Ellen McIlhenny - The Smart and Savvy Exit – An ESOP as a Transition Strategy
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On March 31st President Biden signed the PPP Extension Act which gave an additional two months until May 31, 2021 to apply for PPP funds. Then there is an additional 30-day period for the SBA to process applications that are still pending even beyond the deadline.
While this was good for small business owners, I am starting to see some of the same panic that happened last spring when money kept running out. I had one client last spring who submitted the PPP application to a large lender. That lender sat on the application for two weeks and then returned it two days before the first round of funds ran out. Not knowing if there would be more, it was panic time for my client. Now what I am hearing is at the current rate, the money this time around will be gone long before May 31. That is why, if you are putting off applying for any reason, go ahead and get it done.
Beyond that there has been a lot of frustration with lenders who have been slow to update their platforms because there have been so many guidance changes since this whole thing started. Forgiveness applications on first round loans were held up many weeks for some because of the banks.
And now we are being told that there have been many large PPP applications that have been held up due to processing errors – something like 190,000. These larger PPP applications will more than likely use of more than half the funds left in the lending pool. Once again, the little guys come up short.
I heard the other day that there is a possibility that they could pull some additional money from the SBA's EIDL program. Since PPP loans are forgivable it has been much more popular that the EIDL.
PPP is a well-meaning initiative but has at times been a bureaucratic nightmare. It will be sad when the money targeted for truly small businesses runs out.
So far, more than 8.2 million PPP loans have provided struggling small businesses with the relief they need to keep workers employed and make ends meet during this pandemic. It is a program that I have been squarely behind because it helped people who through no fault of their own were being destroyed by government shutdowns.
Show Objectives - The Why
Today I will be talking about Employer Stock Option Plans (ESOPs) and how they can be used as an exit strategy.
Find My Podcast at https://pod.co/future-financial-confidence-with-ellen-mcilhenny
Next Week: I will be talking to Rob Youngblood about what’s next after selling.
Written by Ellen McIlhenny
Owner of CFO Plus Services, a Fractional CFO services firm which also offers Back Office Bookkeeping Services. Author of the business novel The Big Turnaround; How Bad Management Nearly Destroyed an Exceptional Company. Check it out at https://thebigturnaround.com
You can connect with Ellen on any of her #cfoplusservices platforms or firstname.lastname@example.org
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