Is PPP Good for Your Small Business?

Find out whether or not that PPP Loan would have been really a good idea for your business in this episode of Financial Fridays.

Find out whether or not that PPP Loan would have been really a good idea for your business in this episode of Financial Fridays.

Seãn Johnson:

Hey everybody, this is Seãn Johnson here with Cigar Conversations. I’m bringing you a brand new segment, and it’s actually called Financial Fridays. It’s bright early in the morning, I haven’t even had my coffee yet, so please bear with me. I want to go to bring in an expert that has traveled pretty much all over the United States, has offices in several different places. I want you to meet Frank, Frank Akridge, with Financial Pathfinder, LLC. Frank, welcome.

Frank Akridge:

Hey, thank you. Good to be here, Seãn.

Seãn Johnson:

Listen, you’re in the midst of what’s known as the new norm right now, with COVID. And one of the questions that I’ve gotten a couple of times in the last month or so, we have, how would you call it now, the PPP?

Frank Akridge:

Mm-hmm (affirmative).

Seãn Johnson:

We have the $1,200 that goes to individuals, that’s to help with their monthly expenses. But what can business owners do, small business owners, if they get this loan? Can they go ahead and somehow maybe reinvest it, try to come out ahead of this curve? Well, what’s your thought on this?

Frank Akridge:

Well, it depends, Seãn. It depends on which loan they get, and when they get it, essentially. If they get the PPP loan, the rules limit them tremendously. They’ve got to, to be able to have it be some or all forgiven on the loan side, they’ve got to reinvest that money into payroll, and/or employee expenses, and/or overhead expenses. And-

Seãn Johnson:

Like 75%, or something like that?

Frank Akridge:

Yeah, yeah, like 75% of it. So if I get $100,000, $75,000 has to go towards payroll, overhead, all those kinds of things, for me to be able to have that loan forgiven, either some or all. And that’s great for most business owners. But you and I both know there’s a lot of business owners that are one- and two-people operations, and they don’t have a ton of overhead, and they really don’t have salary. So in that case, if they actually got the loan, it simply would be they’d have to pay it back.

Seãn Johnson:

Because for me, what I’m thinking in my industry, as far as the cigar emporiums or the cigar shops, like you just said, a cigar shop might be a couple, and it’s just a small family that’s doing this. So what do they do then? They can’t use it to stock up on cigars, because that’s a no-no. And, I mean, they are really limited to what they can do. So the payback is a 1%?

Frank Akridge:

Yeah. Yeah, it’s a really, really, really small price. It’s not bad, even if you end up paying the whole thing back. And the SBA, who’s kind of behind this whole deal, is notorious for giving you a second chance. They’re usually not real … It’s not like they’re going to start showing up at your business with four ugly guys and some AK-47s, and you pay now or we’re going to kill your kids kind of thing. They tend to work with you a lot, which has always been kind of the mantra of the SBA.

Frank Akridge:

So having said that, we have business owners that are asking the same question you’re asking. And the real answer, most of the time, depends on just what we talked about, the size of the business, what are you going to do. An example, in Philadelphia – I was looking at some of the statistics – and Philadelphia, an unbelievable chunk of the PPP money went to attorneys. Gee, I’m wondering how that happened. But right behind them were physicians. So it seems like there, and in most of your major metropolitan areas, the professionals, so to speak, were getting the lion’s share of the money. And to go back to your cigar owner, you’ve got a family, or a one- or two-person shop that’s selling cigars, they could use the money for cigars. It just means they’re not going to get a loan forgiven. They’re going to have to pay it back.

Seãn Johnson:

Okay. Okay. I think, based on what you just told me, I think if they come around again with another stimulus package, I’m going to reach out to my accountant, I’m going to reach out to some lawyers, and the next time you see me I’ll have a studio. I’ll be right next to Tyler Perry.

Frank Akridge:

I like it. I like it. Tell Tyler hi.

Seãn Johnson:

Will do, will do. And listen, that’s some-

Frank Akridge:

And interestingly though, real quick, I want to throw out something.

Seãn Johnson:

Go ahead.

Frank Akridge:

And this is for the people who have thought ahead of time, and/or their financial advisor was thinking years ago. If they or their advisor were thinking years ago, and they have a Universal life insurance policy, you can pull the money out of that Universal life insurance policy all day long. It’s your money. And so what we do with a lot of our business clients intentionally, is we intentionally overfund those policies. And even though they’re genuine life insurance contract, and it’s about death benefits, you can overfund the heck out of those things. And then in a situation like this, you just pull the money out and use it for yourself. And if you want to not pay income tax on it, you pull it out in the form of a loan. Well, it’s a loan to you, so you don’t pay income tax, and the interest you pay back goes into your life insurance contract, so it’s like you have your own bank. We call it the infinite banking concept.

Seãn Johnson:

You see, and that’s the reason why, ladies and gentlemen, that’s the reason why we have Frank here today, okay? And moving on, it’s going to be every Friday we’re going to get tidbits. And that wasn’t even planned. That was just off the cuff. These are just some of the stuff that Frank has in his arsenal, been in the business for so long. Thank you for that one. Let me ask a question. I should’ve asked it at the front part of this. Tell me a little bit about yourself and the company.

Frank Akridge:

Okay. I’ve been in the business about 20 years. I obviously am not 40 years old, so I was doing something else before. I started out, out of grad school, I started out in ministry and loved being in ministry. The problem is you can’t eat out of it, and I had a wife and kids, and they kept looking at me like little birds in the nest going so can we get off the peanut butter thing? So after a few years of ministry, which I loved, I went into counseling, because it was kind of an easy transition, and did that for a while. And the problem there was we were making really good money, but I had the personality of a business owner, not a counselor. So like you came in, you and your family, or your wife or whatever, came in, and after about two sessions of one of you whining, I just ran you out. Yeah, I was looking at you like, dude, did you listen to what I said last week or not? So that didn’t work.

Frank Akridge:

And so I had a client who was a business owner, who said, hey, could you just come into our business and do some consulting, in terms of helping us figure out how to get from A to B? And I thought well yeah, that’s kind of like counseling. So then for ten years I ran around the country working with business owners, helping them get their business growing, and helping the employees not revolt. And then learning my father-in-law, 20 years ago, was retiring from the financial industry, and said, hey, are you interested in taking over my practice? And I was tired of traveling, so I just asked if I had to travel, and he said no. And I said when do you need me there, and started out with accident advisors 20 years ago, got my certified financial planner and went independent. I’ve done a couple of gigs with broker dealers and some more RIA’s, but have mainly been independent for the last 20 years.

Seãn Johnson:

So you basically followed in your father’s footstep in the business?

Frank Akridge:

Yeah, my father-in-law.

Seãn Johnson:

Father-in-law?

Frank Akridge:

It’s interesting you say that though. I grew up in Dallas, Texas. My dad owned service stations, back in the day of full-service service stations, and so I grew up in business. I make a rotten employee. I suck as an employee. And my dad used to tell all three of us, he said whatever you don’t, I mean, whatever you do, work for yourself. Don’t ever go work for somebody else. Well, twice I didn’t listen to him, and went and worked for somebody, and it didn’t end well. I just don’t, I tend to think like a business owner, so I really did follow in both my dad and my father-in-law’s footsteps.

Seãn Johnson:

Okay, that makes perfect sense. Listen, I can totally relate to being your own boss. You see things and you’re saying, why can’t they see what I’m seeing? I think because you’ve been so far removed from where you are, it’s a whole nother story, it’s a whole nother story. But currently, you have a satellite offices throughout the U.S.?

Frank Akridge:

We have partners we work with. My office is mainly out here in Woodstock, Georgia. Excuse me. And I can meet people anywhere, but most of my clients are virtual. About, I don’t know, four years ago, I inherited some clients out in the Bay Area in California, and I bought a practice down in Southern Florida. So all of the sudden, overnight, I had these clients who couldn’t come meet me. So that was back before Zoom was sophisticated, so we were using FaceTime and-

Seãn Johnson:

Skype-

Frank Akridge:

Whatever. Yeah, Skype. That’s a really good platform. So we started there. And so literally last summer, way before the virus, we had already made the decision. Because what happened here in Atlanta is we didn’t have any more success with the folks in Atlanta wanting to come see us, after they’d spend all day long driving from downtown back up to Woodstock, or Roswell or whatever, and they sure didn’t want to leave work in the middle of the day and come meet me. So we’d already started moving our local clients over to virtual, so we’ve pretty much got a virtual practice.

Frank Akridge:

And then I’ve got partners around the country that do the high-piece stuff, or the niche stuff, that I’m not good at. So there’s two or three things I’m really good at. Literally, I’m blessed. I’ve got partners all around the country. I mean, Coca Cola could walk here tomorrow and say we need you to take over our whole 401k retirement plan, and we need you, and it wouldn’t bother me at all. We’ve got folks that can do that. And your 21-year-old college grad can walk here tomorrow with no money, and I can take them too.

Seãn Johnson: Listen, Frank, thank you very much. And listen, ladies and gentlemen, stay tuned because coming up next Friday we’ll be talking about… You know what? I’m going to save that for a teaser. But, until next time, have great Cigar Conversations.

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