In case you missed the news, the Paycheck Protection Program is out of money.
According to the Small Business Association, the PPP:
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
The following entities affected by Coronavirus (COVID-19) may be eligible:
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- Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons
So, from reading that you and I and most people assume that the SBA PPP was intended for actually mom-and-pop small business. The sorts of small stores, retailers, or service providers that have been forced to close or severely limit their operations (like going to take-out only) during the shutdown.
Never underestimate the greed of some people.
Form Bloomberg News:
Hedge Fund Managers Claiming Bailouts as Small Businesses
The [PPP] loans can convert to grants if recipients retain or rehire their workers. Some hedge funds already have applied, filling out forms to show they have fewer than 500 employees and certifying the “current economic uncertainty makes this loan request necessary to support the ongoing operations.”
Ironically, hedge funds are designed to employ as few people as possible so star traders don’t have to share millions of dollars in fees. The industry gets its name from the premise it can generate gains even when markets fall.
The question of whether to partake in the program is dividing members of the money management community. Some traders have called it morally corrupt, while others insist they are small businesses — just like hair salons, restaurants and dry cleaners — that could use a helping hand after global markets tumbled and cost them money. Given that the program is first come, first served, some managers were quick to submit their paperwork, according to market participants, even if eligibility remains unclear.Donald Motschwiller, head of First New York, a trading firm that runs $2.9 billion in assets, said he was still deciding whether to request money that could be used to pay employees, including a receptionist and office manager, who are still on the payroll even though, with everyone at home, they essentially don’t have jobs to do. He canvassed about 15 hedge funds in his circle, from small managers to multibillion-dollar firms, “and no one has said ‘no’” to the possibility of taking the loan, he said.
The chatter among money managers has grown loud enough to prompt a warning last week from Aksia, which advises institutional investors on placing money with hedge funds and other alternative investment firms. The firm said it would view any opportunistic use of the program “negatively” when counseling pension funds and other institutions with about $160 billion to invest.A manager with a healthy business who takes advantage of a program that isn’t “precisely defined, is not only showing poor moral judgment and potentially hurting the reputation of the alternatives industry, but it’s also probably crowding out struggling workers and businesses severely impacted by Covid-19,” Aksia said in the memo.
First it was the hedge funds, holding companies, and Wall Street malicious avarice that undercut the middle class and set us down this path when they decided that to maximize profits by offshoring to China.
Now those same people want to help themselves to a small business grant program designed to help middle-class small businesses because “technically” a fund of 20 or 30 multi-millionaire managers with a few billion dollars in assets is a small business and why not get free money from the government.
If I were to find out that some hedge fund manager with a seven, eight, or nine-figure bank account took a PPP loan, were to then find his head socially distanced from his body by an angry mob of bankrupt middle-class small business owners, I’d have a good chuckle.
I am sensing an opportunity in all of this.
I think I am going to open up J Kb’s Performance Guillotine Supply.
Introducing the Decapa-Tron 2020. Designed and built by middle-class engineers out aluminum, stainless steel, and using a food-grade polyethylene chopping block, the system is designed for low maintenance and easy cleaning. Advanced heat treatment of the blade extends service life between sharpenings. This servo-pneumatic driven guillotine is made to slice and dice your way through a brokerage firm at twice the speed as traditional gravity-driven systems.
Now accepting orders.
Update:
If you think that I am overreacting, see this Tweet from Harvard:
For the record, Harvard has an endowment of $40,000,000,000.
Read it out loud: “Harvard has an endowment of forty billion dollars.”
That endowment grew $1.7 Billion in 2019 alone.
This is the same Harvard that just published an article arguing against homeschooling during the Coronacrisis because:
But surveys of homeschoolers show that a majority of such families (by some estimates, up to 90 percent) are driven by conservative Christian beliefs, and seek to remove their children from mainstream culture. Bartholet notes that some of these parents are “extreme religious ideologues” who question science and promote female subservience and white supremacy.
“But it’s also important that children grow up exposed to community values, social values, democratic values, ideas about nondiscrimination and tolerance of other people’s viewpoints,” she says, noting that European countries such as Germany ban homeschooling entirely and that countries such as France require home visits and annual tests.
Understand that homeschooling in Germany was banned by Hitler to make sure that all young people were properly educated on Nazi propaganda.
So the most elite university in the country with a $40 billion endowment, the mint for American’s ruling and financial elite, which has shown nothing but total condescension towards middle-America, is getting a government bailout intended to help America’s middle-class.
I think I’m going to have to open a storefront in Boston as well as New York City.
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