The Small Business Administration’s Paycheck Protection Program (PPP) provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act authorizes low-rate, short-term loans of up to $10 million that are fully forgiven if 75 percent is used for payroll purposes. Financial planners have been divided over the wisdom of taking PPP loans.
Diane Bourdo, president of financial planning firm The Humphreys Group in San Francisco, California, weighed in on this dividing issue in this AdvisorHub article.
Bourdo said the lesson she took from the 2008-09 financial crisis was the necessity of having an emergency fund or credit line that could cover some six months of operating expenses. “We’re supposed to be doing what we tell all of our clients to do, to live within your means and plan for the rainy days,” Bourdo said.
Regarding participating in the PPP program, Bourdo said, “I didn’t think about it for more than five minutes. It’s not meant for people like me, and I do think there’s a stigma to taking it, though there may be extenuating circumstances. Yes, my revenue is down, but I’m not going to have to lay anybody off.”
Read the full May 2020 AdvisorHub article “Advisory Firms Debate Potential Stigma of Paycheck Loans” here.
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