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Anecdotally (of course) of the handful of business owners that I know (personally) who received PPP funds, 75% of them didn't need the loan and all of them had

Anecdotally (of course) of the handful of business owners that I know (personally) who received PPP funds, 75% of them didn't need the loan and all of them had their loans forgiven. Some of these businesses had their best years ever (revenue).

giarc 4y ago
There was probably a lot of "I'm going to get mine" attitude, but I also suspect many took the loans in anticipation of needing them. Remember, very smart people said the economy was going to get destroyed so it would be prudent for businesses to prepare. If you didn't need the loan, but were told to prepare for the worst, why wouldn't you get the loan?
meroes 4y ago
Same. Someone I know claimed he/the owners received $5 million for a single restaurant location over the pandemic. The owners didn't "need it" unless you count not being less wealthy by pumping in their own money a need. But hey, that's the system and they chose to play it. Maybe a requirement to post on the physical business how much pandemic money they've got would be an easy middle ground. I'm glad he told me though so I can I understand what really keeps businesses going.
boole1854 4y ago
Since we're sharing anecdotes... Anecdotally of the handful of business owners that I know personally who received PPP funds (3 businesses total), all needed the loan, used it to maintain payroll, and all of them had their loans forgiven.
- vkou 4y ago
  Since we're sharing anecdotes, anecdotally, the only business owner I know personally who received PPP funds (My wife's employer) needed the loan, kept everyone on the payroll, paying them to do nothing, until PPP funds ran out, and once that happened, laid off half the staff. He then continued running the business at a loss, paying out of his own pocket for the next year and only now has returned to something resembling profitability. Why was the business operating at a loss? Because of the social changes brought about by COVID, it took over a year after the mandates were lifted for his customers to return to the status quo.
  - Scoundreller 4y ago
    > He then continued running the business at a loss, paying out of his own pocket for the next year The year-by-year outlook of profit vs loss is arbitrary. How did the decade by decade history look? Any losses? Why not look at businesses second by second? Sometimes you’ll lose in 1 second what will take thousands of seconds in profit to make up. Largely corps distribute their profits to protect past earnings against future losses, but risk short-term insolvency which should be at their own risk. Likely they funded the ongoing survival of business because walking away from its equity value would have resulted in greater losses.
- thwayunion 4y ago
  You're both right. I know of 10 cases in my social circle. Two were small tech companies (not startups) that pivoted to WFH services in 2020, had their best years ever, and then returned to their normal work portfolio in 2022. Good years. Five were restaurants I frequent. Two of those went out of business, two used PPP to pay salaries then laid folks off, and one had a fantastic year because they already had eds+meds+tech clientelle, were in a fairly good pandemic-weathering of the city (lots of SFHs and huge parks), and executed extremely well on the "delivery but we'll keep the social third place vibe going with various virtual events" model. One is a auto dealership (well, a manager at an auto dealership). Basically used the PPP to pay salespeople salaries for a few months and by the time the first summer came around it was back to business as usual. The rest were various other small businesses for whom PPP was basically purely supplemental income. The only one I'm really sour about is a tradesman who did a bunch of under the table cash work (unreported so a 30% boost already) + got PPP + got enhanced unemployment. Almost two straight years of tax fraud. Bought a $300K boat and bunch of other toys this year. All were forgiven.
  - vkou 4y ago
    > All were forgiven. Snitch on the tradesman, and you'll get 30% of whatever he stole if he's convicted.
ChainOfFools 4y ago
As someone whose own consultancy provides services to a couple dozen of these small businesses, primarily ones which happened to fall under the rubric of "essential services", I noted that nearly all of them received outsize PPP awards (on the order of half a million and up for 30-ish person companies, which had no shortage of income due to being among the aforementioned essential businesses). These were almost immediately forgiven. In most cases the businesses were able to apply twice and get two separate awards. I'm not sure what the mechanism was for this as our business itself never applied for these loans. In the aftermath of all of this there has been a distinct pattern emerging in which these small business owners have developed a kind of amnesia about the money they've received from these loans and have assigned the upward balance sheet inflection to their own "hard work" commitment and demonstrated acumen in negotiating the covid crisis. I suppose this isn't exactly untrue, but there is no internalized recognition that this success was a one-time phenomenon due to a one-time windfall from the government. Another anecdote somewhat unrelated is that the number of family-run (i.e. father and son/s) trades businesses in my local suburb all seem to have decided they need brand new work trucks at the same time. These vehicles are uniformly the upper end luxury trim levels of the line, lifted and stanced to absurdly aggressive proportions, and show no signs of being put to any of the actual work for which they would be utterly impractical anyway. The number of rear window stickers with Sparta helmets or some sort of depiction of an automatic weapon suggests the PPP loans may end up having inadvertently helped equip and arm a future informal militia.
- ted_bunny 4y ago
  The PPP was an upward wealth distribution. It might look like a technocratic accident, but things always, always, always shake out this way. On a similar note, the ~$2000 of assistance most Americans got went straight to landlords. This crisis was fully exploited by people who knew exactly what they were doing.
  - robswc 4y ago
    Who is "they" ? https://www.federalpay.org/paycheck-protection-program/top-loans https://www.federalpay.org/paycheck-protection-program/top-l... Seems the loans were capped at $10 million? Maybe I'm missing something... But it seems any "they" that is able to manufacture an "accident" of this scale would see $10 million on a good market day. I'm not at all saying there wasn't abuse but I don't see any conspiracy when incompetence or laziness makes much more sense.
meetingthrower 4y ago
I'm in PE and have looked at probably 500 deals this year. All received PPP, and in virtually all cases it has dropped straight to the bottom line as a dividend to the owner. (I don't do any restaurant / hospitality businesses, and focus on businesses that would have been open in pandemic.) Biggest wealth transfer to owners of small(ish) businesses ever!!!
icedchai 4y ago
My uncle's business got a half million dollar PPP loan with millions in profits and over 15 million in the bank. It was distributed as employee bonuses. You wonder why there's inflation.

giarc 4y ago

There was probably a lot of "I'm going to get mine" attitude, but I also suspect many took the loans in anticipation of needing them. Remember, very smart people said the economy was going to get destroyed so it would be prudent for businesses to prepare. If you didn't need the loan, but were told to prepare for the worst, why wouldn't you get the loan?

meroes 4y ago

Same. Someone I know claimed he/the owners received $5 million for a single restaurant location over the pandemic. The owners didn't "need it" unless you count not being less wealthy by pumping in their own money a need. But hey, that's the system and they chose to play it. Maybe a requirement to post on the physical business how much pandemic money they've got would be an easy middle ground. I'm glad he told me though so I can I understand what really keeps businesses going.

boole1854 4y ago

Since we're sharing anecdotes... Anecdotally of the handful of business owners that I know personally who received PPP funds (3 businesses total), all needed the loan, used it to maintain payroll, and all of them had their loans forgiven.

vkou 4y ago
Since we're sharing anecdotes, anecdotally, the only business owner I know personally who received PPP funds (My wife's employer) needed the loan, kept everyone on the payroll, paying them to do nothing, until PPP funds ran out, and once that happened, laid off half the staff. He then continued running the business at a loss, paying out of his own pocket for the next year and only now has returned to something resembling profitability. Why was the business operating at a loss? Because of the social changes brought about by COVID, it took over a year after the mandates were lifted for his customers to return to the status quo.
- Scoundreller 4y ago
  > He then continued running the business at a loss, paying out of his own pocket for the next year The year-by-year outlook of profit vs loss is arbitrary. How did the decade by decade history look? Any losses? Why not look at businesses second by second? Sometimes you’ll lose in 1 second what will take thousands of seconds in profit to make up. Largely corps distribute their profits to protect past earnings against future losses, but risk short-term insolvency which should be at their own risk. Likely they funded the ongoing survival of business because walking away from its equity value would have resulted in greater losses.
thwayunion 4y ago
You're both right. I know of 10 cases in my social circle. Two were small tech companies (not startups) that pivoted to WFH services in 2020, had their best years ever, and then returned to their normal work portfolio in 2022. Good years. Five were restaurants I frequent. Two of those went out of business, two used PPP to pay salaries then laid folks off, and one had a fantastic year because they already had eds+meds+tech clientelle, were in a fairly good pandemic-weathering of the city (lots of SFHs and huge parks), and executed extremely well on the "delivery but we'll keep the social third place vibe going with various virtual events" model. One is a auto dealership (well, a manager at an auto dealership). Basically used the PPP to pay salespeople salaries for a few months and by the time the first summer came around it was back to business as usual. The rest were various other small businesses for whom PPP was basically purely supplemental income. The only one I'm really sour about is a tradesman who did a bunch of under the table cash work (unreported so a 30% boost already) + got PPP + got enhanced unemployment. Almost two straight years of tax fraud. Bought a $300K boat and bunch of other toys this year. All were forgiven.
- vkou 4y ago
  > All were forgiven. Snitch on the tradesman, and you'll get 30% of whatever he stole if he's convicted.

ChainOfFools 4y ago

As someone whose own consultancy provides services to a couple dozen of these small businesses, primarily ones which happened to fall under the rubric of "essential services", I noted that nearly all of them received outsize PPP awards (on the order of half a million and up for 30-ish person companies, which had no shortage of income due to being among the aforementioned essential businesses). These were almost immediately forgiven. In most cases the businesses were able to apply twice and get two separate awards. I'm not sure what the mechanism was for this as our business itself never applied for these loans. In the aftermath of all of this there has been a distinct pattern emerging in which these small business owners have developed a kind of amnesia about the money they've received from these loans and have assigned the upward balance sheet inflection to their own "hard work" commitment and demonstrated acumen in negotiating the covid crisis. I suppose this isn't exactly untrue, but there is no internalized recognition that this success was a one-time phenomenon due to a one-time windfall from the government. Another anecdote somewhat unrelated is that the number of family-run (i.e. father and son/s) trades businesses in my local suburb all seem to have decided they need brand new work trucks at the same time. These vehicles are uniformly the upper end luxury trim levels of the line, lifted and stanced to absurdly aggressive proportions, and show no signs of being put to any of the actual work for which they would be utterly impractical anyway. The number of rear window stickers with Sparta helmets or some sort of depiction of an automatic weapon suggests the PPP loans may end up having inadvertently helped equip and arm a future informal militia.

ted_bunny 4y ago
The PPP was an upward wealth distribution. It might look like a technocratic accident, but things always, always, always shake out this way. On a similar note, the ~$2000 of assistance most Americans got went straight to landlords. This crisis was fully exploited by people who knew exactly what they were doing.
- robswc 4y ago
  Who is "they" ? https://www.federalpay.org/paycheck-protection-program/top-loans https://www.federalpay.org/paycheck-protection-program/top-l... Seems the loans were capped at $10 million? Maybe I'm missing something... But it seems any "they" that is able to manufacture an "accident" of this scale would see $10 million on a good market day. I'm not at all saying there wasn't abuse but I don't see any conspiracy when incompetence or laziness makes much more sense.

meetingthrower 4y ago

I'm in PE and have looked at probably 500 deals this year. All received PPP, and in virtually all cases it has dropped straight to the bottom line as a dividend to the owner. (I don't do any restaurant / hospitality businesses, and focus on businesses that would have been open in pandemic.) Biggest wealth transfer to owners of small(ish) businesses ever!!!

icedchai 4y ago

My uncle's business got a half million dollar PPP loan with millions in profits and over 15 million in the bank. It was distributed as employee bonuses. You wonder why there's inflation.