Startups Pursue 'Free Money' With Relief Funds, Prompting Backlash (nytimes.com) 100
Some young companies have turned to the government loans not for day-to-day survival but simply to buy useful time. From a report: Domio, a start-up that offers short-term rentals, has its headquarters in a New York City loft that features beer on tap, a game room and a wall of house slippers for visitors. The fast-growing and unprofitable company has raised $117 million in venture capital, including $100 million in August. When the coronavirus pandemic caused Domio's bookings to dry up last month, it laid off staff but did not ask its investors for more funding. Jay Roberts, Domio's chief executive, said it had no immediate need to raise more money and most likely had enough cash to last until 2021. Instead, Domio applied for a federal loan under the Paycheck Protection Program, the $349 billion plan to save jobs at small businesses during the outbreak. It received a loan on April 13. Three days later, the program's funding ran out, even as hundreds of hard-hit restaurants, hair salons and shops around the country missed out on the relief.
Questions about whether the funds were disbursed fairly and whether some applicants deserved them have drawn scrutiny to the aid program. Several companies that got millions of dollars in loans, such as the Shake Shack and Kura Sushi restaurant chains, faced criticism and eventually gave the money back. On Friday, President Trump signed legislation approving a fresh $320 billion to replenish the program, which the Small Business Administration is directing. Now, scrutiny of the program has reached technology start-ups like Domio. While many of these young companies have been hurt by the pandemic, they are not ailing in the same way that traditional small businesses are. Many mom-and-pop enterprises, which tend to employ hourly workers and operate on razor-thin margins, are shutting down immediately because of economic pain or begging for donations via GoFundMe campaigns. But start-ups, which last year raised more than $130 billion in funding, have sometimes turned to the government loans not for day-to-day survival but simply to buy useful time. In Silicon Valley parlance, they want to extend their "runway," or cash on hand, to a year or more. Many are backed by venture capital investors, who have accumulated record sums of capital -- $121 billion as of the start of this year -- that could be used to keep companies afloat.
Questions about whether the funds were disbursed fairly and whether some applicants deserved them have drawn scrutiny to the aid program. Several companies that got millions of dollars in loans, such as the Shake Shack and Kura Sushi restaurant chains, faced criticism and eventually gave the money back. On Friday, President Trump signed legislation approving a fresh $320 billion to replenish the program, which the Small Business Administration is directing. Now, scrutiny of the program has reached technology start-ups like Domio. While many of these young companies have been hurt by the pandemic, they are not ailing in the same way that traditional small businesses are. Many mom-and-pop enterprises, which tend to employ hourly workers and operate on razor-thin margins, are shutting down immediately because of economic pain or begging for donations via GoFundMe campaigns. But start-ups, which last year raised more than $130 billion in funding, have sometimes turned to the government loans not for day-to-day survival but simply to buy useful time. In Silicon Valley parlance, they want to extend their "runway," or cash on hand, to a year or more. Many are backed by venture capital investors, who have accumulated record sums of capital -- $121 billion as of the start of this year -- that could be used to keep companies afloat.
Re:Isn't that the point? (Score:5, Interesting)
This isn't some nationwide chain taking millions while laying off their entire staff...
These are small businesses paying salaries instead of laying off their entire staff.
In a world where the President encourages people to take deadly ineffective drugs, and when that fails to inject bleach or shove a lightbulb up their ass, having a startup use stimulus funds to pay salaries is the least of our worries.
Most small businesses don't have access to hundreds of millions of dollars in VC funding like these startups do. Supposedly the new extension excludes any firms with access to significant outside funding or loans.
Re:Isn't that the point? (Score:5, Interesting)
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As is often the case with programs where the government hands out money, it rarely goes to helping the kinds of people who the well-meaning authors of the program anticipated or intended. Rather, it gets concentrated into relatively few hands which tend to be the more savvy and capable sort that would likely be fine without the assistance.
Don't forget that the banks in the first round tended to help their larger, more established clients (who would be less likely to need the money in the first place) first. I like that they've added a limit per bank in this latest round to prevent the larger banks from gobbling up huge shares as well.
Re:Isn't that the point? (Score:4, Insightful)
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Wouldn't that exacerbate the problem? Plenty of businesses are enraged at the slow or inept banks that prevented their applications from being funded the first time- if a bank has to choose winners due to a limit, what are the odds that they tell larger clients no rather than the smaller ones?
Its a Bank Bailout (Score:2)
The entire CARES act is just another bank bailout. Most of the money is going to corporations so that they dont declare bankruptcy and default on their loans. Most of Mnuchin's friends would lose their annual bonuses if that was to happen.
If Govt really cared about the people it could have done a very simple relief act - give 50% of last reported income (with a floor of 1500 a month) to every American taxpayer every month while shutdowns were going on and pay for all medical care for the duration of the cri
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As is often the case with programs where the government hands out money, it rarely goes to helping the kinds of people who the well-meaning authors of the program anticipated or intended
As is often the case with comments from the peanut gallery people declare these programs huge failures by pointing to a handful of fraudulent cases. I hate to burst your bubble, but just because a few rich people are well off through fraud or outright statistical luck, it doesn't mean money doesn't go where it needs to. You said it yourself 70% of the subsides for farmers went to 97% of those who needed it.
Re:Isn't that the point? (Score:4, Informative)
You said it yourself 70% of the subsides for farmers went to 97% of those who needed it.
No I didn't. I directly said the opposite where I indicated that two-thirds of the money went to the top 10% in my own post. Clearly you didn't even bother to read the comment, let alone the study. If you had, you'd have seen that the bottom 75% of farms are only getting 15% of the commodity subsidies and an even smaller share of insurance indemnities.
Further, if you examine farm subsidies in general they make even less sense because even discounting that the subsidies are mostly ending up in the hands of the wealthiest farmers, the average farm household is economically better off than the average U.S. household. People who are less wealthy are being forced to subsidize people who are on average more wealthy. So no only are these subsidies a wealth transfer to people who are on average better off than the people paying for them, the wealth transfers are being concentrated into the hands of the wealthiest individuals within that group.
I guess you're still right about comments from the peanut gallery though, but just not the one you had in mind while making your post.
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I remember reading about another instance where it was discovered that a women who had received a substantial subsidy targeting minority business owners had a white husband who was already a wealthy business owner and was essentially using her as a front for free money.
Well, there you go -- finally we have actual proof that diversity really does have benefits!
Farm subsidies are evil (Score:3)
Farm subsidies lead to over centralization and situations like milk being thrown into compost pits while there is no milk on the supermarket shelves.
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That's pretty disgusting with the farmers. Closer to home I know of at least one local woman owned small business has benefited from the COVID loans. I'm sure there are many more that get things that don't deserve it, but I guess sometimes it works out to help a few who need it. My 1 cent.
Re:Isn't that the point? (Score:4, Informative)
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The government loans have actually pretty brutal interest rates attached to them if used for anything other than salaries and rent+utilities - which you have to be able to prove existed prior to the economic crisis in order for those to mature into grants.
Are you sure about the word "brutal"? I mean, if my loans were attached to a 1% interest rate, I'd prefer to be brutalized instead of what my other options are. Citation: https://www.sba.gov/funding-pr... [sba.gov]
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Reading comprehension... a dying skill.
"When the coronavirus pandemic caused Domio's bookings to dry up last month, IT LAID OFF STAFF but did not ask its investors for more funding"
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"Now, scrutiny of the program has reached technology start-ups like Domio. While many of these young companies have been hurt by the pandemic, they are not ailing in the same way that traditional small businesses are. Many mom-and-pop enterprises, which tend to employ hourly workers and operate on razor-thin margins, are shutting down immediately because of economic pain or begging for donations via GoFundMe campaigns. But start-ups, which last year raised more than $130 billion
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Re: Isn't that the point? (Score:2)
They're giving companies a grace period to give back the loans if they applied for them without actually qualifying for the loans
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Small businesses are always at a disadvantage. (Score:2)
Whenever a policy is made to help the little guy, it is often so full of anti-abuse protections that it is nearly impossible for the little guy to sign up for it. While the big companies have a team of lawyers who can fill out all the paperwork and weed threw the bureaucracy.
This problem isn't always due to the fact of corrupt politicians, but due to the fact they try so hard to make sure the system isn't abused that it is difficult to different a fly by night scam, vs a small company that is one week of re
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having a startup use stimulus funds to pay salaries is the least of our worries.
Another important thing to remember is it takes time to craft legislation with as few undesired consequences as possible. This money was needed by people right away, so there likely wasn't time to spend extra weeks having detailed discussions regarding how the program could be abused. If we end up finding only 75% of the money went into the hands of the people who truly needed it, perhaps that is still a success. Hopefully later stimulus programs can then be more targeted.
The same holds true for stimulus ch
Privatise profits, socialise losses (Score:5, Insightful)
That's how you do business in modern capitalism. Put the profits in the pockets of investors, but beg for governement money to cover the losses.
I wonder how many rabid capitalists/free-market defenders would still feel the same if they had to play by the real rules of free-market.
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You're "smart" if you pay no taxes. You're a genius if you leave others holding the bag. Bankruptcy is a negotiating tactic. 1000% price hike once you get the monopoly. These are the rules we have on our law books.
The markets larger than you think (Score:2)
You feel unfair that people who are better at lobbying, buying influence get a better deal in the regulated market. You somehow feel its not fair but actually its just a market. The market is not limited to buying and selling physical goods. it also includes lobbying. Why should a firm which has prudently invested in buying Congressmen in good times not get the benefit in bad times. its like buying insurance. You cant complain if in a flood only the ones with Insurance are made whole.
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"that government of the people, by the people, for the people, shall not perish from the earth."
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The voter is only one stakeholder in the govt, the taxpayer who pay for it, the lobbyist who do the research for new bills, the special interest groups, foreign govts whose welfare depends on decisions the US govt takes all of them have input. Dont be naive that only elections matter.
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I understand fully what currently matters.
I am saying that the current state of affairs leads to oligarchy or kleptocracy or similar.
Elections should be all that matter. Nothing and no-one else.
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Money just ends up selecting for politicians that are good at currying favor with a very few.
I'd expect them to be very good at legislating, as long as it was in the interests of those few.
Is that anything close to democracy?
Isn't that hoarding? (Score:2)
They don't need the money and yet they ask for more while others actually need it.
https://en.wikipedia.org/wiki/... [wikipedia.org]
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I don't know about unicorn farts, but unicorn poop [quill.com] exists.
Modern capitalism at its finest (Score:1)
So, the startups who do not really need the money are being lambasted for taking the money that the government and the Payment Protection Program rules say they are entitled to, instead of being magnanimous and thinking "well, we are entitled to the money according to the rules, but other companies who are also entitled would need it more, so we will not take it".
Sounds to me like the company did what they should (take any and all resources they are told they have a right to), and that the problem is with t
Re:Modern capitalism at its finest (Score:4, Insightful)
Yep, perfect example of capitalist mindset. Fuck morals, fuck ethics. If the law allows me to be an asshole, then I'll sure as hell be an asshole, and blame the governement for allowing me to be one !
I tought conservatives were all about "personal responsibility". And yet they always seem to be blaming someone else (i.e. the governement) for every crappy, immoral, disgusting decision they make.
Never mind the fact that we are in a time of crisis, and new laws and rules regarding the pandemic must be drafted very quickly without passing through every single verification from the legal team.
How about taking responsiblity for you own assholery, fucking sociopaths...
Sorry for the colorful language, but sociopaths infuriate me to no end...
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Don't hate the player, hate the game?
These businesses were entitled to the money; they didn't lie, cheat or steal to obtain the loans. It's the business owners' responsibility to make choices that will ensure the survival of the business. It would be wrong for them to not apply for the loans.
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Don't hate the player, hate the game?
These Auschwitz guards were entitled to the money; they didn't lie, cheat or steal to obtain the loans. It's the Auschwitz guards' officer's responsibility to make choices that will ensure the survival of the NAZI party. It would be wrong for them to not slaughter the prisoners.
Do you see how fucking stupid that sounds now?
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Do you see how fucking stupid that sounds now?
Actually, no. But thanks for reminding how moronic a reductio ad absurdum fallacy can be.
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LoL. So it's the government fault? Whatever happened to personal responsibility and ethics?
It got 100 million dollars in August and "had enough cash to last until 2021." It could've survived for a while, but why not take as much as you can from the ACTUAL SMALL BUSINESSES?
Quit making excuses for avarice-fueled cash grabs.
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When did we decide Domio was a "conservative" organization? Just like all those conservative universities (like Harvard) that took the government's "free money" when they didn't really need it...
I'm guessing you're a liberal, so that means everyone that does something you dislike must, by definition, be conservative?
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I don't know, nor do I care, if this Roberts guy is a conservative or a liberal. I do know, however, that the kind of apologists always defending this kind of sociopathic behaviour always seem to be overwhelmingly pro-business conservatives.
Let the Media do its job (Score:3)
No law is ever going to be perfect. its the job of the Media to name and shame the assholes so that companies that do care about public goodwill will not indulge in assholery
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Absolutely. I don't care if they are liberal, conservatives, or aliens. If they're sociopaths, they need to die a painful, gruesome death, preferably involving fire.
Just FYI (Score:3)
Just FYI, when the government controls your money, handing it as they see fit, that's called socialism.
When you control your own money, that's capitalism.
Capitalism - those who built or bought the capital use it.
Socialism - society, via politicians, control the capital.
Calling a government money program capitalism is like calling Trump humble.
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That is utter nonsense.
Ignoring the false equivalence you've drawn between tax revenue and your personal capital, the dichotomy you presented between capitalism and socialism is oversimplified enough to be out of a kid's book.
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Funny you should mention that. Pure communism is identical to a 100% tax rate. It's been said that socialism is halfway between capitalism and communism, so if you want a quick rule of thumb measurement, tax rate is a reasonable measure of how socialist a country is.
For more than a quick gauge, for really knowing the difference between socialism and capitalism, you have to understand the difference between public goods and private goods. Private goods are used by one family at a time, such as a car or a ga
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Funny you should mention that.
Pure communism is identical to a 100% tax rate.
Sure, in non-Marxist philosophy circles.
Do you think the Soviets were not paid?
It's been said that socialism is halfway between capitalism and communism
Somehow, I don't think the spectrum that is measured on is taxation.
so if you want a quick rule of thumb measurement, tax rate is a reasonable measure of how socialist a country is.
Bad logic leads to bad conclusions.
For more than a quick gauge, for really knowing the difference between socialism and capitalism, you have to understand the difference between public goods and private goods. Private goods are used by one family at a time, such as a car or a game of checkers. My family can't use the checkerboard your family is using, so that's a private good. Public goods are used by community all at once. Military protection is an example. So is fire protection - if my next door neighbor's house burns down, mine will likely be significantly damaged too. The government department that checks gas pumps for measuring fairly is a public good, the whole community is protected from a rigged gas pump.
It's good for you if I participate with you in the national defense. It's good for you if your next-door neighbor's house isn't on fire. It is good and right that we work together on these things. Government can and probably should provide a consistent fire code for buildings. It's a public good.
I'm pretty sure we're all aware of these distinctions. But that's irrelevant here because:
Socialism is when government controls the production and distribution of private goods, of things where it's none of my business what you choose to get.
Is a flat-out falsehood.
The government (i.e., the people) generally control the base industrial foundational industries- or things considered to be for the good of everyone, which you have already loudly proclaimed to be a legitimate use
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> Sure, in non-Marxist philosophy circles.
> Do you think the Soviets were not paid?
Who do you think they were paid BY? Who decided how much doctors were paid, etc?
All of the (legal) money was controlled by government.
Which is identical to a 100% tax rate - all of the money is controlled by the government / politicians, who distribute it as they please.
Marxisr philosophy talks about WHY Marx thought communism would be good. That's philosophy. It doesn't say that with 0% private control, that doesn't
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Who do you think they were paid BY? Who decided how much doctors were paid, etc?
That is irrelevant.
100% taxation means you're not paid.
You're flailing. You've done this in past arguments. Try to stay on topic.
All of the (legal) money was controlled by government.
No more so than ours is here.
There was private barter and business in the USSR.
Which is identical to a 100% tax rate - all of the money is controlled by the government / politicians, who distribute it as they please.
No... no it's not.
That's not what the word identical means, so stop fucking using it like that.
Communism is government control of substantially all (legal) trade
Again untrue, but even if it were- it would do your argument no good whatsoever, as control does not amount to taxation.
including most especially your ability to trade your time and effort.
And you've gone off the deep end.
I suppose the government prohibition of me being a
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Do you think welfare money isn't tax money?
Any money that the government sends out isn't tax money?
If the government takes the money, then sends it to who that want to send it to, that's functionally a tax.
Again, I'd like to hear your definition of "tax" that doesn't involve the government taking control of the money.
I like how when I point out the dictionary definition of the words we're talking about, your response is "you're off your rocker". Thanks for the enlightening conversation. And remember - Mer
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Do you think welfare money isn't tax money?
Depends on its source. If it came from taxes, then yes, it's tax money.
Any money that the government sends out isn't tax money?
That depends. Is your government funded by taxation, or by ownership of the means of production?
Give you a hint- here is where communism and capitalism diverges, and your premise that their funding based on socialized means of production is identical to taxation is patently false. The government is the producer of the societally or nationally important goods. Other things are owned by cooperatives. Even other things that are strictly a
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Do you actually believe that 300 million people are going to have a daily morning vote to decide how many trucks to make today, or do you recognize that "public control" and "in common" means controlled by the government, and politicians? That is, do you think the average Soviet citizen was making decisions about the economy, or do you think Stalin was?
Ps - the government right now is the Trump administration.
Advocating for "public" control of anything more in the US is advocating for it to be controlled b
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A what? (Score:5, Funny)
a wall of house slippers for visitors
Oh, hell no, that's gross.
That's not a tech startup, that's a bowling alley. I hope their loft catches on fire and they all catch coronavirus of the feet.
Businesses are like sharks (Score:3)
There can be no expectation of moral behavior so we need to build "shark cages" out of laws. Unfortunately this is difficult to do quickly in an emergency. Maybe the best we can do is to increase the criminal penalties against executives who take illegal advantage of emergency funds, with actual jail time.
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Or you know. We could be at all of them plus head after the root cause, being the whole President taking a hard pass on letting the DoJ appoint an IG. I mean, when you have a program with millions of dollars and it receives no oversight, then what does anyone expect to happen? I mean seriously, the day the President indicated that he was going to go ahead with no IG appointment (which is perfectly legal, stupid as fuck, but perfectly legal) what the fuck did anyone expect here? I mean the only way that
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Fucking Donny and his dim-witted ignorance. Like it's too much to ask to know there's a difference between, say, agricultural Price Loss Coverage subsidies and a National Cancer Institute research grant.
Harvard received money under an entirely different program than the PPP, namely, the CARES Act Higher Education Emergency Relief Fund. It requires that at least 50% of the funds go to student emergency financial aid grants. That $8m works out to be less than 4% of the undergraduate aid
Government picking winners and losers (Score:2)
Small Business Money? (Score:5, Insightful)
I don't know of one small business that actually had a chance to get this money.
Most of the small businesses I know don't have financial people to drive this. Most of the small businesses I know find out about this sort of thing through their chamber of commerce which are days if not a week behind in passing this type of news on. Most of the small businesses I know have a hard enough time simply trying to get their taxes done on time. By the time the how and where was passed on to most of the people I know, this was old news.
If you aren't connected and don't have a financial person that is looking after you for tens of thousands of dollars a year, you never had a chance for this money. The system is not setup for this type of thing.
Case in point: The politicians shut down every small business yet left Walmart open. There were never more than a couple people in any of our small shops, social distancing was easy. Now everyone is lined up outside Walmart waiting for their turn to shop.
Small business in America is considered the scraps that couldn't be hoovered up by a large corporation. Wall Street and the congresspeople are not paying attention to the little guys. The little guys don't pay dividends.
--
The literati in their cellars perform semantic tarantellas. I wish I did it half as well as them. - Al Stewart
Re:Small Business Money? (Score:5, Interesting)
I am a small business owner and this post is bullshit.
Tons of small businesses got PPP money, including mine for approximately 25 full-time employees. The deciding factor for a lot of them was that they had a pre-existing relationship with the bank (something that all small businesses should have anyway). If you think that counts as "connected" it sounds like you've never been involved with a small business or borrowed money before beyond paying your mortgage. But yes, applying required that people act promptly and be responsive -- you know, for their own best interest. Applying businesses needed to send the banks cash flow statements, payroll reports, and a lot of other documentation. The small businesses that I know who got funded all knew this info would be required and had it ready to go BEFORE the gov't actually opened the program and submitted it IMMEDIATELY as soon as the starting gun went off. It's almost like they knew they had to do everything possible to maximize the likelihood they'd be lent the money, and they tried their best not to leave anything out that would potentially delay the application.
And what's this about the small businesses that didn't get the money were all working on their taxes? That's a steaming pile of shit. Everyone that has been paying attention knows that the IRS has delayed filing AND payments until July 15th.
Like it or not, with limited funds available, not every business that applied was getting money in round 1. The vast majority of small businesses that got shut out of the first round either weren't eligible to begin with or didn't act quickly enough to make sure they were towards the front of the line. Perhaps they should have done everything absolutely possible to ensure that their application was submitted as soon as possible if the funds were so urgently needed. Like everything else in life, not being responsive has consequences.
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I am a small business owner and this post is bullshit.
I'm a small business owner too, and know a few hundred others. The post applies to every one of us so I have to assume you're full of shit.
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If you owe the bank $20,000 then the bank has you by the balls.
If you owe the bank $1,000,000 then you have the bank by the balls.
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I also know quite a few small businesses that are afraid to ask for the money because they don't want the scrutiny of their books. How factual are the tax records of the pizza place down the street who only accepts cash and no matter what combination you buy always comes out to an even 50c. My guess is other than the owners there isn't a single w2 prepared for the rest of the employees.
Not trying to start who pays and who doesn't pay their share of taxes debate. Just saying doing it through the IRS is going
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The PPP has nothing to do with the IRS and the money isn't lent "through" the IRS. It's a program administered by the Small Business Administration [sba.gov] and conducted in practice via participating SBA lenders (banks).
My $0.02 -- if you are a tax cheat (little or big, and yes, I'm talking about Google, Facebook, GE, and other "legal" professional tax avoiders), your business shouldn't be eligible for this or any other relief. Pay your fucking taxes like the rest of us do.
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The money you receive is based on your taxes. You have to show that you have X employees and that you paid that money out. Anything that doesn't jive is considered a loan. All of the values of what you qualify for is based on your previous years taxes.
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My GF finally managed to get approved for a PPP loan for her orthodontic business. She needs to be able to pay her staff of 4. Took like forever.
Meanwhile, Shake Shack and Ruths Chris got multi-million dollar loans pretty much immediately. This is not right.
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Meanwhile, Shake Shack and Ruths Chris got multi-million dollar loans pretty much immediately. This is not right
Why is it "not right"?
Because they have financial professionals that could complete the forms in minutes?
Because they have a serious relationship with thier bank?
Because they asked for a bigger number that your girlfriend?
Ultimately, Shake Shack and Ruth's Chris announced they would return the money.
Re: Small Business Money? (Score:1)
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Because they have financial professionals that could complete the forms in minutes?
No, they had special access, and there is a huge difference.
Banks werent letting small business apply, at all, at first.
Then the banks only considered applications from businesses that owed them a lot of money.
Special access not given by "financial professionals" but instead by corruption.
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No, because they have access to other sources of funding, which most small businesses do not.
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I don't know of one small business that actually had a chance to get this money.
Indeed. You don't know so it didn't happen.
Most of the small businesses I know find out about this sort of thing through their chamber of commerce which are days if not a week behind in passing this type of news on.
Quite frankly small businesses who don't pay attention to the debates about funds that may determine their very survival sound like the type of mismanaged businesses that deserve to go under. Greetings from Europe, where even I heard about what the government the day they did it, and don't bother getting all my news from Slashdot 3 days after the fact.
Case in point: The politicians shut down every small business yet left Walmart open.
Yeah that was some nefarious pro mega-corp agenda, yesirrreee. It couldn't possibly be the difficulty of classifyin
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Quite frankly small businesses who don't pay attention to the debates about funds that may determine their very survival sound like the type of mismanaged businesses that deserve to go under. Greetings from Europe, where even I heard about what the government the day they did it, and don't bother getting all my news from Slashdot 3 days after the fact.
You're the reason that scene from Hitchiker's Guide to the Galaxy is a meme, and why the rest of the world (Murica especially, not that "especially" is particularly required given we are the world and you are our bitch) looks down on you.
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I don't know of one small business that actually had a chance to get this money.
Indeed. You don't know so it didn't happen.
Bullshit, they had a chance, then they got a second chance - that they were ineffective in RECEIVING the money could be for any of a million reasons. The key factor in being awarded money, based on what I've seen and read, is the company's relationship with thier bank.
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Most of the small businesses I know find out about this sort of thing through their chamber of commerce which are days if not a week behind in passing this type of news on.
It was in the news CONSTANTLY FOR TWO WEEKS before the MASSIVE one-page application was put online, with instructions to work with the local bank they deal with.
The actual application is *trivial* on purpose, intended for exactly the types of small businesses you describe.
Seriously, how could these business owners have missed the program while it was being discussed nationally?
Startups employ people too... (Score:2)
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...and this is about keeping people employed, isn't it?
Yes, but they could go to their VC funders to ask for more money, or sell off shares (hell, even United Airlines is selling shares to raise cash). Bob's Hardware or Alice's Diner down the road don't have access to the VC channels, or the collateral necessary to get a traditional loan from banks. The stimulus was meant to help them.
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Yes, but they could go to their VC funders to ask for more money, or sell off shares (hell, even United Airlines is selling shares to raise cash). Bob's Hardware or Alice's Diner down the road don't have access to the VC channels, or the collateral necessary to get a traditional loan from banks. The stimulus was meant to help them.
Why? The government was giving them FREE MONEY. A careful read of the criteria for applying for the government's FREE MONEY would tell you that the company qualified for the FREE MONEY. They are a small business, they were impacted by the shutdowns, and as long as they use the money to make payroll and cover certain other expenses (utilities, rent, etc), the gov't loan turns into FREE MONEY.
There is no requirement that the business not have access to other sources of funding, or that the business establish
Re: (Score:2)
And the startup in question didn't need money to keep people employed through the end of the year. The money it took could have been used by a small business with impending layoffs.
Main problem is with the design of the program (Score:2)
Face it, companies (and people) will take advantage of whatever free opportunities are made available. To assume that a company will take the high road and say "I'll leave this for someone who needs it more" is unrealistic. Don't get me wrong, some companies will, but there will always be enough that won't to suck up all available monies.
The program should have been designed to prevent these types of businesses from getting the money. I understand that there was an urgency to get *something* out there qu
Re: Main problem is with the design of the program (Score:3)
A good start would have been to consider all locations of a chain business to be part of a single entity instead of individual businesses. So a small local chain of say, 10 stores with less than 30 employees each would be 300 employees so they would qualify, but a nationwide chain with 100+ properties each employing 50 people is considered one business with 5000 employees and therefore ineligible.
Re: (Score:2)
A good start would have been to consider all locations of a chain business to be part of a single entity instead of individual businesses.
No, that would not be a "good start."
Take, for example, McDonald's. They have a large parent corporation, and many, many of their restaurants are owned by franchisees, independent businesses that file their own taxes, meet their own payroll, hire their own employees. Under your plan, no franchisees would qualify for PPP. How does that help the displaced workers from the local franchise McDonald's?
Because Exxon-Mobil doesn't qualify for PPP, then no independent Exxon-Mobil gas station owner can qualify for P
Re: (Score:2)
A good start would have been to consider all locations of a chain business to be part of a single entity instead of individual businesses.
No, that would not be a "good start."
Take, for example, McDonald's. They have a large parent corporation, and many, many of their restaurants are owned by franchisees, independent businesses that file their own taxes, meet their own payroll, hire their own employees. Under your plan, no franchisees would qualify for PPP. How does that help the displaced workers from the local franchise McDonald's?
Because Exxon-Mobil doesn't qualify for PPP, then no independent Exxon-Mobil gas station owner can qualify for PPP?
McDonalds had $21 billion in revenue in 2018, with a net income of almost $6 billion. The franchisees should go to the parent company for financial assistance, especially since McDonalds is a large enough entity that it could easily assist the franchisees in getting loans or access to other forms of temporary capital.
Trickle up (Score:2)
The fairest and most democratic approach would have been to give money to the people evenly and spread it out over several months. The people will spend and businesses will compete for the money ... aka free market capitalism. Let's try trickle up instead of trickle down.
Giving money to business will always end up being unfairly distributed due to differences in political affiliation, established relationships with banking institutions, attorneys, CPA, etc.