What Comes Next for Small Businesses and PPP ?

WIth the funds for the PPP depleted as of today, as we hope for another tranche of the same amount or more to be approved by the government,  here are some of the issues I have had to address with small businesses I deal with and some of the recommendations I am making to those federal workers I am contact with. I would love to know what everyone thinks. All feedback is welcome in the comments
1. Timing
The original goal was to get money into the hands of SMBs so they could retain employees. It is obviously cheaper to subsidize retained workers than for employees to go on unemployment.  Unfortunately, because of the double whammy of the funding not being received for several weeks AND the continuing closure of businesses, SMBs were forced to layoff, furlough or fire employees. Very often they worked with employees, helping them go on unemployment in order for them to make as much if not more money that way
Because of this current status, even as companies receive the PPP funding they find themselves with the big problem of whether or not to bring employees back knowing that they wont be able to immediately open back up.  So they will be paying employees not to work with the fear, and this is the biggest problem, that the PPP money for payroll will run out before they are able to open up.
SMBs that qualify would prefer to delay use of the money until their authorities allow for them to open up for business. It is critical for them to be able to use the money to cover the 8 weeks of payroll when they are open, knowing that for the vast majority of the companies their businesses will be down significantly. So they will need the 8 weeks of PPP money for payroll while open for customer  
2. 25 Percent is not enough for non-payroll expenses
Its a fact that  25pct of total PPP money is rarely enough to cover non payroll overhead. As a result they find themselves in a catch-22, they dont have enough money to stay current with their bills for the time when they are allowed to open up
For the 2nd tranche to work, businesses will need to be able to use more than 25pct. Given that we missed the window that the money would allow their employees to be retained and not go on unemployment , this is not unreasonable.
3. Testing
Another issue that came up that I did not expect is that when employers attempt to hire people, while still closed, in an effort to replace those who have quit for other jobs, or left because they can make more from the increased unemployment levels, the legacy employees, even those who are getting paid not to work, and/or have left for other unemployment are saying they will not return because they are concerned that these new people may have the virus and could spread it through the company.  This of course confirms the importance of testing as a key to getting businesses open
We need federal testing standards put in place, and most likely testing done by “Testers and Tracers”, newly created federal positions that could amount to a million or more new jobs for people who are trained to do testing that helps the country open up and helps trace the history of any positive tests.
As part of the “Testers and Tracers” job creation program, there needs to be a hard expiration date so that this program doesn’t extend into a draconian big brother like situation.
4. Independent Contractors getting PPP
There was a last minute increase in the paperwork required for Independent Contractors to be eligible for loans. This isn’t a prima-facie problem, but it significantly extends the time it takes for banks to try to confirm and qualify the applicant.  Anecdotally it appears that many banks are choosing to make these loans a lesser priority and putting them behind bigger clients, creating obvious financial problems for ICs
5. Banks are understaffed
There is just no reasonable way to expect that Banks have enough personnel to deal with the volumes of applications.  I don’t know if there is a way around this (other than possibly going to an Over Draft Protection Program for the 2nd tranche).
As one owner told me, if all of these loans are fully guaranteed and banks truly are held harmless, why are they involved at all other than being a conduit for immediate funding ?  
Why are they going through all these approval processes ? Wouldn’t a better use of resources be fraud determination after the fact?  Get the money into the economy and have the banks deal with those recipients they suspect of fraud rather than being arbiters of credit at the time of application.
What makes this even crazier is that is that if they average size loan is 200k, the average fee is 5%.  5% of $350 billion is $17.5 billion of risk free money that the banks will earn in TWO WEEKS.
Why is the treasury letting banks process these so slowly. For the 2nd tranche, if its also $350 billion, another $17.5 billion in fees will be made in a week or two. The treasury should be able to dictate what the banks do, when they process these,  shouldn’t they  ? Given what is at stake with the economy, shouldn’t the Treasury just tell the banks to fund first, audit for fraud later ?
6. Banking Remembers the FInancial Crisis
Every bank i have talked to is terrified that all of these loans will be audited in 2 years and a new political climate will lead to them being nitpicked in those audits and actually losing a substantial amount of money.  Despite the 17.5b in fees, they want it legally incorporated into the law that they wont be audited and face loses on these loans.  The reality is that this request is very reasonable
7. Transparency and Communication
One of the most stressful aspects of the entire PPP process is the lack of feedback from banks.  Once an application is placed, for many applicants the total amount of feedback can amount to not much more than an email or a voice mail. That is not only frustrating , its terrifying for businesses who have no idea what their future holds.  There business is closed, they have no or little revenue, and the one hope of upside, the bank from which they can get a PPP loan has effectively ghosted them.
For tranche 2, banks should be required to list the name of the applicant, the amount applied for and date received, some sort of status for the loan and the date when the applicant should expect to hear bank from the bank.
This information should be available for everyone to see.  Its only fair that all applicants know where they stand and be able to see other companies who are in the same position
If there are any banking laws that prevent, please let me know. Maybe they can be suspended and some common sense can be put in place
hope this helps

62 thoughts on “What Comes Next for Small Businesses and PPP ?

  1. I love all of these rich guys thinking they know all about everything. Just stopped into our local mom & pop restaurant today and found out that they did not get anything from PPP. They said that all of the large food chains got the $ but the mom & pops got nothing. They also received nothing from their business interruption insurance. Therefore they are hanging on by a thread. Mr Cuban, you have no idea about the plight of the true small business people in our country. Shame on you!!!

    Comment by Don Weltzien -

  2. Since the problem is quite large, success can be achieved if the subject is considered as a whole. Therefore, it is more accurate to evaluate the proposed solutions together. The unemployment problem is economic as well as a social one. It is necessary to be careful about the money reaching those who need it. The deal with your first fund is important. The prospect of a new Covid-19 wave that is likely to come as risk remains. If there is a weakness in control, an increase in crime rates is inevitable. There seems to be a need for organized support from the local government and local groups working for assistance. At the same time, experiences need to be shared.https://www.gonencemlak.com.tr

    Comment by Kemal Gonenc (@gonencemlak) -

  3. Congressional Shark Tank…in Indiana 9 your old hangout of Bloomington, Indiana is included in the District…here’s my pitch…https://www.youtube.com/watch?v=CZd1H_9buA0#action=share

    Comment by pastormarkpowellgmailcom -

  4. Pingback: What Comes Next for Small Businesses and PPP ? | Teps Agencies

  5. Hey Mark,

    How about I turn it around, and ask questions to business leaders.

    1. Do you pay your workers enough to save? do you now see how that pads your investment strategy?

    2. If you do pay them enough, are they trapped in a consumer-centric environment? …live up to the Jones’s… and does that help he economy?

    3. Does your outsourcing strategy (manufacturer), now pose a threat? …esp if you add a pandemic equation?

    4. Healthcare! are we doing it right? should we focus on treatment or prevention?

    5. How does your work from home strategy change? Were your core people productive?

    Comment by Michael Kinyanjui -

  6. Unemployment claims are overwhelming many state unemployment capabilities, leading to terrible results for individuals and the economy. Would you be in any position to help solve this problem? Partly from my perspective as a long-time FEMA reservist, it seems like the federal government could devise a computer system that could handle claims for states that can’t keep up—like Colorado where I’m an unemployed gig worker/substitute teacher. In stead or in addition, the federal government or states themselves could staff up huge contingents of workers to process applications the old-fashioned way if necessary or on several smaller systems. Funds that come months from now may be too late to keep some restaurants open and pay rent that’s due today…BTW thanks for being you and the good you do.

    Comment by Buffy Gilfoil -

  7. Despite the overwhelming negative comments, i think this should be a lesson to current and potential business owners with regards to how to manage finances and operate with less than they generate. It is also a great time for forward looking investors to bail out businesses in dire need of funds without having to rely on government loans. Corona is here with us, let every business person learn from what put them in bad financial situation in the first place and think of a way out. You may qualify for and get a loan today, what if another corona like crisis comes later, would your business still need bail out? Learn to live within your means. A great time for investors though to fund businesses @ http://www.myhelpfund.com

    Comment by Grace Time -

  8. anntollison5@gmail.com

    Comment by aardvarksports -

  9. I think we’ll always see an uneven application of benefits with any program of this size and what’s unfortunate is that we’re seeing public companies “returning” PPP funds that can’t get disbursed out to other companies after the fact. The court of public opinion is very influential, but what could those companies do? They’re run by people and if there was no backlash, would the accountants at Ruth Chris or other places kept their jobs if they didn’t apply to PPP? Of course not, they’d be derelict in their duty to the company. It’s a lose-lose.

    Comment by Jim Wang -

  10. Hi Mark, The SBA must be working with Windows 95. How are they going to process the EIDL Loans and Grants at this rate? (Not PPP) As of April 24th the SBA Report says:
    Loans Approved
    38,984
    Total Dollars
    $7,967,174,888
    With over 4 million applicants in the system, how will the multiple Billions from the CARES Act get distributed to the dying Business dying by the day or hour. I have submitted my application streamline March 30th for EIDL and Grant. I have NOT received ANY EIDL Grant or Loan? My small business has been closed since March 20th. Please offer help to the SBA to build an efficient system, program to help realistic timely way to distribute the money according to the LAW OF THE CARES ACT. We need your help. Thank You; Dying Small business.

    Comment by Mark Keting -

  11. I believe that one of the biggest problems facing the small business community is that the PPP is masking the fact that the world has changed. Period. That means that small business owners are PUTTING OFF DECISIONS in the hope that things will return to normal. It is time to accept the new environment and begin to adapt. This may be different employee profile, selling assets, a new focus for the business or any number of gutsy calls. Sadly, to some small businesses, this means closing. It may just not be a viable business case anymore. But putting off the decision will create a worse situation for all involved. If you can get it, take the money and take care of your employees. But make decisions for the future of your organization as soon as you can. You are always able to create a future for yourself and your organization that should not rely on the government to maintain the status quo.

    Comment by dpdeitzer -

  12. Mark, what about getting big enterprise and gov’t agencies to step up and pay all outstanding SMB receivable today? SMB’s are owed $900 billion for services already delivered. We can inject almost $1T if businesses paid what they owe. #paytoday https://paytoday.club/

    Comment by Fundbox (@fundbox) -

  13. I grow premium oysters in Louisiana, and agree with Mr. Williams comment above. This year is my break out year. I have 500,000 oysters on my farm coming to market size this month. The entire crop was spoken for at $1 each. April was the month that our revenue was going to increase, allowing us to hire workers. PPP does not apply to new hires or to me as an owner/manager not taking a salary. I now have zero sales and only a few hundred dollars in the bank. The road to the Island I live on is closed, and out of respect for the order I have not brought in anyone from out of the area to help on the farm. This is also the time of year that I need to get my seed and focus on next years crop. I’m sure many other farmers are in a similar situation with the spring time being a very busy time. Even if small farms and food producers were included, I have no time to chase down and figure out these programs. That is definitley not our core compentency. I tell this story only to give a snapshot of the plight of food producers that have even fewer options than the restaurants. We have partnered with Chefs and created two new pop up concepts that have both sold out. The first time in two days, the second in an hour and a half. This has kept Chefs working (Three guys sold $4,000 worth of food in two evenings) and given us gas money. It’s not perfect, but was the right thing to do for us. I’m not looking for handouts, but could definitley use some help right now, as I am sure many other busy farmers could.

    Comment by Scott Maurer -

  14. PPP – Little Guy Gets Left Out

    Dear Mr. Cuban,

    I am the owner of The Wind-Chill Factory, a seasonal drive-in restaurant in the Adirondack Park in upstate NY. Despite submitting my application for PPP on the first day of eligibility(April 3rd), I did not get an approval.
    This is absolutely crushing, especially when you hear stories like Larry Kudlow’s wife (who owns an art gallery) getting approved.
    I am reaching out to you because I know you are a a self-made guy that really seems to get what going on in the real world. This is why I reached out to you to share my story, whom I am sure is like so many others.
    Our opening day this year was March 8th. I decided to stay open during the shut down because my business is considered essential and I suddenly had a lot summer employees returning from college that needing to work. I laid off my 75 year old manager (Amazing Woman) when Governor Cuomo implemented Matilda’s Law. We have used creative marketing like giving away a free roll of toilet paper with your order. I have also given away free pizza and ice cream lunch to nearly all essential workers in our community, such as over 150 WalMart employees, school cafeteria workers, and our local hospital and nursing home to name a few (I’m still working on the rest).
    Despite doing what you feel are all the right things, putting yourself (my family) and employees in harms way we keep plugging along while being hopeful that a program like PPP will come through to help us remain a viable business. Those dreams were shattered last week when I learned that the funds had been depleted and there were no new bills in the pipeline for a new round of funding. How fair is this?
    If you would like to reach out to me to discuss this further, my cell phone is (518) 304-3170 and email is bob@windchillfactory.com. I understand you must have an extremely busy schedule, but if it’s not through me, please reach out to other small business owners you know and see what their experience was like applying for a PPP loan. Thank you for your time & stay healthy!

    Best,

    Bobby Porter
    Owner
    The Wind-Chill Factory

    Comment by windchillfactory -

  15. Great post free udemy course , digital marketing ,SEO experts , Programming and other visit my site http://www.uearnclick.com free paid udemy Course

    Comment by uearn click -

  16. Today I received an email from SBA that I was denied EIDL based on credit (medical debt). There was no mention or wording of 10k grant or I assume in my case 4k, based on 4 employees. Has anyone else received a denial of loan and still received the grant money? Maybe it will magically appear in my bank account? This just doesn’t seem right to me. Also, could not get PPP processed. This is the email I received:

    Dear Applicant,
    In these unprecedented times, we understand the challenges you are facing. The SBA is making every effort to support small businesses, which are the backbone of the American economy. Unfortunately, although we have made every effort to approve your loan request, we are unable to offer you a Economic Injury Disaster Loan (EIDL) for the reason(s) described below.
    Unsatisfactory credit history.
    We evaluated your credit report and related information. Based on the information we obtained, we are regretfully unable to approve your application. We based this decision on information obtained from:
    Experian P.O. Box 2104 Allen, TX 75013, (866) 200-6020.
    If you disagree with our decision, you may request reconsideration, subject to the availability of funds. You can submit your request to any of the following:
    1. Mail your request to the address at the top of this letter.
    2. Fax your request to: 202-481-5931.
    3. E-mail your request to: pdcrecons@sba.gov
    Your request must:
    1. Be in writing and be received by this office as soon as possible.
    2. Contain all significant information that will overcome the decline/withdrawal reason(s).

    Comment by Claire (@clairebelone) -

  17. Please run for Senate.

    Comment by Valerie Alexander -

  18. This is another way to take everything we own and then feed the people crumbs knowing that this financial institution is a scam anyway and this is done on purpose to keep the rich richer and the poor they dont have a chance I have been poor all my life but rich in spirit I was a good person at o e point but this world hates good people and when you see what you worked so hard for all your life get taken away from you leaves a bitter taste in the mouth and makes you think to yourself why not eat a bullet instead as long as the federal reserve is allowed to continue to print and make money we will never be free we are slaves to a system that makes us work until we die just to have it taken away all that money the first bail out did was go straight into the hands of a few this 1200 dollars is a joke but airlines get billions after they make millions everyday this make my stomach turn it make me mad and you know what I am glad I dont have anything to live for just hit the nuke button and put us out of our misery
    Y

    Comment by Joseph Bane -

  19. As a lawyer and former community banker, it is my opinion this has been an unmitigated disaster that could have been prevented. One local company I know of that received funds is an essential business that has been only marginally affected by the shutdown. But because it has a significant amount of debt with a mid-sized bank, the bank got right on the application and bent over backward to help the company. And why wouldn’t the bank do this…it protects their borrower and therefore the bank’s loan. I suspect this was a significant factor in the way applications were prioritized and funded.

    Yet, other businesses I spoke with (who didn’t have large amounts of debt) couldn’t get their banks to do anything…sometimes not even a return phone call.

    As you have pointed out before Mr. Cuban, the banks caused significant operational friction in this process. They also caused behavioral friction by picking and choosing what applications to process. The people I know who are going to lose their businesses on “Main Street” literally only need $5,000 to $50,000 to stay in business. But they got shut out due to the massive chunks of money taken by larger businesses.

    So I have two ideas:

    (1) A Micro-Business Program
    Create a tranche of funds that is directed only at micro-businesses (perhaps businesses with less than 10 employees, or annual revenue under a certain amount). Allow them to submit a statement of need along with very limited information directly to the Treasury, which will automatically be funded by the Treasury via direct deposit. This program would be capped at a reasonable number, perhaps $50,000 per entity. Audits and follow-ups would be done afterward just like the PPP. This would get cash immediately to the micro-businesses that need it while removing the friction of the banks.

    (2) A “Need Test”
    It took me 5 minutes to come up with a formula that would weight the following factors to calculate a “need score”
    – Estimated drop in revenue due to the coronavirus (represented as a percentage)
    – Cash on hand/average deposit balances
    – Number of employees

    Using this, you would have a brief application period followed by the government (or banks if need be) review and fund loans based on the needs scores, from highest to lowest. I am sure this would not be a perfect process, but it would prevent the travesty that just took place with $350 billion.

    I look forward to watching your Town Hall this coming week! Thanks for being a voice for those who nobody seems to want to listen to in this disaster.

    Jeff

    Comment by Jeff Honaker (@JeffHonaker) -

  20. Amazing, Chase bank, and presumably the FED in the background, do the OPPOSITE when times are tough, they cease all HELOC activity when the obvious, responsible solution would be to allow a safety valve approach to HELOC’s. Limit the amount that can be taken out every month so that home owner ship remains steady, viable, and valuable. If not now, then when can a person slowly tap their equity, only when they reach age 62, really? https://www.fool.com/investing/2020/04/17/jpmorgan-chase-stops-accepting-heloc-applications.aspx

    Comment by Alessandro Machi -

  21. Mark, Think you hit most points right on. From the outset of response I was concerned that the money would not get to the people in need fast enough to avoid the unemployment debacle unfolding now. Agree with your fund first point. I am concerned that a push to reopen sooner than when it is safe will cause another wave of Covid-19. Crime is likely to spike as people struggle to feeld themselves and their families. Local groups who are trying to serve these people need organized support from local government to help

    Sent from my Sprint Samsung Galaxy S10.

    ________________________________

    Comment by buzznewmedia -

  22. Maybe there’s a way to tie this all to AOC’s Green New Deal – since climate change is still the elephant in the room. Lots of people unemployed. Government paying out big bucks. Kill 2 birds with 1 stone. Use the unemployed to fight climate change. Never before were this many people available to help. We’re paying out the money any way – might as well apply it toward climate change if possible. AOC probably has ideas/insights how this could all be linked together. Mark, please give her a call.

    Comment by Ken's Stock Blog -

  23. Hello Mark, Your efforts and insights are greatly appreciated. Have you considered utilizing another forum for feedback management? Perhaps the re-opening and longer term “2.0” efforts would benefit from leveraging something like the EFM/customer insight tools that are often used by software/technology organizations.

    Also, I agree with Bobby Lazenby regarding “Testers and Tracers.” Time, $, and effort would be better spent elsewhere – one example would be on education efforts in the areas of hygiene, science, data analysis, etc.

    Comment by Debbie Spalding (@dstxus) -

  24. Great break down of what is going on financial in our country with the CARES Act stimulus package.

    Comment by Maria Isabel Wangenheim (@misabelcubillo) -

  25. Mark, Thanks for great insight.
    On another subject near and dear to all, I am a retired restauranteur (owned Del Frisco’s in Texas for 20+ years started in 1983) I have a good solution to maintain original restaurant seating capacities (or very close) and satisfy safe distance requirements as well. I am happy to share with you. Not as a pitch (I don’t want a job!) just to help my fellow restauranteurs through this unthinkable business crushing tsunami.
    Be well

    please post it here. would love for everyone to see it. I love Del Friscos !

    Comment by naples22 -

  26. Owner of two SMBs. Would like to help. Email me nick@nicknicastro.com. Thank you!

    Comment by donniccolo -

  27. I am screwed every which way from stimulus check to PPP for my small business to my taxes this year. This has been a disastrous domino effect for me

    I have a small business. I applied for a PPP Loan. The bank asked me to reapply and added new requirements that I can’t fulfill partly based on paying contractors and freelance via venmo or sometimes cash
    I decided to apply as self-employed instead of under company name and try to at least get a little money to use to keep the business afloat. One thing I need is Schedule C from tax returns

    I found out today I couldn’t file my self-employment taxes I need for PPP because taxes were already filed under my SS? How you may ask? This leads me to the stimulus check.

    I had not done my personal taxes this year but needed to update my new bank account so I could receive the stimulus check. According to everything I read online I was to fill out the non-filer form
    to update my bank information.

    I filled out what I thought was just a placeholder with correct bank info until I do my 2019 taxes but turns out I filed a tax return with no income! So, now i can’t fill out my real tax return or show proof for PPP loan.

    Furthermore after all that the IRS still sent the stimulus check to the closed bank account!

    Does anyone know who I can get a hold of to fix this?! I DO NOT HAVE MONTHS. Since Irs is closed I can’t talk to anyone.

    In case you were wondering crickets on the EIDL.

    Comment by Jocelyn Rameriz (@JocelyneRameriz) -

  28. Just finished reading enough articles to know that my PPP loan for my solo family medicine clinic will never get past the submitted phase. Over the past month I have kept all of my employees on full pay as we managed phone calls, med refills, referrals and appointments. We’ve been staying busy taking care of our patients, but telemedicine isn’t paying the bills as our income dropped to 20% of normal. Even in the medical world, there’s no obvious answer to when clinics will be bustling with patients again. So along with millions of other small business owners, my 21 year old practice is now at risk of closing its doors.

    But I have an idea. What if my bank automatically extended my already existing line of credit every two weeks when they see my usual payroll expenditure come across from Quickbooks? Or when I pay those monthly supply company and utilities bills I’ve been paying for two decades?

    My bank probably knows more about my spending habits than I do. Could the banking world save small businesses across America two weeks at a time, or am I just a crazy dreamer with what seems like a simple plan?

    Comment by jsgmobile -

  29. How the world works, please read, its not self serving or about me, these are facts and when you get to the 2nd to last paragraph, you will get it, or not!

    Great to hear from you Mark, its been a minute, thanks to Bob Lefsetz we communicated in 2012 in regards to Regenerative Medicine and how it could benefit some of your Maverick players when unfortunately injured.
    I loved your answer, I quote, “sounds interesting but its not my area of expertise so I have to pass at this time” I was in partnership at the time with the worlds renowned leading scientist, professor and specializing in the area of the Thorax doctor from Karolinska University Hospital in Stockholm Sweden. The infamous at the time, Dr. Paolo Macchiarini leading the still relatively unknown at the time Regenerative Medicine at the highest level of medical standards. Tracy Curry aka The D.O.C. from DFW was looking for help to repair his severed left larynx from a career ending accident in 88. Doc and I worked together at Death Row Records
    until the shit hit the fan. Here is why I mentioned this, number one, I am so grateful you did not become involved because Dr. Macchiarini ended up to be a complete fraud in raising tens of millions of euros for clinical trials when it was really used to fund his lifestyle. He used living patients Mark as his clinical trials that he gave false hope to when they had inoperable diseases with only months to live. It was on synthetic Trachea transplants seeded with the patients own stem cells. It took 9 deaths all over the world before Karolinska finally decided to investigate him and his RM team and RM clinic. Thank God The D.O.C. did not proceed with the surgery, as he would not be still with us. So from the darkest period in my 42 year career in the music industry handling business affairs for Suge Knight during our untouchable days, to meeting at the time and befriending and partnering to build a completely self contained RM Clinic which would have been a worlds first with Dr. Paolo Macchiarini who turned out to be a fraud, only Doc and I could survive such and come out unscathed. What does this have to do with PPP, the USA government and small businesses requiring and wanting promised loans just to survive. Well as I have no doubt you have had your own headaches being as successful as you have rightfully earned, you Doc and myself know what the power of the USA government is best at! Deceit no matter who is in the White House!!!
    People are suffering because this was perhaps (my speculation) a last Hail Mary attempt to get rid of Trump and politicians will go to any level to get what they want, the innocent people that have died and countless familia’s whom are suffering, USA government just chalks it up to Collateral Damage!! Everything you wrote made sense, yet lets be completely transparent to all of your readers. Please do not waste your precious time expecting the government to help when in dire need or bail everyone out. The employees of ours i.e. Politicians whom we the tax payers pay their ridiculously over paid salaries are self serving puppets. They are simply buying time at the expense of good honest working American families.
    USA Government, They Fuck Ya,They Fuck Ya. They Fuck Ya, Every Time (Joe Pesci quote from Goodfellas) So I hope I put a smile on some peoples faces with this bizarre yet true story. The world is in a bad position, yet we all have ability so please find the strength to get up, dust yourself off and find an alternative solution instead of the continued Empty Promises from the Government.

    Mark, I know you give to many charities, with your public reach I challenge you to Challenge every NBA player you have helped become millionaires, including All of your wealthy associates to fund a Syndication and raise a Billion Dollars to help your fellow American business men & women. Nobody needs to know how much individual donated, this is not for bragging rights, this is for Human Lives. You and your connections can accomplish this within 2 weeks. Because in 3-4 weeks these people suffering will still be hanging on to false hope as usual by the Government! Think about it and count on me to also help!!
    Kind Regards,
    Alex Roberts
    http://www.linkedin.com/in/hmgmusic

    Comment by HMGMUSIC (@HMGMUSIC) -

  30. Pingback: The Outsider Perspective Issue 187

  31. “If there are any banking laws that prevent, please let me know. Maybe they can be suspended and some common sense can be put in place”…..end quote….

    Yes, there are laws that prevent. The FED has put homeowners in a headlock by blocking their use of their own home equity. If a homeowner is not employed, they cannot access any home equity. If a homeowner has massive amounts of home equity available to them and just want to take it out in very minimal monthly withdrawals just to pay bills for a relatively short period of time, they can not do it.

    All third position liens are out. Even if a homeowner still has 1/2 million dollars of Home Equity, the FED will not allow a penny to be taken out in third position, even if the LTV is below 50%! And, because Home Equity cannot be responsibly and slowly withdrawn when it will not affect the first or second, the home WILL go down in value in probably an equivalent or greater amount than the amount that was to be slowly withdrawn!

    So the one way to retain the value of millions of homes, has been taken away by the FED. The Lost Home value could have instead gone to pay a homeowner’s bills during the Coronavirus. This is literally a use it or lose it situation regarding homeowner equity. The government could have then offered income tax credits in which whatever amount was taken out during the economic crisis could be deducted off of the total income tax due over a span of several years.

    (sorry for the similar post, I posted the prior one too soon.)

    Comment by Alessandro Machi -

  32. “If there are any banking laws that prevent, please let me know. Maybe they can be suspended and some common sense can be put in place”…..end quote….

    Yes, there are laws that prevent. The FED has put homeowners in a headlock by blocking their use of their own home equity. If a homeowner is not employed, they cannot access any home equity. If a homeowner has massive amounts of home equity available to them and just want to take it out in a very minimal monthly withdrawals just to pay bills for a relatively short period of time, they can not do it. All third position liens are out. Even if a homeowner still has 1/2 million dollars of Home Equity, the FED will not allow a penny to be taken out in third position, even if the LTV is below 50%! And, because Home Equity cannot be responsibly and slowly withdrawn when it will not affect the first or second, the home WILL go down in value. So the one way to retain the value of millions of homes, has been taken away by the FED.

    Comment by Alessandro Machi -

  33. April 30 is the next big deadline for employers – they will be forced to make brutally tough decisions about keeping workers before another pay period begins on May 1.

    Even if Congress were to rush and approve more PPP by this weekend, they will do so with a whole bunch of new rules that will require Treasury and SBA review and issue new guidance, then the banks will have to update their application forms, businesses will need to resubmit, then underwriters will need to review and submit the loans to SBA.

    Quite likely we will see another pay period starting up May 1 with no PPP in bank accounts and another wave of layoffs crushing the economy.

    The foot dragging in Congress is turning into a complete a disaster.

    Comment by John Raffetto (@jrrhetoric) -

  34. As a small manufacturer here in Las Vegas, I have had several issues with the so called CARES act and the SBA’s handling of the EIDL program. 1) the CARES act was substantially under funded to begin with. I think Congress and the Administration is a bit out of touch when it comes to how much damage is done in a short period of time. 350 billion is barely a drop in the bucket of what small business move in and out of their accounts on a regular basis. This should have been 10x this figure. 2) I am with you Mark. I said this from the beginning “99% percent of folks out there are honest. Lets get the money out there, then figure out who the criminals are later”. 3) this goes with number “2” – keep the financial companies (hedge funds, etc) out of this mix. 4) Let’s split these funds up by several categories… A- is for manufacturers and processors who make things in the USA including small farms B- for hospitality businesses such as hotels, venues, restaurants and bars etc. C- retail establishments such as grocery stores, clothing, art etc. D- For distribution/trucking etc. and the list goes on. Each one of these categories has different needs and priorities. This is not a cookie cutter situation. 5) Here is a major problem. There is little to no business being done right now is most industries. With the delays we have seen, some business will be gone before the money even arrives. If it arrives at all. This is an effing emergency and all I see are pictures of congress smiling while they hold up the signed bill, or worse yet, a president who wants to have his name on a check. Give me a break. Get the funds out there now. You can play like you did good later. 6) Why not just get ahead of this thing. You want this situation to be just a blip on our economy? Plan on funding every business affected by this Pandemic enough for 6 months of full operations (rents, utilities etc) along with full payroll expenses. We all want to work and do business, but if this closure goes on without proper mitigation for too much longer, there will be a big price to pay and I fear it will make the great depression look like a fairy tale. Thanks for listening.

    Comment by Vincent Jay -

  35. Mark, I realize in times of struggle, it is common for those who feel weakened to look at the most powerful person in the room and scream, “DO SOMETHING!”.

    However, I think differently. I believe the US government should back off. Relying on government to solve a business problem turns over too much power to the federal branch, seemingly demanding of them to “govern our business”. The US Government should not be involved in our business dealings. They are supposed to be public servants. It’s already ridiculous that lawmakers & politicians can invest in the very companies they regulate, which is like giving control of the sandbox to the biggest schoolyard bully and hoping he decides to play nice.

    Also, the government does not “build” anything. They only tear down what is not working. I would rather see American small businesses take this time to ask the Federal Government:

    – “Instead of a PPP, how about you don’t tax me for every single, solitary thing and make it damn near impossible to start a small business. That way, I can create a financial cushion for myself in times of crisis.”

    I firmly believe what we are seeing now is another “40 acres & a mule” promise (Google it) that people will wait for, until they cannot wait no more. It’s a move to make small businesses GO AWAY by delaying empty promises. The mid-west, especially, has had a 100 years of empty government processes. And the US Government is made up of “people”, and “people” have track records of behavior. Businesses do not.

    I have been working in startups since 2007, and one of the most disgusting things to me about the process of starting a business is how much the government gets in the way, and always has its hands in the pockets of business owners before they even generate revenue. There’s a reason 55% of the most successful entrepreneurs are NOT from the US. They have the “freedom” to set up operations in their home country, use the US as a customer base, and send all the money back home to their low paid/highly talented staff, setting up an international utopia for themselves.

    Point: I don’t trust the US government. They are too involved in the finances of people just trying to be capitalists in a boldly fascist nation.

    Comment by Steven Lowell -

  36. Mark,
    As a start-up CEO, I echo your sentiments. It is short sited to incentivize companies to rehire or keep employees on when there may be nothing for them to do. Far more prudent to allow companies a much longer period to use the PPP funds as forgivable payroll so that we can rehire and restart when there is actually something to do. As presently situated, the govt. is simply trying to delay unemployment filings (I can’t imagine that our president would perhaps be pushing PPP to artificially reduce unemployment filings for the next two months!!).

    One glaring point that needs to be addressed is that Bank of America acted horridly in administering the PPP. While we should be applauding them for moving so much faster than any other bank and opening up PPP applications early, in truth, they limited initial applications to business customers that also had credit accounts with them. In other words, they only wanted to get PPP funds to companies that owed BOA money, so that their debt doesn’t go bad. When they a day later (after $10B in applications) opened it up to other business customers, they removed the credit account requirement but ADDED that you cannot have a credit account with ANY OTHER institution. So, if you had a business AMEX, you were out of luck. BOA was not going to give PPP money to customers that might use it to pay debts held by their competitors. This is all quite troubling. The banks were simply supposed to be a distribution system for government support. BOA at least, turned a support system into a self serving process. I am all for free capitalism, but their behavior here has been abhorrent.

    Jaime Siegel, CEO, FlipTix, Inc.

    Comment by Jaime Siegel -

  37. It’s difficult for me to get my head around the full impact of this virus. Past data does not support the decisions made to ‘shut-down’ the world. According to the CDC more people die every year from the flu, pneumonia, and various other diseases and we’ve never taken this type of massive action. The simple fact that this has never happened makes be think there is an arterial motive. The economic toll will completely wipe out many businesses and people. Did we worry about the loss of lives when we stuck our necks out for War? Tim Ault – Coffman Media

    Comment by Tim Pam Ault -

  38. Maverick, When will our government ‘leaders’ realize that in this economy, there are NO non-essential people.  If our governments (et al) don’t get that through their collective egos, there woll be no end to increasingly forward resistance. Great points!

    John Van Den Berg

    Comment by John Van Den Berg -

  39. Agree banks don’t need to be in the smb $ distribution. Just have the treasury do with small businesses what they are doing with individuals and accept a simple online application form with their tax ID (EIN) and bank info and get a direct deposit grant. Worry about fraud with an audit later. KEEP SMALL BUSINESS ALIVE AND WELL.

    Comment by bspector124c41 -

  40. Take out the testing part and I am 100% in agreement.

    Comment by Warren Taryle -

  41. You outlined the most important part.
    Banks are not doing “their job” in this and are acting as huge barriers.
    They are afraid that the downturn in the economy is going to impact them, (It is) and are building up their reserves. (Bank of America is shoring up $3.4 Billion to cover bad loans, etc.)
    The Fed is giving the banks money again, and they’re keeping it, again and not putting it back into economy nor in peoples hands.
    It’s hard to blame banks though, since they are a business too, but for $17 Billion in free money, you would think some forward thinking FinTech apps would have been a better choice. Or to take that $17B in fees and do a direct deposit to consumer and SMB’s to put back into the world.

    Comment by marathonmasochist -

  42. Mark you have 7 points but only numbered 6 due to “5” repeating.
    1 – Another timing reason why small businesses can not re-open is due to their supply chains and services not being available.
    3 – Social distancing can not be done in most businesses. Covid negative workers can come into contact with Covid positive people after testing is done so testing has to be administered during each work day.
    The efforts you (Mark) have made to assist small business is noteworthy but most small business especially in the NYC area will not be able to re-open.

    Comment by Thiago Santiro (@thiagosantiro) -

  43. Mark, your advocacy for SMBs is greatly appreciated by all of us trying to navigate this chasm. We applied through BofA on April 3, uploaded documentation April 7 and have yet to be contacted. As a small start up we incentivize our employees through membership grants in the LLC, which requires income to be reported on a K1. Even though all wages are processed via a 3rd party payroll provider there appears to be an inconsistency among the lenders as to if this “qualifies” in determining eligibility. We continue to retain all 18 employees as we weather this storm but we cannot do this indefinitely. Thank you for passing along our concerns.

    Comment by Frank Pinero -

  44. 70% of the GDP is consumer spending. The PPP program makes sense from the macroeconomic level to put money in the hands of the consumer to help with consumer spending but that is not what is happening.

    What I did not see working was

    1. Execution at a grass roots level. The SBA and the banks do not have the expertise to get the money in the hands of the consumer.
    2. The SBA/Banks are going through small businesses. The small businesses who are not working with adequate cash reserves and revolving lines of credit will not get grants/loans to keep people employed.
    3. Small businesses that get approved could take cheap money as a bridge loan for themselves and not distributing to the employees. Essentially prolonging their misery without consumer spending keeping businesses open
    4. The credit crisis of 2008 created a mentality for lenders to tighten credit. They no longer took risks to invest in the economy. The result was a proliferation of private equity and non-bank lending institutions. The current environment will tighten things more.
    5. The virus will change how we do business. What was considered a profitable business/industry prior to this social distancing and mitigation guidelines may not work in the future. How are they basing their credit decisions?

    I am willing to help where needed and I am an IC.

    Comment by E L Garza (@elgarza11) -

  45. Please take a minute to her me out. I am a small business owner of a salon in Cicero, NY (suburb of Syracuse), I have applied for EIDL Loan/Advance and tried to find a bank to fund me a SBA Bridge loan. I filled out my applications March 27th, I have heard nothing. I own my building that my salon is in, my monthly expenses are $3200 a month, I have been closed now since March 21st, roughly 4 weeks. I haven’t received a dime of UI, no EIDL Advance or EIDL loan, not even a phone call to process it and can’t find a bank that participates in the SBA Bridge Loan. I was counting on the 10K advance (grant) to float me for a couple of months. That $10k quickly turned into an employee-based grant. I have NO employees, I have 4 Stylists that Booth Rent from me, my staff, but not “employees”. That $10,000 grant just became $1000 if I’m lucky. They changed how they were dispersing the grant money at the last minute, $1000 per employee, I have 5 staff members that need a place to come back to. My overhead is $3200 a month to just sit there empty, I will get (maybe) the exact same amount as my booth renters (independent contractors) who have applied and have ZERO overhead! How on earth is this fair? Who is representing the Salon Industry? The State ALLOWS booth rental-based salons, why are we NOT being represented? I was promised Federal help, I have received none.
    Let’s discuss the PPP. I have NO employees, no payroll except for me. In 8 weeks, I can receive roughly $6400 on unemployment or a one-time check of $3700 from the PPP for an eight-week period. Two months of over head is $6400. It makes no sense for me to even apply for the PPP. Meanwhile, my booth renters are sitting home collecting unemployment, their $1000 grant money and $1200 Stimulus check without a care in the world because they have NO overhead, they are not paying rent to me. You are falling short of the “Actual” small businesses. You are killing us; I will never be able to recover without the funding that I was promised.
    I do not have a lawyer, CPA on my payroll or a Bank CEO in my back pocket to push my loans through quickly like your multimillion-dollar small businesses. I am a 48-year-old mother of 3 about to lose everything I have worked for in the past 26 years because I am a “small business”.
    Soft opening of my salon… can’t happen. Cannot happen without funding to supplement the revenue I am losing for working at half the capacity. It will bankrupt me the first month. If I used to bringing in $1000 a week and now can only bring in $500, what bills do I pay and what bills do I fall behind on and lets just forget a paycheck. I am a service-based business, I get paid by servicing clients, no clients no money. It will be absolutely impossible to keep my doors open at half the capacity and supply extra PPE and sanitation precautions that will be needed to keep me and my staff safe. I am begging you to please take a moment to listen to a salon business owner, we are not essential but extremely important. Please represent me, a salon owner, mother of 3.

    Comment by netnet88 -

  46. Somewhat independent from the rolling startup of the economy, this would be a good time to reform the education system in the US. On line learning has become a reality at all ages now. I would like to see a higher education system that is online for the first two years of college. This should be offered at a substantial reduction in cost which would help the crippling cost of higher education. After two years of on line learning, the student would apply for transfer to the traditional campus environment. Part of this process would be applying for a major field of study and applying for a student loan. The loans would be underwritten by a bank that review the application for viability of repayment based on salaries of entry level positions in the field of study. The bank would have skin in the game as they would have liability for 25 % of the loan in the student defaulted. Also the university would be responsible for 25% of the loan if the loan were defaulted. This change would reduce the overall cost of education and force the lenders and the universities to have more accountability for somewhat insuring that a student can repay the loan based on current prevailing circumstances.

    Comment by Dennis Cavanaugh -

  47. Mark, keep beating this drum on behalf of SMBs! SMBs that are shut down or massively slowed down do not benefit long term (nor do their employees or the economy) by patching a problem for 8 weeks by paying employees to stare at the door waiting for customers who never appear. The gap left between the non-functioning EIDL program and it’s promised flexibility and long term debt financing … and the PPP which only narrowly addresses the issues pressing SMB owners and helps “kick the can” … leaves massive opportunity to provide SMBs real recovery support/financing/workout that can strengthen them for the long term so real employment can return. We don’t have to have the extremes of lending under 4 percent for 30 years (EIDL) or 1 percent for 2 years. There is massive middle ground and unless this is uncovered and addressed people will be paid for 8 weeks and then the eventual fallout will begin. Please keep up this fight! You are the only voice on a national stage addressing these issues at this level of detail and understanding.

    Comment by Doug Turner (@dougpturner) -

  48. We had all of our documents ready and waiting to submit as soon as our local bank posted their website link on the evening of 3 April 2020. We were advised on the 11th that we were approved, but then told it could take another 2 weeks to get the funding. All the while, we have retained all of our employees and are eating away at any cash reserves, whereas some of our competitors just immediately furloughed their team. We most likely will see cash by the end of April, but we are in the Travel Service Industry and with Airline Fleets grounded, the media continuing to Preach FEAR to the Public and Governors vowing to Lock down their states for Months, what is next ? use up the PPP and then what? Go into Long Term Debt or release team members?

    Comment by Wayne Lawhorn -

  49. Thank you for these thoughts.

    As a small, family-owned business I have felt these obstacles substantially — I’m still “in process” for my final PPP approval

    Also, being considered “non essential” despite being a large part of the “long-term solution to covid-19” to proactively fortify ourselves against fatal infection (more on that here: definingdadbod.com/blog/coronavirus-covid19 ) is also an obstacle.

    This cure seems worse than the disease.

    Comment by Coach Al -

  50. Mark, as a science guy do not forget “shoes” they are also collectors and transmitters of the virus. My information says we will probably get some re-infections and we hold far too many false negatives because the test are not properly administered. If you do not shover those two swabs to the back of your throat and the other up and into your sinus cavity like you have nearly hit your brain, then the test will be inconclusive. On the business side: I think remote work will now take a spike for some time as no one feels safe and mostly have no equal salary place to go back to right now. A financial depression could be percolating but warren buffet seems OK, so we might not get that far. Be safe..Doug Linman

    Comment by Doug Linman (@drDlinman) -

  51. Regarding PPP, I am aware of four specific SMB cases in Dallas this week that are perplexing in their inconsistency.
    1 – Two person mortgage business where owner laid off his one employee. Got his funding of and immediately hired her back. Great that’s the purpose of this.
    2 – highly profitable family construction company that kept everyone employed ended up filing for and receiving over 600K. They have a two year backlog of projects, much of it government work. For what purpose was the money? Not the intent.
    3 – Salon that laid off full support staff of seven (except owner who doesn’t draw a salary) plus all stylists who were contractors who cannot work still waiting with zero information forthcoming. They will close next week for good. PPP of zero benefit where needed most.
    4 – Ad agency with ten employees didn’t file in hopes of riding this out. Owner was overtly political and stated with no hesitation that COVID 19 was no worse than a bad cold. Now decided to cease operations because 80% of their clients have cancelled all advertising or projects. Already a marginal operation, now put out of their misery. Sad that employees get stuck but that’s the way things go.

    My point is that this is not a one size all proposition. Some weak operators will be wiped out because they weren’t good before the virus, some good operators will have to close because of bad timing and some will rake in free cash they didn’t even need to begin with. Maddening in many ways as this plays out. And the idea of fair and equitable is no where to be found.

    Comment by Chuck Wall (@customerceo) -

  52. Reference #5….expanding on your thoughts of pursuing fraud post application….this program could be executed similar to the $1,200 stimulus check program…. Business submits detailed application to Bank….Business visits IRS specific site which 1- validates entity existence via current/prior year(s) income tax returns, 2- links into Bank application site which provides verification (Y/N) of a detailed application 3- any other key information/questions/criteria/bank account info/contact data entered 4- funding provided in 24-48 hours window directly into applicants bank account. Banks role then primarily limited to receipt of detailed application and subsequent analysis for fraud, etc. ..Random application selection (likely via Algorithmic sampling) of potential fraudulent applications, incomplete, etc with Bank providing key analysis role. Clawback/criminal enforcement measures linked to an IRS/DOJ special purpose team. Overriding assumption, however, will require economic and political forbearance for some level of inefficiency/slippage/fraud inherent in this program vs. an overriding need for speed in the allocation of funds

    Comment by Ken Whitehurst (@KenWhiteh) -

  53. John P David, my bank (Comerica) isn’t officially accepting PPP applications yet. Though I have heard they are back dooring some applications for their big customers. And most other banks won’t accept applications if you aren’t already using their bank. So we’re screwed.

    Comment by Richie Wohlers (@RichieW13) -

  54. Mark, as usual you make several good points. However, the Testers and Tracers”, newly created federal positions that could amount to a million or more new jobs i.e. growing the government i just cannot get behind. This is a temporary problem with a vaccine coming in the next year of so. There is not chance the government cloud launch a million person division 9 that would require and additional 250k to supervise) before the vaccine is available to all.

    I really like the line of though behind the “fund first, verify later approach” to get the funds deployed. There are so many companies better qualified, than than banks SBA lenders to process the hundreds of millions of loan applications electronically how about Chase, AMEX or Discover credit cards division, these companies systems are designed to electronically approve underwrite and score million of applications on demand. Every SBA application has lengthy disclosures for eligibility, if the applicants lie they will be prosecuted under Federal Law at a later time. Forget signing all these small unsecured FIntec lenders to assist i.e. Kabbage. The credit card companies have the systems, scoring, and facilities to get this job done in weeks not a year of more. What good will the money be then.

    Comment by bobby lazenby (@blazenby007) -

  55. Banks need to find this at face value and then have govt collect on back end of necessary. Also, Banks are only doin loans for existing customers with business accounts. I know small operators who use their personal accounts. There needs to be more conduits to get money to small business. Lastly, why can’t he govt. Handle directly without Banks as middle men? Just have SBA lend directly from Treasury

    Comment by pghgator3 -

  56. Mark,

    Thanks as always for your insights. You’ll have my full support should you decide to run for president. Please announce through your blog when you start recruiting for your campaign!

    Best wishes, Jason Rindenau

    Comment by Jason -

  57. Mr Cuban, you reset the board, you take 25 Trillion and give every american 75k , and that will reset demand from the bottom up! you also suspend buybacks, and dividend increases until wages increase 30%, you also restructure americans debt, car loans no more than 3 years, homes no more than 15 years, College maybe 7 years to 10 years Americans are so under water trying to keep up with Car,House and College Prices , you also have a price freeze until all companies complete the 30% wage increase. You have to bail out the everyday american for once. that will get the economy rolling again. not this trickle down crap it wont work!

    Comment by Dave Crow Tarver -

  58. At this point, I have to wonder if my wife’s business should have just shut the doors and laid everyone off from day one. She chose to shorten hours and stay open (veterinary clinics are deemed essential for only a few services) because we didn’t want to lay off everyone, but certainly we’re operating at a loss. We were hopeful our PPP application would come through, but it sounds like it won’t or if it does it may be too late. I hope there is a second round of funds. We would still put 75% into payroll (our biggest expense).

    Comment by Bryan Hellard (@bryanhellard) -

  59. Mark, Insightful. But best to try to fix the sins of the first tranche with the hopeful second. Banks are sadly taking care of their own, and not even all of them, at the expense of small customers and non-customers.

    Comment by John P. David (@johnpdavid) -

  60. I am so HAPPY that you are aware of the problem presented in your #1 comment. I pulled my PPP application on Sunday because of this exact issue. Plus there is a program called the Employee Retention Credit that is also competing with the PPP. If the timing of the funds is not optimal and another tranche is not realized, this is an option. So, there are really 3 options….keep your employees on unemployment and reduce your burn rate, go for the PPP and not get full forgiveness (I am hoping for a second tranche) or just hang tight for the ERC. If you get the PPP, you are not eligible for the ERC. Crazy times Mark. So glad you are on this committee.

    Comment by Elizabeth Sternberg Goldreich -

  61. Thank you for the update and your prespectives. Daniel Corno Law Office of Daniel Corno 1535 S. Richey St., Pasadena,Texas 77502 phone: (832)767-2922 fax: (713) 740-8100 email: elabogadodaniel@yahoo.com NOTE: The information contained in this e-mail is subject to either attorney-client privilege, attorney work product, or confidential. This information is privileged and confidential and is intended only for the use of the addressee, you are hereby notified that any dissemination, distribution, or copying of the message is strictly prohibited. If you have received this message in error, please immediately notify the sender by telephone or email and return the original message to us at the above address via the U.S. Postal service. Thank you.

    Comment by Dan Corno -

  62. You should consider adding small farmers/food producers.

    Comment by Jeffrey A. Williams (@JeffreyAWillia4) -

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s