PPP and the Importance of Cash Flow Planning

Part of the government’s COVID-19 stimulus package was the Paycheck Protection Program (PPP) – a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. It was intended to provide money for the short term; not to keep businesses running indefinitely. As such, it’s critical that recipients of PPP money are managing those funds appropriately.

In general, understanding the cash needs of your business and where cash is coming from is critical to running a successful business. And now, for businesses with PPP money, it’s even more critical. When you don’t know what cash you have coming in, cash flow planning will show shortfalls that when known, can be more easily taken care of in advance of an emergency; and in these times, when your PPP money runs out. It’s a tool that when put in place on an active basis, enables you to to project when you’ll have cash issues and allows you to react to them before they cause a negative impact on your business.

When the COVID 19 stimulus package rolled out, we sent a letter to our clients about the importance of cash flow planning and included a cash flow template to help them manage their PPP dollars. We’re happy to send our template to you, upon request.

There’s no question that P&Ls will be taking hits this year. The real question is who can survive? Business owners with an understanding of how much cash they’ll need, and at what times, will be better prepared to discuss their needs with lenders who will then be better able, prepared, and more willing to help them.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.