SBA’s PPP failure and its lessons for great leaders

My COVID-19-related recommendations last month for CEOs and fund managers — which a few then referred to as “heavy-handed” — now appear lightweight.

Beyond the virus’s medical realities, with profits tumbling from banks like JPMorgan Chase and famed Bridgewater Founder Ray Dalio warning of a Great Depression, many now feel its economic effects with layoffs, furloughs, and reduction in hours as the unemployment rate soars.

In order to combat these economic trials, Congress signed the largest stimulus relief package in history of $2 trillion. Appropriately named the CARES Act, the efforts include a $349 billion package called the Paycheck Protection Program (PPP) providing small businesses, self-employed workers, and individual contractors forgivable loans to maintain their payroll/earnings for an eight-week period.

Yet, the SBA program fails to get the little details right — like an idiot-proof application form and universal accessibility — to ensure those struggling get relief quickly. It gives vague guidance for borrowers and lenders, and uses oft-crashed tech to close on loans.

During times of crisis, great leaders create structure and simplicity in spite of chaos.

Here are five things that founders and executives can learn from the PPP’s failure:

  1. Create order. Taming chaos requires two key plans: one for action and one for communication. Focus on clarity and break down large problems into manageable items. Remain calm, transparent, and resolute as team members takes their cues from leaders.
  2. Design for simplicity. Whether designing an app, campaign, or meeting, now is the time to keep it simple and reduce noise. Guide the audience and clearly outline achievable next steps. Humanize messaging and remain consistent.
  3. Focus on results rather than rhetoric. Create an objective with quantifiable results. It’s impossible to track progress without a baseline, and this holds everyone accountable.
  4. Have a plan. Identify the stakeholders involved, the actions and results required, and potential blockers when moving from Point A to Point B. Communicate this plan, document it with simplicity in mind, and remind the team often.
  5. Trust your experts. Never be the smartest person in the room. Listen to advisors with expertise and experience. Invite them to challenge perspectives and influence the plan.

For the sake of all leaders and their small businesses fighting for financial life, I hope Congress, the White House administration, and the SBA acknowledge the program’s shortcomings by increasing its allocated funds, approving additional lenders for easy accessibility, and extending its time coverage.

In the meantime, stay healthy, cover your face, and wash your hands.