Unsurprisingly, numerous SBA PPP Loan calculators have appeared on the web. Many of them are tied to a specific bank and have various complexity (or simplicity) in determining the amounts available. We’ve tried a few of them for comparison and found the calculations to be inconsistent.
So, we created our own and validated it with a number of accountants and lawyers. As the rules changed (and they continue to change), we updated it so we believe that it is current as of 4/8/20.
I’m going to refer to it as the Mostly Simple, Super Clear, SBA PPP Loan Estimator. It’s a Google Sheet, so if you want to use it, just click the link above, make a copy, and do whatever you want with it.
Please note the Disclaimer: this simplified model is meant to provide a quick, rough estimate the size of potential PPP loans and forgiveness amounts for planning purposes. Actual loan and forgiveness amounts will be determined by your bank based on federal law, regulations and bank implementation policies. Please consult your bank’s calculator and program paperwork to determine actual loan and forgiveness amounts.
My partner Seth Levine recently put up an extremely thoughtful post titled SBA PPP Loans Aren’t for Everyone. Go read it now – I’ll be here when you get back.
Seth references two other posts to read and consider. The first is by Albert Wenger at USV titled VC Backed Startups and PPP: Do You Really Need It? The other is an OpEd for CNBC written by Seth and Elizabeth Macbride titled Stampede for emergency loans is crushing lenders, putting millions of small businesses at risk. Here are steps to fix the system.
The complexity around both the PPP loans and the implementation of them is staggering. I can’t begin to estimate the number of hours spent collectivity just across our portfolio on trying to decode the rules, figure out how to comply, decide on a company by company basis if they should apply, and work through all the legal dynamics around them. On top of that, the mismatch between the expectations of dollars flowing quickly to the reality of the application process is dramatic.
We believe that many VC-backed companies will look at their businesses and determine that there is a clear and real need for the funds offered through PPP. But we’re encouraging all of the companies in our portfolio to pause and consider whether they truly qualify for the program and whether their participation in the program will save jobs and result in their business being less threatened by the crisis.
We understand that there will be many companies that fall into a grey area, have no way of predicting how serious the economic downturn will be, and how much it will impact their business. Hard calls will need to be made but we’re encouraging companies to make them with thought and compassion.
We sent the following email to all the CEOs in our portfolio last Friday. After discussing internally, we felt it was relevant to share publicly.
First of all, we can’t begin to tell you how impressed we’ve been with the leadership that you have all exhibited over these last several weeks. These are very challenging times both personally and professionally and these are the moments where true leadership is demonstrated. We sincerely thank you for the thoughtful and compassionate approach you have all taken during this crisis so far.
We had over 70 participants on the CARES Act/SBA/PPP call last night and we’ve had countless one-on-one conversations on this topic with many of you over the last few days so we know there is a lot of anxiety around the application process at the moment. The high anxiety levels appear to come from a mix of excitement and uncertainty which is certainly understandable because both components are clearly at play here. Although we can’t immediately relieve the anxiety, we strongly encourage you to take a few deep breaths and step back for a moment of reflection.
As you reflect, we think it is important to start by asking yourself “Was this relief package created for my company?” We’ve heard many of you talk about how attractive the economics of the loan could be for your company. The term “free money” has been tossed around more than a few times. We’ve also heard plenty of excitement around how simple it could be to qualify in part because the qualification requirements are both broad and ambiguous. However, the reality is that receiving a loan for your business means it isn’t going to another business that might also deserve the money so receiving a SBA loan does come at a cost to the broader small business community. Given the already mentioned ambiguity, we can’t, unfortunately, rely purely on the letter of the law to make this qualification decision for us. We all have to apply our social conscience and good judgment to come to the right answer. From Foundry’s perspective, we believe PPP was designed to accomplish two things:
No doubt that all of our companies would benefit from more cash with attractive loan terms on the balance sheet so it isn’t surprising that the majority of you are considering applying for the loan. At the same time, we know that many of you have not eliminated jobs or have no immediate plans to eliminate jobs at the moment. If you aren’t definitely planning to eliminate jobs, should you apply? Will your business likely fail without this loan?
As the application process is currently written, you (and perhaps your affiliates) will have to certify “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” This statement is highly ambiguous and could be interpreted in numerous ways. We’re sure most of you could easily rationalize this statement to be true. At the same time, providing false information in this application is a federal crime that includes jail time. In addition to your social conscience, you should have real conviction and certainty that you qualify in your own hearts and minds.
If you have a strong balance sheet, have recently raised money, or have some certainty around a near-term capital raise, we think you should reconsider applying. Although things are chaotic at the moment and it might be possible to take advantage of a lack of controls in the system, that doesn’t mean we should necessarily do so. Imagine for a moment that three years from now, the WSJ or FBI does a deep forensic analysis on the small businesses that received loans during the crisis. Would you feel good about the details of your situation being revealed in that process?
You are all proven leaders who have repeatedly demonstrated the ability to take a thoughtful and compassionate approach to decision making. While we all sort through the details and logistics of the loan application process, we encourage you to take a step back and remember to consider the big picture.