Audioburst Search

Small business loan funds are tapped out



Marriage. It's complicated to be amazing. The the upshot is it is complicated and some unknown percentage of Americans wound up getting stimulus checks this week at the same time as some unknown percentage of small business owners wound up getting the PC checks this week. Paycheck protection plan Not all of them have gone out yet. But I'm I'm assuming that within the week nearly all of that initial three hundred and forty nine billion will go out to small business owners. It is clearly not enough and while the people who didn't get stimulus checks on mostly super annoyed about I've seen some people saying like I got some weird windfall income in twenty. At and then. That means I'm not eligible but I should be eligible any any money like there are definitely people who should be getting stimulus checks in on the real anger. I'm seeing is from small business owners who just didn't have the right banking relationships and didn't manage to get their PCP applications in and they are just furious that money has run out and they aware they can end up with nothing. Fox is that thirteen point seven percent of the P P P loans went to the construction industry versus nine point one percent of the P P P loans which one small business owner told. My colleague stands for WHO Poop Poop then to the restaurant industry? Now the construction industry so far in March Last twenty nine thousand jobs and the restaurant industry march las four hundred seventeen thousand jobs yet. The construction industry was the F. top industry beneficiary ficiary of the PP loans. Which kind of I think is a very telling way of talking about how the program was poorly structured and like Felix was saying benefited those who had the good relationships with their banks over those who probably needed the money even more. But just don't have that kind of relationship aren't as savvy about applying through the money like there are some law firms that were out there. Like drumming up interest in getting these loans and Like a franchise restaurants like. Ruth's Chris. Steak House got Twenty million dollars. Pp loans also. It's just I think was a poorly show was definitely this weird carve out so to to be eligible for the people you need to be a small businesses with fewer than five hundred employees asterisk. And then this Astra's all you can be a restaurant with any number of employees so we screw steakhouse as five thousand employees and they managed to muscle up to different subsidiaries which they decided eligible for Ppo so they got twice the maximum and people are looking at them going look. You're a publicly traded company. This money was not designed for you and that twenty million dollars could have gone to a genuine small business which really needed the cash right now. But I think that there's a little bit of a false scarcity issue is not real scarcity issue. No it's a real scarcity that's been created but doesn't need to be. I don't think the issue here is companies getting too much money. I think the issue here is that it was too small to begin with. It shouldn't have been designed in such a way to go through the banking system. It should have. I think a lot of just been very similar to how we did the personal payments. I realize it's going to be harder if it was simply done. From the IRS sending out based on like corporate taxes but at the end of the day we need firms to get money. We can allocate so much more money to this than we already are so I think arguing between firms is less the issue the issue that we just need more money to go out and I think if they haven't at three hundred forty nine billion a lot of the anger an avatar would not be that like they're talking about another two hundred and fifty which I suspect also won't be enough but I also suspect that if they add another three hundred fifty or so then it probably will be enough so I don't understand why they're trying to sort of minimize the amount of money that they're spending on this when it's obvious that it's the outcome right now is deeply unfair and you need to allow the small businesses who didn't have the right kind of banking relationships to be able to compete on an equal playing field with the ones who did. And so why a eking out these trenches why they think well we'll give you three fifty and then if that turns out to be not enough we'll give you another two fifty and if that turns out to be not enough maybe we'll give you a little bit more just allocate like a trillion dollars or something and then any money left over you can back and use for something else. I mean it seems like there's a real prejudice against there's no other way to look at it and say oh the the federal government sees small businesses completely differently than the large businesses. That are able to tap into this all this this river of bed money and be okay and then making these small businesses kind of lake. Go begging for money. The there is a big family. Which is the big river of fed money for big businesses which is a big river of money and is actually working pretty well is loans all of it needs to be paid back every penny. The small businesses are not lunged at basically grunts dressed up as loans. And for that reason. You need to. You need to raise the money from Congress. You can just magic the money out of thin from the FAD and so congress is going to be sitting there going. Who Second Nettie is going. Oh this is you know fiscal blah blah blah. And so it becomes harder. One of the things I wrote about in my news out of this week was the way that the Federal Reserve and the Treasury been working together to really maximize the amount of money that is going into the economy but the P. Program is somewhere that really the Federal Reserve. Come help much. They they have said they're going to start buying up these. Pp Lennon's banks like Wells Fargo. Who really need to get mafia balance-sheets but that super marginal really you need Congress to allocate capital in Congress is about as functional as you'd expect it to be right now. Yeah so now. We're what's emerging is really this like to tear response to this crisis where small businesses and individuals are kind of left twiddling their thumbs. Not they're not getting the money they need right away. Small businesses are GONNA go under and businesses. Thanks to the Fed even notes loans are GonNa probably be okay are going to swoop in and take over there. They're going to be the ones popping up in where the small businesses kind of failed and at the end of the day. If we ever get out of this we're just GONNA see more inequality in the US. I mean the one thing I will say though is that like this has been there is so much more aid and so much more aid more quickly this time around than we've ever seen before in it is far from perfect. And I think we're all in agreement that this should have been structured differently in should've been structured better but I like I guess I would say that. Yes you know. It is probably likely that a lot of small businesses are going to fail and that is horrible. That shouldn't be happening. And that is going to be a fault of poor response a response but like I the one thing I will say. Is You know we are just really starting to see this money coming out now so we still don't totally know what the effect is going to be one thing. The one thing that we do know is the. I've been hearing from small business on this. Who Literally said I needed that? Pp money in the first trunch. If I didn't infest ranch I have to shut down. This is the big businesses in the S. and P. Five hundred. The biggest businesses in America is basically what the S. and P. Five hundred bouncing back up thanks to all of the liquidity that the Fed is providing. I think emily is absolutely right. That it is. This is one of those periods where inequality between businesses has been massively exacerbated in the big your balance sheet the more access to capital markets and generally the Ludger. You are the better off. You are with very few exceptions and there's no question that's going to be bad for everyone right. You have more of these big businesses taking over. It means more monopolies cornering different industries. It means lower pay for people at Wieden pay disparity. I mean it's really although if you look at men here like that the companies the I mean I look. I don't disagree with you in the sense that like. I don't think it's a good thing. If we have a bunch of small businesses going under I don't think it's a good thing if we have like greater monopoly power. I completely agree with you on that. Although the one thing I will say. Is that working for a larger company. You tend to be paid better that so the idea that if you tend to be the worst if it working for smaller companies and you have a large companies. This is one of the long term trends which is absolutely clear. Is that the total employment in the S&P. Five hundred has been trending downwards for decades. And you have you know. Large company says suddenly the trillion dollar companies out. There like Microsoft have a lot of employees. But they don't have nearly as many employees as like you know. Hundred Billion dollar companies did twenty years ago. And so. Yeah if you're lucky enough to work for Microsoft that's great but that's not the source of employment. Small Business is the real place where you tens of millions of Americans need to find employment and if small business fails on mass that's going to just completely decimate the employment situation in

Coming up next