I can't imagine where this is all going to lead. It's the fact it's going to cause similar political-economic problems in every country in the world that is so mind-boggling.
Previously....
Today:
Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent
With most the nation living month to month, it seems to track. There is no way they are going to fix this in DC. The scale and scope of the effort is beyond their imagining. Espeically when Congress has stood as staunch defenders of the trickle down status quo their entire lives. Who is going to tell the landlords to piss off? Who is going to tell the landlord's lenders to piss off?
Who is going to make the United States whole again, and prioritize keeping people in their homes?
I still worry about what the post-Covid landscape looks like for the hospitality/food service industry.
I read this today. It's an owner of a bar that is about a 5 minute walk from my house. He talks about the decision of taking loans and how it doesn't work well for small businesses like him.
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In the last three weeks, I filed a claim with my insurance company that was denied because of the “virus exemption.” I applied for disaster assistance from the US Small Business Administration (SBA), as well as a Prosper Portland grant. They are surely overwhelmed, and I haven’t heard anything back from either. I’m working every day to find a way for us to reopen. I am now waiting for my bank to open its online application for the Paycheck Protection Program (PPP). I’ve been following the details of this program, and the more time I spend researching it, the more I think that even if I am approved for the loan, I won’t take it.
If you aren’t familiar with this particular part of the “CARES” act, the PPP provides low interest loans to small businesses to retain or rehire their staff. The amount of the loan directly correlates with the size of your monthly payroll. “2.5x” is a number I saw on the SBA sample application. If you use at least 75 percent of the loan on payroll, rent and utilities, and rehire your entire staff by June 30, you are eligible to have a large portion of the loan forgiven. The loan has a two-year term, with no payments for six months. The usual requirements for collateral, underwriting, credit checks, etc., are being thrown out the window. They are trying to get the money out as quickly as possible. This is my current understanding, but new details are coming out even as I write this. The entire rollout has been mired in delays and confusion. There is still no information on how forgiveness will be calculated, which is a real concern.
When I first heard about this program, I felt a wave of relief. I want nothing more than to get the whole team back together and serve our wonderful customers. I put together a rough plan, including deep cleaning projects and a revamped menu for take-out orders. I was excited to get back to business.
After this initial elation, I started to think about the terms of the loan critically. Between the vague conditions, and unrealistic requirements, I was left with a lot of questions.
How does this help the crew?
It is illegal for us to fully reopen. At best, take-out orders will keep 25 percent of the team busy. What should I do with the other 75 percent? Do I pay the bartenders to stay home? Is that fair to expect some employees to work for their money, while others are being paid without working? Am I opening myself up to legal action over this?
As far as I know, my employees have already applied for unemployment benefits. In the case of the bartenders and servers, both wages and declared tips are factored into their unemployment benefits. Tips make up a big portion of their income. If I bring them back, and they are unable to earn tips, they will be making dramatically less money. And I can’t afford to make up the difference.
As a quick reminder, we are also in the middle of a global pandemic. We have all been ordered to stay at home unless it is essential that we leave. Re-opening the restaurant might increase exposure to both employees and customers. Is opening another take-out restaurant “essential” work? Am I only making the problem worse?
As this process continues, it’s becoming clearer that we will be dealing with these issues for awhile. The US Treasury stipulates that the loan funds need to be used within eight of the loan origination. What happens after those eight weeks? Do we close back down? Do I lay the crew off again? Are they better off coming back to work on such a limited basis?
Does this loan help my business?
The only option for us to stay open right now is to switch to a take-out model. Our business has always been more about bringing people together than taking food to go. We have a very talented kitchen crew, and I have no doubt we can build that side of our business, but it is a fundamentally different concept. It will take time to understand what sells, what are peak times, what are ideal staffing levels, etc. It is like starting a new business. And in this climate, does it really make sense to start a new business?
We are all asking, “When will we get back to normal?” Even if—and it’s a big if—we are winding down the social distancing restrictions by June 30, it is doubtful that we will immediately go back to our normal routines. So much of what our business does is the opposite of social distancing. We are a social place. Our goal has been to bring people together. I’ve heard many plans for how we transition out of our current quarantine, but all include long periods of limited social gathering. How will I be able to maintain our full payroll burden, if we aren’t allowed to operate at full capacity?
The rules on forgiveness of this loan are vague at best. The current information from the US Treasury says “it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.” “It is anticipated”... as in, they don’t even know what the terms of this loan will be. The banks and the Treasury Department will be figuring it out as they go. If we aren’t back to normal by June 30, then I won’t be able to afford to pay all of my employees. If I can’t afford to pay my employees, then I can “anticipate” being liable for the majority of the money I borrowed. How can I borrow money with confidence if the lender doesn’t even know the terms?
Essentially, I will be paying back a loan that is two-and-a-half times our monthly payroll, with a two-year term, to pay employees who I am putting at risk and who I don’t have work for. I will be no closer to actually reopening than I was before I applied for this loan. In fact, I will be in a much worse position. The more I think about it, the less sense it makes."
Previously....
Today:
Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent
With most the nation living month to month, it seems to track. There is no way they are going to fix this in DC. The scale and scope of the effort is beyond their imagining. Espeically when Congress has stood as staunch defenders of the trickle down status quo their entire lives. Who is going to tell the landlords to piss off? Who is going to tell the landlord's lenders to piss off?
Who is going to make the United States whole again, and prioritize keeping people in their homes?
I know that most states have something in place to prevent these people from getting evicted quickly, but this is still going to royally screw up their credit in the future. I hope that they weren't planning on buying a new car or a house for the next seven years.