Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Letting these companies get loans was a feature, not a bug

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Letting these companies get loans was a feature, not a bug

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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Business

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free Everyone is focusing on the wrong problem with the PPP program

The Admin

bestonline

Business how to earn money from home without any investment how to make money from home part time real ways to make money from home for free

  • Some politicians and pundits have been quick to lambaste the Small Business Administration’s Paycheck Protection Program.
  • Critics typically target the fact that a range of corporations like Shake Shack and Ruth’s Chris received large payments
  • But we should actually focus on a different problem: That the program doesn’t have enough money.
  • Matthew Zeitlin is a writer in New York.
  • This is an opinion column. The thoughts expressed are those of the author. 
  • Visit Business Insider’s homepage for more stories.

As the federal government’s aid to businesses affected by the coronavirus pandemic has gone out, a curious new breed of public moralizer has emerged: the wealthy businessman or their political allies angry at businesses getting money that isn’t “meant for them.”

People are angry at larger companies that participate in the Paycheck Protection Program, a loan fund created by the CARES Act and administered through banks and the Small Business Administration to help ease the economic pain of the pandemic.

The program is designed to give generous loans that would cover 2.5 times the monthly payroll of a qualified business and that loan would then be forgiven if they were spent on a few categories of expenses — most notably paying employees. 

The program has been castigated by critics across the political spectrum for a slew of issues, most notably for letting larger companies participate who may not seem like a “small business.” In particular, this criticism is directed at companies that are publicly traded and thus might be able to tap to the equity markets for funding.

But it’s not a failing of the PPP that some larger companies got money — the program was designed to include them and, if the purpose of it was to protect employment, then letting a wider as opposed to a narrower range of companies participate could be helpful. 

The PPP, despite getting another infusion of $320 billion on top of the $349 billion already disbursed, has clearly been underfunded and, second, its actual goal of protecting employment has been confused with its marketing as a way to assist sympathetic small businesses. 

The PPP deliberately designed its rules so that large restaurants could access the funding, leading to name brands like Shake Shack, steakhouse chain Ruth’s Chris, sandwich chain Potbelly and others getting checks. This stirred up substantial opprobrium as many truly small businesses have received nothing so far. 

After the uproar, Shake Shack founder Danny Meyer and the company’s chief executive Randy Garutti took to LinkedIn to say that the burger chain would give back its $10 million loan, while the sushi chain Kura Sushi said it would return its $6 million in PPP funding, along with Ruth’s Chris.

None of these companies are “small businesses,” but their qualification under the plan isn’t a “loophole” — it was deliberate. The Treasury’s guidance specifically says that hotels and restaurants get special treatment under the plan, specifically that the standard is that if there are 500 or fewer employees per location, not for the entire business.

“Few, if any restaurants in America employ more than 500 people per location. That meant that Shake Shack — with roughly 45 employees per restaurant – could and should apply to protect as many of our employees’ jobs as possible,” Meyer and Garutti wrote on LinkedIn. 

Marcus Lemonis, the CNBC host and Camping World chief executive, has been on the warpath against public companies who’ve participated, tweeting, “We will not and cannot accept this… it’s go time… as the largest shareholder of a public company I cannot stand by and watch this… public companies can sell equity or raise debt,” and “These companies have alternative avenues of raising capital…. no excuses… and I will make it my mission to find out why.”

Mark Cuban was so upset with larger companies getting access to the program’s funding that he proposed a lottery in place of its current system of working through banks and the Small Business Administration. Sen. Rick Scott, the typically conservative and pro-business Florida Republican, lamented that “millions of dollars are being wasted” because “businesses with thousands of employees have found loopholes to qualify for these loans meant for small businesses.” Treasury Secretary Steven Mnuchin has gone so far to say that any loan for over $2 million will be “reviewed” to see if they were really eligible. 

On its own terms this made some sense — in a world of limited funding for generous loans (which, if the guidelines are followed, turn into grants that don’t need to be paid back) — the Shake Shacks of the world should not be first in line to get the money. As Lemonis said, they are public companies that should be able to raise money from the capital markets. 

But it’s not like PPP money is exclusively going to large, name-brand firms. While a few loans have gotten the vast majority of the attention — Ruth’s Chris, Shakes Shack, the around 70 public firms, some large hotel locations — there have been over 1.6 million loans under the program from nearly 5,000 lenders. Three quarters of the loans have been for under $150,000, while about 9% of the total funds have gone out in loans greater than $5 million, only about a quarter of one percent of the loans have been that big. 

The problem isn’t that Shake Shack and Ruth Chris got support from the government, it’s that companies were set up to compete with each other for money in the first place. While the rollout of expanded unemployment benefits has hardly been perfect — largely thanks to outdated and overburdened state unemployment systems — the federal government doesn’t need to go back to the drawing board in order to fully fund it with new appropriations after a few weeks, they simply disburse the money to the people that its owed to. 

If anything, the rules for restaurants are not generous enough. In the first batch of PPP loans, the sector that received the most aid was construction firms, with professional services, manufacturing, and health care all ranking above accommodation and food services businesses. 

A restaurant trade group told the Financial Times that much of its industry was “highly likely” to give back the loans instead of holding on to them and trying to get them forgiven, as the program was envisioned. That’s because many restaurants are currently closed, meaning that the requirement they spend the money within eight weeks in order to get the debt forgiven may be more of a burden than a benefit.

The real problem is that we are in the midst of the most severe economic downturn since the Great Depression. Economic growth has completely reversed, with the economy shrinking at an almost 5% annualized rate in the first three months of the year — a period where only one month, March, was dramatically affected by the coronavirus-induced crash. The risk is that we spend too little to keep the economy on life support, not give money to the “wrong” recipients.

Almost 4 million people made claims for unemployment benefits last week, a figure that’s several times more than the worst weekly claims numbers during the 2008-9 financial crisis but actually better than the week before. Businesses have either been shut down explicitly by the government or saw their revenue dry up because consumers didn’t want to risk getting sick. The government is uniquely situated to fill in the gap — whether by supporting businesses and payrolls directly through the PPP, by sending checks to individuals, or through a massive increase in unemployment benefits. 

In order to prod the government to act more quickly and to keep its assistance sustained, we shouldn’t focus on those people or entities that are getting too much, but on those who are getting too little or none at all. 

And it’s not like the government is hurting for money — inflation expectations are low, interest rates are low, the value of the dollar is strong against other currencies. And to the extent aid doesn’t reach businesses who can use it, they will lay off employees — and it doesn’t make a difference to laid off workers whether they’re getting laid off by Ruth’s Chris or a local greasy spoon.

The PPP itself is caught between two goals: The way it’s talked about in public, it’s a program designed to help the bottom line of businesses while their revenues are taking a hit, but the actual method by which it does so is by giving loans that functionally become grants if they’re spent largely on retaining workers. If it were truly a “small business” program, then restricting who gets access to it would make sense and there would be few guidelines for how money should be spent, and if the goal were to keep employment levels as high as possible, then the government should imitate Denmark and directly subsidize wages of employees who don’t get laid off.

And there’s a growing movement for government backstops for wages from the federal government from both Republicans and Democrats. These schemes would involve large, direct subsidies to all employers, big and small, thus running directly into concerns about undeserving companies getting “too much” aid compared to smaller ones.

By drawing up programs so that no one who doesn’t “deserve” it gets to benefit, we are just as likely to exclude those who do through red tape and bureaucratic hurdles.

We should not, in the words of Marcus Lemonis, “find out why” public companies sought PPP aid. We should be finding out why and holding the White House and Congress for every dollar not spent, every job lost and every barrier put up in front of individuals and firms that need assistance.  

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