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‘It doesn’t make any sense:’ Restaurant owners push back against SBA loan restrictions

Summary:
This is true for any "LOAN!" that the government is arranging in response to this shutdown...it won't work... why borrow munnie to pay people WHEN YOU HAVE NO CUSTOMERS????  It's cheaper to just send them to unemployment... “That money will quickly come and go, and then you’ll kind of be back to where you are, if you don’t plan it out properly,” Rubin said. “If you just take that money and just pay people to be on payroll but there's no demand for them to work, there's no other money coming into the rest of the business to build up cash to then fund the next step of the business.”  The Paycheck Protection Program (PPP) allows small businesses to apply for loans up to 2.5 times their average monthly payroll. The funds are fully forgiven, so long as they are used for payroll costs,

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This is true for any "LOAN!" that the government is arranging in response to this shutdown...it won't work... why borrow munnie to pay people WHEN YOU HAVE NO CUSTOMERS????  It's cheaper to just send them to unemployment...

“That money will quickly come and go, and then you’ll kind of be back to where you are, if you don’t plan it out properly,” Rubin said. “If you just take that money and just pay people to be on payroll but there's no demand for them to work, there's no other money coming into the rest of the business to build up cash to then fund the next step of the business.” 
The Paycheck Protection Program (PPP) allows small businesses to apply for loans up to 2.5 times their average monthly payroll. The funds are fully forgiven, so long as they are used for payroll costs, interest on mortgages, rent, and utilities. While payments can be deferred for six months, forgiveness is based on the employer maintaining or quickly rehiring its employees. The amount of forgiveness drops for companies that don’t follow all the requirements. 
“The challenge with the loan and the potential loan forgiveness is the 8-week window of time for spend, which may not work as intended for every business,” Rubin said. “Some restaurants will not see revenue above single digits of their pre-COVID steady state for some time. This will make it near impossible to rehire 100% of [full-time employees] which is the majority of the basis for the loan and loan forgiveness.”

The whole Small Business response is FUBAR...

Looks like Trump is sending in the A-Team to fix it:

If she fixes this thing... the whole Treasury Department, Small Business Administration, the Fed people and Congress should have to all resign immediately... 

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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