APRIL 22, 2020

News Roundup for Small Business Owners

The latest news about relief efforts for small businesses, particularly via the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

• The bad press continues for the PPP. Judd Legum found a few odious stories simply by mining SEC disclosures from some of the public companies who received PPP loans. (Popular Information)
• Yet, Senate Majority Leader Mitch McConnell doesn’t quite see the problem with it, saying that large companies getting small business relief is an “interesting debate.” He went on to say that when it comes to the workers, they shouldn’t be punished for working for a large company and, essentially, jobs are jobs. But let’s go back and look at some of the stories from Mr. Legum’s article again. How about the COO of PlarityTE receiving a $165K cash bonus and $150K in stock just four days after the company received a PPP. Or, how about Aquestive Therapuetics who received a PPP loan despite their stock price having doubled since March 15. There are so many more stories. The question, Senator, is whether the aid is actually protecting paychecks, or is this just lining the pockets of the already wealthy and connected? An interesting debate indeed. (New York Post)
• Another frustration point with the PPP is the fees the banks received for processing what was essentially a zero-risk loan program. I know my lending contacts at smaller banks worked tirelessly to help their clients, but with all the press that’s coming out about cronyism this is at the very least bad optics. Banks received between 1%-5% in fees depending on the loan size, and based on the data released by the SBA, NPR estimates that the program made banks $10 billion in fees alone. Not bad for 2 weeks of work. The point isn’t whether they deserved compensation; certainly they do. BofA claims they had 8,000 employees working on the program, and of course those workers should be paid for their hard work. But in my opinion, the point of a relief package is to provide aid not profit. Why weren’t banks issued a flat rate based on labor time? (NPR)
• I know many are frustrated with the program, myself included, but remember that most of the companies who received them are using them fairly and justifiably to support their employees and keep their businesses afloat. Do you have a story about someone who went out of the way to help you during this time of need? Do you know a small business who has put profit aside to do the right thing to help its community? Please email me; we’d love to hear some good news we can share.
• I keep coming back to a pretty interesting quote from Senator Marco Rubio, who chairs the committee on small business and entrepreneurship: “Any business, regardless of size, must certify it has been harmed by the coronavirus crisis and that PPP is necessary to maintain operations,” adding that his committee will subpoena companies who don’t provide said proof. But that’s not really what the bill says. The word the bill uses is “necessary to support the ongoing operations.” Expect the courts to spend a lot of time trying to define the difference between “maintaining operations” verses “supporting operations.” (The Hill)

Previous Entries:

Tuesday, April 21 | Monday, April 20 | Friday, April 17 | Thursday, April 16 | Wednesday, April 15 | Tuesday, April 14 | Monday, April 13 | Friday, April 10 | Thursday, April 9 | Wednesday, April 8 | Tuesday, April 7 | Monday, April 6

Masterplans is a veteran-owned business that specializes in providing the highest-level business development consulting located in Portland, Oregon. For 17 years we have helped thousands of entrepreneurs launch new businesses and put their ideas in motion. Now, more than ever, we want to see these same businesses survive the largest economic disaster of our generation.