Business Resource Center

TIME (5/13, Elliott) profiled rare books dealer Arthur Fournier’s experience with the Small Business Administration’s Paycheck Protection Program (PPP). Fournier “was one of thousands of small business owners who applied for PPP money, and quickly found themselves way outside their comfort zone.” After finding difficulty acquiring a loan through fintech Ready Capital, he “decided to try another route, through PayPal, which was also offering non-bank-based loans.” But because “the Small Business Administration already had a record of his application from Ready Capital and had assigned his business an identification number, Fournier couldn’t apply with another lender. Washington was trying to prevent the same business from taking multiple loans, but in effect he was trapped in Ready Capital’s system that was at best sluggish and at worst over-extended.”

The New York Times (5/6, Rappeport, Flitter) reported that small business owners who took out Paycheck Protection Program loans are “preparing to ask for their eight-week loans to be forgiven,” but “banks and borrowers are just now beginning to realize how complicated the program may turn out to be,” given “the government’s strict and shifting terms.” Businesses, along with lawmakers, “are pushing the Treasury Department...to make forgiveness requirements easier to meet.”

Small business optimism saw further decline in NFIB’s Small Business Economic Trends survey for April. Small business owners expected the economy to decline in the near term, but then improve in the next six months. NFIB Chief Economist William Dunkelberg was quoted saying, “The impact from this pandemic, including government stay-at-home orders and mandated non-essential business closures has had a devastating impact on the small business economy. ... Owners are starting to benefit from the PPP and EIDL small business loan programs as they try to reopen and keep employees on staff. Small business owners need more flexibility, though, in using the PPP loan to support business operations and liability protection so that all these efforts to support small businesses are not ultimately lost in costly litigation.”

The New York Times (5/2, A1, Cowley, Flitter, Enrich) reported, “Some owners don’t see the point of hiring back workers when business is so slow. Others chafe at having to use the money within eight weeks, when they would like to keep the financial cushion for longer. And many of the owners are confused about whether they have any flexibility,” as they “would rather use the cash to retool their operations for an altered world or buy protective equipment for workers, but the rules require them to spend it on specific expenses, like payroll.” Small-business owners “also say they are afraid of running afoul of the program’s rules, which are complicated, ambiguous and still evolving. Accountants, lawyers and lenders are struggling to understand the nuances and offering clients tentative guidance.”

The Washington Post (4/28, Stein, Whoriskey) reported that a Federal Reserve program that is “expected to begin within weeks will provide hundreds of billions in emergency aid to large American corporations without requiring them to save jobs or limit payments to executives and shareholders.” According to the Post, “Under the program, the central bank will buy up to $500 billion in bonds issued by large companies,” who can “use the influx of cash as a financial lifeline but are required to pay it back with interest.” The Post added, “Unlike other portions of the relief for American businesses, however, this aid will be exempt from rules passed by Congress requiring recipients to limit dividends, executive compensation and stock buybacks and does not direct the companies to maintain certain employment levels.”

The Wall Street Journal (5/14, Omeokwe, Subscription Publication) reported a survey by the Census Bureau released Thursday found 75 percent of small businesses in the US have sought federal assistance to stay afloat during the coronavirus pandemic. Overall, 75 percent of respondents sought Paycheck Protection Program (PPP) loans and 38 percent of respondents said they received the loan money; nearly 30 percent said they sought SBA disaster loans and 10 percent said they received the funding.

Politico (5/17, Warmbrodt) reported that in the wake of “public outrage and Trump administration pressure,” companies “are scrambling to give back the Paycheck Protection Program loans” before a Monday deadline, after which they could face audits over whether they need the money. However, the decision on keeping the money has been “wrenching,” leaving them choosing between retaining employees or avoiding “questions from the public and government audits.” Politico says the issue “illustrates the extraordinary confusion surrounding the” PPP.

The New York Times (5/17, Smialek), among other outlets, reported on Federal Reserve Chairman Jerome H. Powell’s appearance on CBS’ 60 Minutes. The Times reported that ,”asked whether the economy could recover without an effective vaccine, Mr. Powell suggested that activity could restart before a treatment became available without making a complete rebound.” Powell said, “Assuming that there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of this year. ... For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine.”

The Washington Post (5/12, Long) reported that the coronavirus pandemic “is emerging as an existential threat to the nation’s small businesses,” with “the potential to further diminish the place of small companies” in the US economy. Economists “project that more than 100,000 small businesses have shut permanently since the pandemic escalated in March, according to a study by researchers at the University of Illinois, Harvard Business School, Harvard University and the University of Chicago,” and “their latest data suggests at least 2 percent of small business are gone.”

Columnist Andy Kessler wrote in a piece for the Wall Street Journal (5/17, Kessler, Subscription Publication) that consumers should get ready for a steady decline in prices as deflation takes hold. Prices and wages may decrease in the next five years, and will be evident in sales, specials, and promotions.

Papa John’s Founder John Schnatter wrote an opinion piece in Fox Business (5/13, Schnatter) on “three traits all small business owners must apply if your goal is not simply to survive – but to actually thrive – in the largely unpredictable times that lie ahead.” They include extraordinary effort, enthusiasm, and being entrepreneurial. Schnatter said, “daily and weekly changes will have to be closely monitored and adjustments made quickly once we know more as economies reopen.”

USA Today (5/13) reported in depth on Latino small business owners, which are “the fastest-growing group of entrepreneurs in the U.S. even as they battle systemic racism that has resulted in lower incomes and loan rates.” The article added, “Over the past 10 years, the number of Latino business owners grew 34%, compared to 1% for all business owners in the United States.”

MarketWatch (5/15, Kilgore) reported American Express on Friday said US cardmember loans in April were down $62.9 billion, 8.8 percent, from the end of March. Consumer cardmember loans fell 9.2 percent to $50.5 billion while small business loans fell 7.5 percent to $12.4 billion.

American Banker (5/8, Subscription Publication) reported, “Many fintechs have struggled to gain traction in the Paycheck Protection Program. Most were shut out of the $669 billion emergency loan program’s initial round, instead acting as agents for lenders that were approved to participate.” The piece said “those that are now cleared to participate are trying to make up for lost time, hopeful that a strong finish will bolster their case for inclusion in traditional programs managed by the Small Business Administration.”

CNBC (5/8, DeMatteo) reported small business owners are dealing with credit card fraud amid the coronavirus pandemic. One particularly stressful problem was “friendly fraud,” when a “consumer receives goods or services and requests a refund (also known as a chargeback) from their credit card company rather than make a return.” The piece said “someone has to pay for the charge. Usually that falls on either the card network (Amex, Discover, Mastercard or Visa) or the merchant.”

Bloomberg (5/14, Melin, Steverman) reported many “essential” employees in the US will be facing a pay cut in the coming weeks as the initial push for “hazard pay” around the pandemic begins to fade. Initially, many employees “received bonuses or pay bumps to compensate for the risk that comes with clocking in at supermarkets, hospitals and other crowded workplaces during a pandemic,” but companies are beginning to end these programs. For example, Kroger “is rescinding the” pay “raise it gave to store and warehouse workers” while Target and Amazon “will follow later this month, with other firms charting similar moves.” The planned cutbacks “have rankled unions, employees and customers who are accusing companies of putting profits ahead of worker well-being.” The decisions “also raise questions about how to value the essential workers who are keeping society functioning,” as many employees “put their health and safety on the line in exchange for relatively low wages.”

The AP (5/7, Rugaber) reported that the Labor Department revealed on Thursday that “nearly 3.2 million laid-off workers applied for unemployment benefits last week,” which means that “roughly 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors and slash their workforces.” The AP said “that is the equivalent of one in five Americans who had been employed back in February, when the unemployment rate had reached a 50-year low of just 3.5%.” On the other hand, “Initial claims for unemployment aid have now fallen for five straight weeks.”

The AP (5/6, Boak) reported that the payroll company ADP announced Wednesday that US employers “cut an unprecedented 20.2 million jobs in April, an epic collapse with coronavirus outbreak closing the offices, factories, schools, construction sites and stores that propel the U.S. economy.” According to the AP, Mark Zandi, chief economist at Moody’s Analytics, is predicting that “the losses will likely continue through May, with a recovery in hiring likely to begin in the months that follow.” The Washington Post (5/6, Telford) reported that “as bleak as these numbers appear, it is likely that the worst is still to come.”

The Washington Post (4/30, Romm) reported that some states are “issuing early warnings to their worried workers: Return to your jobs or risk losing unemployment benefits.” According to the Post, “For some states, the concern is that residents who are offered their old jobs back simply may not accept them, choosing instead to continue tapping historically generous unemployment aid.” The Post said that “some states’ public comments have frustrated federal lawmakers, labor activists and public health officials, who say forcing workers to return so quickly might be dangerous – and could undermine the country’s response to the deadly pandemic.”

The Washington Post (4/30, Siegel, Van Dam) reported the Labor Department announced yesterday that “more than 3.8 million people filed for unemployment benefits last week.” Economists “estimate the national unemployment rate sits between 15 and 20 percent, compared to about 25 percent at the peak of the Great Depression.” The Post added, “For comparison, 4.4 million people applied for benefits for the week ending April 18, and 30.3 million have sought benefits in the past six weeks alone,” which “represents roughly 1 in 5 American workers.”