Under the policy, any business (or nonprofit, veterans organization, or tribal concern) with 500 or fewer employees is eligible for a government-backed loan equivalent to eight weeks of its prior average payroll, plus an additional 25 percent of that sum (unless that grand total adds up to more than $10 million, which is the cap for any individual firm). And these loans are really more like grants, which means free money: Firms don’t need to make any payments on their loans for six months — and if they maintain their workforces, then the government will forgive almost all of the loan (more fine details on this point below). The idea is to keep the small-business sector frozen in place, so that it can rapidly defrost once the coronavirus pandemic has passed.But you can’t freeze something for later if it’s already spoiled. And many small firms directly impacted by social-distancing measures were already collapsing by the time Congress finally passed legislation. For these reasons, the Trump administration was eager to get the PPP up and running as quickly as possible. To that end, the administration has (1) made it possible for small-business owners to secure government-backed loans at any federally insured lender that wishes to participate in the program, regardless of whether such banks or credit unions are affiliated with the Small Business Administration, and (2) officially launched the program April 3.Unfortunately, the small-business bailout season is off to a shaky start — and for entirely predictable reasons. - New York Magazine
Monday, April 6, 2020
Big problems for small-business loan program
It’s hard to believe that the Party of Trump would dare, politically, to not get this worked out. But we’ll see.
Just curious can any "small business" qualify regardless if they are a "family" business or are only active for a short period of time ?
ReplyDeleteSupposedly, Trump owns 500 "small business" but they may have been purposely denied the ability to participate in the bills language ... but what about others ?
Could a candidate who established a "John Smith for Senate LLC" business in January ... with a few employees (including a family member or two) and then apply for the loans?
Could a farm being established as a LLC find a way to pay his employees (family) using this forgivable loan program ?
How about a small business that does snow plowing ?
What about the Minnesota Twins LLC ?
What about Single-member limited liability corporations (SMLLCs) ... are they eligible ?
I am not expert on this newest regulation, but my impression is YES -- all could apply but are subject to various limits ... like the Twins would be impacted as individual employee salaries are capped at $100,000. And since the period covers February 15, 2020 – June 30, 2020, even a snow removal business could apply.
I know the intentions are good, but I can see a lot a shifty people taking advantage of the program.
And don't quote me on this as my memory is fading but didn't a Twins pitcher get unemployment compensation because there were no jobs in Minnesota during the winter (his trade was "baseball pitcher"). My memory banks says it was somebody in the Dave Boswell era when the teams would pay the players starting in the spring and end in October ... after that claim, the teams switched to paying players on a year round basis.
Still don't know if the Minnesota Twins sought any monies, but did you read that the Los Angeles Lakers (formerly the Minnesota Lakers) applied for a loan through the Small Business Administrations CARES Act ... they got approved for $4.6 million but now after getting some publicity have returned the monies.
ReplyDeleteAnd my question of whether campaign LLCs could apply, reminds me that some candidates pay employees (including payments for social security and unemployment compensation) while others just hire "independent consultants" so as to avoid paying the taxes (or providing healthcare benefits.)
Looks like somebody else was thinking about the question "Could a candidate who established a "John Smith for Senate LLC" business in January ... apply for the loans?"
ReplyDeleteWell, CloudCommerce, which had 49 employees at the end of 2019, received nearly $800,000 from the federal coronavirus relief fund for small businesses ... don't know who is CloudCommerce ??? Well, ask Trump campaign manager, Brad Parscale, who has been CloudCommerce's largest beneficial shareholder.
Here's a link to the CBS story ... https://www.cbsnews.com/news/brad-parscale-trump-campaign-manager-cloudcommerce-paycheck-protection-program-loan/
BTW ... in the May 8 Hagedorn Report he reprinted a letter praising the lending program from a Minnesota banker ... no mention that the bank is paid a fee for processing the paperwork ... and that banks brought in a whopping $10 billion in fees from the government's $350 billion emergency lending small business Paycheck Protection Program (PPP) ... here is a link
https://www.fool.com/investing/2020/04/23/banks-rake-in-10b-in-fees-in-phase-1-of-ppp-progra.aspx