy you are for your employees who have been with you for years.

3. Don’t be defensive. The loan is something that you need, deserve and qualified for.

4. If a reporter asks, “Don’t you think the money should have gone to the homeless, students, etc., not you,” the answer should be that you definitely deserve it, and I hope you get more Get support because it’s good.

5. You should be willing to explain to a reporter in a non-defensive manner how you are going to use the money. You do not need to provide any information, e.g. $ xxx for employees, $ xxx for whatever.

6. Most reporters are just trying to get information for a local story. They are not after you unless it is obvious that you are taking advantage of the program like some of the major chain restaurants and hotels.

7. Remember that anything you say could appear in the story. Don’t go off the record or say anything you don’t want to see in print or online.

Should you return the loan?

One tricky question concerns local businesses with wealthy owners whose businesses are nonetheless fully legally eligible for the loans. Should they follow the lead of the larger “small businesses” and return the loan money if necessary? Barry paused at this. “My first reaction,” he told me, “is to hold back as it smells a bit of self-tapping and a bit of bragging, that is, ‘I’m so rich, I don’t need the government money. ‘”He suggested that if a number of companies in your industry, profession, or community decided to jointly announce this,” it would have more credibility and more newsworthiness. ”

Some midsize small businesses are starting to decline PPP loans. For example, see the first-person story and reasoning from Dan Wagner, CEO of Civis Analytics (headquartered in Chicago, IL) in The Atlantic. His company refuses $ 4 million. He also presents suggestions on how the PPP can be made fairer.

What if a company realizes that it may not really need the money, maybe because business is picking up or the downturn wasn’t as bad as feared? One suggestion I’ve heard comes from Tim Kochis, CEO of Kochis Global in San Francisco, CA (Advisor to Independent Financial Advisors (RIA) in the US and abroad). He suggests giving the appropriate amount of money to local charities and nonprofits and then repaying the PPP loan, which only has a 1% interest rate. This is an idea he is conveying to his customers in this situation. “With way too many people starving in the US, especially now when they can’t put the money to good use in their own business, donate to the locals Panel. “

My other blogs on Forbes.com about the Paycheck Protection Loan Program

The federal fees for PPP loan fraud are intended to remind you that these loans are not “free money.”

Corrections to the paycheck protection program accelerated by a bill proposed in Congress

Paycheck Protection Program News: SBA Offers Good Faith Safe Harbor Certification to Support Loans

Paycheck Protection Loans and the Risk of Government Investigation: Advice from former federal prosecutors

You have received your paycheck protection program loan. What now? Advising lawyers for small businesses

How to Avoid Going to Jail for Your Salary Protection Program Loan: Advice from former federal prosecutors

Free Money For Small Business? Beware of the legal risks of the paycheck protection loan program until further guidelines are issued

SBA says Paycheck Protection Loans are not suitable for larger “small” businesses with access to liquidity


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