UNITED STATES PARKOUR ASSOCIATION
EDITORIAL – SHOULD I TAKE THE PPP LOAN?
Answer: It depends
In times of crisis, it’s a challenge for most people to say “no” to money, but if you are the type to “Rob Peter to pay Paul” then taking it may not be a good idea. We’ve all been there, “Oh, I’ll use THIS money for THAT, and when the bill for THIS comes due I’ll have made the money for it” or “That’s Future Me’s problem”. It’s how so many Americans end up with crippling credit card debt. Somehow we are able to convince ourselves that the money will come from somewhere when there really is no mystical future source of money. However in times of uncertainty its best to use only what we know to be true. As with all things in parkour, this is an exercise in awareness of reality and self-control rather than an un-calculated headlong rush into potential danger.
So, back to the Payroll Protection Program (PPP) itself. First and foremost, this money could allow gym owners to keep paying and avoid laying off any of their staff. This is critical to the health of the individual businesses and their local parkour communities. There are three reasons board member and gym owner Mark Toorock feels you should take the loan, if you know yourself and have a track record of being able to handle credit.
- There is a 6 month period of 0% interest. Loan opportunities are rarely so generous with their terms.
- There is forgiveness for any funds that you can show went to payroll, within your averages for previous periods.
- Up to 25% can be used for other approved purposes. This one must be handled with care as these terms are less defined and you run the risk of paying it back if your use of the funds is NOT approved.
Mark, a longtime business owner, suggests the the RIGHT way to do it includes:
- Take the loan
- Setup a separate savings account (usually free to attach to your business checking)
- Every payroll period, transfer the EXACT amount of your documented payroll and associated taxes.
- Save your payroll documentation in a specific folder so that you have clear, instant access to reference / provide to the lender later.
- It is difficult at present time to assess when COVID-19 will subside and allow resumption of normal business. The endgame of this loan may have two (or more) options: It may end up making sense to exhaust any funds which you know will be 100% forgiven. Alternatively, it might make sense to keep the balance in that separate account to instantly pay back any funds which you can’t prove direct 100% forgiveness for.
The worst case scenario for disciplined people is that you don’t use any of the money, and sometime within the 6 month grace period you simply pay back 100% of the loan, no penalties or fees.
The worst case scenario for non-disciplined people (and be honest with yourself if this is you) is that you take the loan, spend it on gym equipment–or worse personal items or debt– and convince yourself that some magic donor will come through and help with your payroll / business expenses. When the loan comes due, you are accountable for 100% of the amount because you didn’t track any of it to payroll (or get that magic cash you were hoping for) and then end up paying interest and just being in a deeper hole. That is a TERRIBLE situation to be in as business owner, and can make a bad situation much worse.
Here at USPK, we don’t want to see any gyms go out of business or dig themselves into a bigger hole. We encourage all our members and the parkour community at-large to weigh their options and consider which category they fall under. If you’ve demonstrated in the past that you can handle the responsibility, this may be the lifeline you need to keep your business afloat provided you carefully track your expenses. Otherwise, please do the responsible thing, refuse the loan and stay safe!
We hope you continue to overcome obstacles with us, whether physically or by keeping your own parkour community thriving in these trying times!
USPK Board Member and APK Founder,
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