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The nature of PPP seemed to be "just get it out there" by leveraging the banks but it didn't occur to government how big the influx of applicants would be and s

The nature of PPP seemed to be "just get it out there" by leveraging the banks but it didn't occur to government how big the influx of applicants would be and smaller business got shafted since they don't have the same resources as bigger businesses. So, you have situations where mom&pop sized businesses are constantly on the phone trying to get into PPP while trying to keep their business afloat by last minute transitioning to pick-up/delivery models. Meanwhile, bigger institutions can sic a dedicated team to PPP. By the time m&p get the PPP (if ever) it's already been exhausted or the amount was trivial. What a mess.

samtho 6y ago
This is a classic example of "the road to hell is paved with good intentions." The problem congress had was simple: Businesses need help keeping staff and paying bills. The solution was also simple, give the businesses some cash asap. To implement this solution would prove to be tricky as magically poofing billions of dollars into the hands of these businesses requires a lot more than just handing a check to people who filed taxes and thus were on record. They thought they would leverage an institution that already issues money to their audience here: business loans. This sounds great, right? Fed says (not a direct quote), "Go ahead and issue money to (almost) any business who asks for it and we will guarantee it" and, "Businesses who qualify will have it forgiven." It uses a system already in place to get cash out fast to people, rather than the law requiring a website to be built out among other bits of infrastructure as by the time this is done, many businesses would have likely gone under when this cash could have helped them prevent that. The problems, however, present themselves very quickly. First, banks were reluctant to loan money out to organizations with no credit, but the fed guaranteed all of these loans, right? Well, kind of. They guaranteed up to an amount issued but if banks loaned out more, they would be on the hook for servicing that loan to a business that is already struggling. The information as how this would be divided amongst banks was also unclear. In short, banks did not trust that congress would have their backs if something got messed up with the interpretation of the language and delegation of available funds. The second issue was where they favored large businesses who would likely have been able to weather the pandemic and thus they could collect the loan from if Uncle Sam did not end up backing it for technicalities. It's also easier to make 100 large loans of $100,000 than 500 small loans of $20,000. Small businesses represent more than 2/3 (fig. might be outdated) of all businesses, they are typically among the top employers in rural areas, providing livelihoods to people living in smaller communities and this shit has screwed them big time. Many have closed, and more will close, that will never reopen again.
votepaunchy 6y ago
There was $130 billion available in the PPP fund when scheduled to close on 6/30 (the program was extended).

samtho 6y ago

This is a classic example of "the road to hell is paved with good intentions." The problem congress had was simple: Businesses need help keeping staff and paying bills. The solution was also simple, give the businesses some cash asap. To implement this solution would prove to be tricky as magically poofing billions of dollars into the hands of these businesses requires a lot more than just handing a check to people who filed taxes and thus were on record. They thought they would leverage an institution that already issues money to their audience here: business loans. This sounds great, right? Fed says (not a direct quote), "Go ahead and issue money to (almost) any business who asks for it and we will guarantee it" and, "Businesses who qualify will have it forgiven." It uses a system already in place to get cash out fast to people, rather than the law requiring a website to be built out among other bits of infrastructure as by the time this is done, many businesses would have likely gone under when this cash could have helped them prevent that. The problems, however, present themselves very quickly. First, banks were reluctant to loan money out to organizations with no credit, but the fed guaranteed all of these loans, right? Well, kind of. They guaranteed up to an amount issued but if banks loaned out more, they would be on the hook for servicing that loan to a business that is already struggling. The information as how this would be divided amongst banks was also unclear. In short, banks did not trust that congress would have their backs if something got messed up with the interpretation of the language and delegation of available funds. The second issue was where they favored large businesses who would likely have been able to weather the pandemic and thus they could collect the loan from if Uncle Sam did not end up backing it for technicalities. It's also easier to make 100 large loans of $100,000 than 500 small loans of $20,000. Small businesses represent more than 2/3 (fig. might be outdated) of all businesses, they are typically among the top employers in rural areas, providing livelihoods to people living in smaller communities and this shit has screwed them big time. Many have closed, and more will close, that will never reopen again.

votepaunchy 6y ago

There was $130 billion available in the PPP fund when scheduled to close on 6/30 (the program was extended).