Eq: Total Market
(New York)
One of the most famous hedge fund managers on Wall Street made a bold warning yesterday. Jeffrey Gundlach of DoubleLine Capital, adored by the media, said yesterday that he thinks stocks will retest their previous lows. “People don’t understand the magnitude of... the social unease... that’s going to happen … We’ve lost every single job that we created since the bottom in 2009”.
FINSUM: One thing that seems certain right now is that consumer spending is not going to bounce back to where it was for some time. It is going to take years for all these people to re-enter the workforce and loosen the purse strings. A recession for the rest of the year appears inevitable.
As of 10:30 AM Eastern this morning, the PPP Program re-opened for applications from this “bucket” of $310 Billion, as the first bucket of $349 Billion rapidly was depleted.
PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY
Has demand waned? On the contrary:
Not even 10 minutes after a government relief loan program for small businesses relaunched on Monday, lenders reported that the U.S. Small Business Administration system was overwhelmed and inaccessible with a flood of applications.
Lenders from across the country were saying they couldn’t get into the SBA’s system when the Paycheck Protection Program relaunched at 10:30 a.m. New York Time, said Paul Merski of the Independent Community Bankers of America. The system was down as early as 10:34 a.m. in New York, according to a person familiar with the matter.
Which is why we even put out a press release this morning demanding an additional $400 Billion rapidly be allocated to the program so the overall funding exceeds $1 Trillion.
The Federal government seems to imply that the $310B number was sufficient because that’s about how many applications were stranded that couldn’t get funded in the first round – about 1 million.
Here’s the thing, however, that’s not the true number. Based on our survey data and our estimation, over 4 million applications were not completed based on a variety of factors – including glitches on the SBA’s site, problems with the lenders, etc.
Which means even this next $310 Billion won’t be enough and why we called for at least an additional $400 Billion – with rules for disbursement that will make sure TRULY small businesses benefit, and not just large companies masquerading as small ones. Read more here, and if you haven’t yet, be sure to submit an application.
COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.
APPLY FOR PPP WITH COVID LOAN TRACKER
So much of the focus of the media covering the Paycheck Protection program has been about the awful pace and communication about application processes and approvals. However, what has been less covered is just how difficult the application process itself is. At COVID Loan Tracker, we have gotten a rare insight into the difficulties everyday small business owners are having with the application process because of the thousands of emails we are getting from CLT community members.
PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY
Those general struggles are a story for a separate article, but today we want to focus on the challenges the application process poses for immigrants and those for whom English is a second language. IRS forms in particular, which are a crucial and obligatory part of the application for every lender, are made for professional accountants, not genuine small business owners. Terms and terminology are difficult even if you are a native English speaker. If you are not one, they are nearly impossible.
The IRS does offer forms in a few languages, but not all lenders are equipped to process such forms with an expediency, which means the default language is inevitably English. Amplifying this issue is the fact that immigrants become entrepreneurs and small business owners at almost 4x the rate of native born Americans*. This means that per capita, immigrants are much more likely to deal with PPP applications issues than native-born Americans. Furthermore, the types of business that immigrants own**—gas stations, drycleaners, nail salons, hotels & motels, and specialty food stores—have been particularly hard hit by the shutdown. Therefore, in many ways the Paycheck Program excludes immigrants almost by design, and resultantly, the COVID-19 lockdown poses a much larger threat to the livelihood of immigrants than it does to native-born Americans.
COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.
Apply for PPP with COVID Loan Tracker
*https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/
** https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/
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All the buzz in the small business world today is about Congress’ new PPP funding package. The $484 bn deal gives $310 bn to helping small businesses as part of a continuation of the Paycheck Protection Program. It also sets aside some of that money to be processed specifically through small banks.
COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.
PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE FORM
While the deal may be a sigh of relief to small business owners waiting for money, it does not go nearly far enough. Firstly, on the positive side, it does give billions of Dollars to be processed through small banks, which clearly did a great job the first time around. COVID Loan Tracker’s stats show that 82% of all successful PPP money was processed by small banks.
However, the new program does not allocate money specifically to companies of a certain size, which means the free-for-all of “first come first serve” will continue to disadvantage small companies. Bigger small businesses (up to 500 employees) have extensive accounting staff and sterling paperwork, which means they will once again be able to submit applications much more quickly than genuine small businesses. The program needed to have a feature which made sure “X” Dollars were allocated to genuinely small business, such as those under 25 people.
So, yet again it looks very much like the PPP won’t help the small businesses that need it most.
(New York)
The markets are not reflecting it, but sometimes it feels as though the writing is on the wall. The economy is bound to get worse before it gets better. We have been locked down long enough now that consumer habits are shifting and the spending patterns that prolong recessions are taking hold. Total US credit card debt has fallen 5% in five weeks—the fastest fall since the Great Recession. Auto loans are the same. On the whole, the more data comes out, the worse the picture gets.
FINSUM: Job losses have not yet peaked, so we are not even close to being on the road to recovery. We suspect it is going to take a long time to get back to where we were in February. We expect this will be a very wide U-shaped recovery.
If you have been confused about the exhaustion of the Paycheck Protection Program in the context of hearing so many stories that people have not received money, you are not alone. There has been a huge public outcry about the program. It is not just that so many big companies got the money, it is that so FEW others did. Less than 7% of businesses got approval.
At COVID Loan Tracker, we have been watching actual loan disbursements, not just approvals, by relying on fellow small business owners. The results have been stark. Thus far, only 8.1% of business report receiving any money. 28% say that they have received “approval” but have not gotten money yet. COVID Loan Tracker has had around 20,000 company submissions that track around $7 bn in PPP applications. See full stats here.
Here are the stats as of 6 am this morning (4/21/20):
PPP application approval rate: 28%
Percent of PPP applications actually received money: 8.1%
Median successful PPP application: 120,000
Median employees: 15
Percent of EIDL advance applications received money: 8.0%
Median money received: $5,000
Median employees: 5
COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.