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>These are loans. They are two year low interest loans. They have to be paid back unless some or all is forgiven. This is a highly politicized way to frame PPP

>These are loans. They are two year low interest loans. They have to be paid back unless some or all is forgiven. This is a highly politicized way to frame PPP loans. Its more like: "These loans are forgiven, unless you scammed the government." These loans were specifically designed to be forgiven, a minimum of 75% of the loan was to be for payroll and if used for payroll (what it was supposed to be used for) that portion of the loan will be forgiven. >Just because a company took a 1M loan, doesn't mean it will be 100% forgiven. Again this is so carefully worded to send a false signal...true "it doesn't mean" it will be 100% forgiven. But again the goal is for at least 75% to be forgiven up to 100%. The idea is businesses were supposed to get a loan with 75% allocated to payroll expenses and the extra 25% to approved non-payroll expenses (example: rent) and the portion used for payroll should be 100% forgiven...which in many cases will be the full amount of the loan, because many businesses didn't add an extra 25% for non-payroll expenses and just took the forgivable payroll portion. Basically the only reason/way these loans would be repaid is if business took out the loans and spent the money on non-payroll expenses...that should be fraud and result in jail not a nice cushy 1% interest rate for people committing fraud.

hn_throwaway_99 6y ago
Totally agree, and I think this is important to emphasize. I was involved in researching the requirements for a PPP loan for a nonprofit. I can guarantee that the vast majority of businesses (like 95%+) took out these loans with the intention they would never be paid back. Indeed, that was a feature, not a bug, of the whole "loan" program. If you took out the loans to keep employees on staff (and did so), then you had to fuck up hard to not have the loans be forgiven. So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back. Not only is that not the case, it was never intended to be the case.
- throwaway_USD 6y ago
  >So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back. I constantly see this..."its not free money, its a loan, and the money will be paid back with interest, just like in 2008." No, its free money for businesses, many of which will fail and let their employees go anyway. Then you hear people claim how somehow it was a victory to keep people off unemployment for 8 weeks, but not a single person can explain why that is such a benefit. Its sort of like saying hey when Corona virus began I stopped flights from Country X and saved 10's of thousands of lives...maybe deaths were delayed but there is no evidence they were prevented.
  - robhunter 6y ago
    I think it's helpful to follow the money. If it goes to salaries, those salaries are taxed (both payroll taxes for the employer and income taxes for the employee). Those salaries, for the most part, get spent - on things with sales tax, creating business profits that are taxed, and supporting the employment of employees' whose wages are also taxed. The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game.
    - throwaway_USD 6y ago
      >The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game. No one argues $600B wouldn't help the economy. Can you point to where I said PPP will not help the economy? Most people are starting to understand the fraud involved with PPP and understanding those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster as its not distributed out over 8 weeks with 25% reserved for non-payroll business expenses. Of course there are arguments for why the money should have gone to businesses as it did and not people...but you don't hear any lawmakers making those argument publicly and if you do its limited to "we are saving jobs." My argument, if you feel compelled to call it that, is that there is no proof these jobs have been saved unless delaying unemployment by 8 weeks is considered a job.
      - kryogen1c 6y ago
        > those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster how could this possibly be true? the economy started tanking because people stopped going out and spending money. giving people money wouldnt fix this.
        throwaway_USD 6y ago
        >the economy started tanking because people stopped going out and spending money. People continued spending money...mortgage/rent; car loans/insurance; food; etc... >giving people money wouldnt fix this. PPP didn't fix it did it? There is an eviction and foreclosure crisis looming...giving people money may have done a better job than PPP in avoiding this coming disaster.
eric_b 6y ago
Politicized? Give it a rest. Yes, if a company spent 60% (down from 75%) of their loan on payroll, and does not exceed the 20k cap per employee, and retained the same number of employees they had at the beginning of the covered period, and can document all this, and they followed the initial SBA guidance when deciding how big of a loan to apply for, then they will get most or all of the loan forgiven. There are lots of comments here about "what about the nail salon who has 14 employees and took 5-10M?!?!". Well, assuming that isn't just a case of bad data, there is no reasonable expectation that the loan will be forgiven in it's entirety. The majority will need to be returned to the lender plus interest.
- throwaway_USD 6y ago
  >"what about the nail salon who has 14 employees and took 5-10M?!?!". If true that is an obvious case of fraud and you are making my point, the only time a loan will be repaid is if the money was spent on things other than payroll...which amounts to fraud. Who cares if its a nail salon? Math is math, if you have 14 employees the maximum eligibility would be 8 weeks of payroll with a cap at $100k salary + up to an addition 25% for non-payroll expenses. $5-$10M for a business with 14 employees is fraud on its face.
  - eric_b 6y ago
    I know lots of folks who got PPP loans. I don't know anyone who's getting 100% of their loan forgiven. Mainly because they took 2.5x monthly payroll as a loan - but then did an 8 week covered period (2x monthly payroll). Most of them will owe ~20% of the loan back to their lender since they had minimal other expenses.
    - acdanger 6y ago
      I believe that ~20% portion is forgivable as well so long as it was an approved expense and they the ~80% was put towards payroll.
      - SpelingBeeChamp 6y ago
deleted 6y ago
[deleted]

hn_throwaway_99 6y ago

Totally agree, and I think this is important to emphasize. I was involved in researching the requirements for a PPP loan for a nonprofit. I can guarantee that the vast majority of businesses (like 95%+) took out these loans with the intention they would never be paid back. Indeed, that was a feature, not a bug, of the whole "loan" program. If you took out the loans to keep employees on staff (and did so), then you had to fuck up hard to not have the loans be forgiven. So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back. Not only is that not the case, it was never intended to be the case.

throwaway_USD 6y ago
>So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back. I constantly see this..."its not free money, its a loan, and the money will be paid back with interest, just like in 2008." No, its free money for businesses, many of which will fail and let their employees go anyway. Then you hear people claim how somehow it was a victory to keep people off unemployment for 8 weeks, but not a single person can explain why that is such a benefit. Its sort of like saying hey when Corona virus began I stopped flights from Country X and saved 10's of thousands of lives...maybe deaths were delayed but there is no evidence they were prevented.
- robhunter 6y ago
  I think it's helpful to follow the money. If it goes to salaries, those salaries are taxed (both payroll taxes for the employer and income taxes for the employee). Those salaries, for the most part, get spent - on things with sales tax, creating business profits that are taxed, and supporting the employment of employees' whose wages are also taxed. The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game.
  - throwaway_USD 6y ago
    >The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game. No one argues $600B wouldn't help the economy. Can you point to where I said PPP will not help the economy? Most people are starting to understand the fraud involved with PPP and understanding those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster as its not distributed out over 8 weeks with 25% reserved for non-payroll business expenses. Of course there are arguments for why the money should have gone to businesses as it did and not people...but you don't hear any lawmakers making those argument publicly and if you do its limited to "we are saving jobs." My argument, if you feel compelled to call it that, is that there is no proof these jobs have been saved unless delaying unemployment by 8 weeks is considered a job.
    - kryogen1c 6y ago
      > those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster how could this possibly be true? the economy started tanking because people stopped going out and spending money. giving people money wouldnt fix this.
      - throwaway_USD 6y ago
        >the economy started tanking because people stopped going out and spending money. People continued spending money...mortgage/rent; car loans/insurance; food; etc... >giving people money wouldnt fix this. PPP didn't fix it did it? There is an eviction and foreclosure crisis looming...giving people money may have done a better job than PPP in avoiding this coming disaster.

eric_b 6y ago

Politicized? Give it a rest. Yes, if a company spent 60% (down from 75%) of their loan on payroll, and does not exceed the 20k cap per employee, and retained the same number of employees they had at the beginning of the covered period, and can document all this, and they followed the initial SBA guidance when deciding how big of a loan to apply for, then they will get most or all of the loan forgiven. There are lots of comments here about "what about the nail salon who has 14 employees and took 5-10M?!?!". Well, assuming that isn't just a case of bad data, there is no reasonable expectation that the loan will be forgiven in it's entirety. The majority will need to be returned to the lender plus interest.

throwaway_USD 6y ago
>"what about the nail salon who has 14 employees and took 5-10M?!?!". If true that is an obvious case of fraud and you are making my point, the only time a loan will be repaid is if the money was spent on things other than payroll...which amounts to fraud. Who cares if its a nail salon? Math is math, if you have 14 employees the maximum eligibility would be 8 weeks of payroll with a cap at $100k salary + up to an addition 25% for non-payroll expenses. $5-$10M for a business with 14 employees is fraud on its face.
- eric_b 6y ago
  I know lots of folks who got PPP loans. I don't know anyone who's getting 100% of their loan forgiven. Mainly because they took 2.5x monthly payroll as a loan - but then did an 8 week covered period (2x monthly payroll). Most of them will owe ~20% of the loan back to their lender since they had minimal other expenses.
  - acdanger 6y ago
    I believe that ~20% portion is forgivable as well so long as it was an approved expense and they the ~80% was put towards payroll.
    - SpelingBeeChamp 6y ago

deleted 6y ago

[deleted]