sigh.
sigh.
And when the businesses taking out the loans but can't pay them back - BoA calls it a loss and has to declare bankruptcy, right?
But, yet again, they're too big to fail.
So the government has to bail them out with OUR money...
The execs will get their hundreds of millions of dollars in parachutes, and we'll all be footing the tax bill for decades.
I don't know much about government financial systems.No. These are SBA 7(a) loans, made by BoA and guaranteed by the SBA. This is a special program called Payroll Protection created by the new bill. If done correctly by BoA they will have no liability for the loans made. If made based on the correct assumptions and calculations, the loan amounts will be forgivable after a period of time.
I don't know much about government financial systems.
Isn't that just basically the same thing I just said but without the need for payback or the intermediary bankruptcy?
This is better?
I don't know much about government financial systems.
Isn't that just basically the same thing I just said but without the need for payback or the intermediary bankruptcy?
This is better?
What sba 7a loans are is government owns the small businesses who take money from the government.
What is the definition of socialism?
What is the definition of communism?
No, it's not the same. The Small Business Administration (SBA) has a program to guarantee portions of bank loans to help small businesses with credit. The program has been in existence for quite a while. The normal program has the SBA guarantee a portion of the loan to a small business. Without the program small businesses without good credit and collateral would have a hard time obtaining business credit. But, the normal existing program requires owners of a small business to guarantee the loan personally and to pledge personal collateral, such as home equity.
This new program just has the SBA guarantee the loan, and then the loan is forgivable if certain terms are met. The loan limits are 2.5 times the average monthly gross payroll costs, including some other taxes like unemployment taxes and limited employee benefits. If the loan is spent on payroll costs, utilities, rent or mortgage interest, and employee benefits then 8 weeks of those costs are forgivable.
The loans are not funded based on need. The needs analysis would take too long and the Congress decided it was better to get the money into the hands of small businesses based on calculations instead of needs.
No. We are just magically printing wealth out of thin air. Relax, what could possibly go wrong?
Please understand I am trying to explain what I know about the SBA and the Payroll Protection Program loans. I can't say that I am for or against the program.
But yes we are printing money out of thin air. We as a country are $23 trillion or so in debt (not counting unfunded liabilities), and we just printed another $2.5 trillion or so to fund the new bill.
I have no confidence in Congress or government. They conspire with the media to take away our freedoms. Congress is asleep at the wheel and none can wake them up and the majority of the american people are asleep as well.
If they don’t have good credit or collateral should they be receiving a loan?
And where does the money to run these programs come from?
Where does all money for all loans come from?
This was fake news, BoA always told me that they were going to be able to process loans for existing lenders first because they have more of info that they need, building the process for existing customers that will be new borrowers is more complicated. Best I can tell they never said that they wouldn’t serve their existing commercial customers.
These particular loans involve no equity, it’s really more of a grant program implemented as a loan so that the funding banks will do the work on validation and control. If it was implemented as a straight government grant program the fraud risk would have been unbelievable. Consider that without these loans, and the related obligation to retain staff, more folks would be hitting unemployment in April and the taxpayer would be on the hook for it anyway. This approach, which I’ve called controlled economic destruction, is bad, but the alternative is probably worse.What sba 7a loans are is government owns the small businesses who take money from the government.
I don't know much about government financial systems.
Isn't that just basically the same thing I just said but without the need for payback or the intermediary bankruptcy?
This is better?
This was fake news, BoA always told me that they were going to be able to process loans for existing lenders first because they have more of info that they need, building the process for existing customers that will be new borrowers is more complicated. Best I can tell they never said that they wouldn’t serve their existing commercial customers.
You misunderstand, they said that they would be processing first for current borrowers and then for current commercial banking customers. The tweet from Rubio implied that they were only going to process applications from current borrowers, that was never correct.If someone from BoA said that, then they didn't know what they were talking about regarding existing information. The loans are based on payroll for 2019, and 1st quarter 2020 if available. Each applicant is required to supply Forms 941 for quarterly IRS employment taxes, Form W-3 showing reconciliation of total wages, and forms for unemployment taxes paid. Unless BoA does the payroll for its clients, they have no more information needed for them than for the general public. That statement from a BoA banker just shows the ignorance that abounds about this program.
Having said that, I really couldn't blame BoA for processing its clients' applications first.
They limited this to businesses with fewer than 500 employees, including affiliates, so probably a different universe that the guys engaged in stock buybacks. What they really want is lower unemployment and more cash in the system, which is hard to do when so many places are closed.It was aLeo my understanding they needed to qualify in other ways such as offering at least two weeks paid dick time to their employees.
One reason I can see for making them loans that turn into grants if the money is used for certain things related to keeping the business afloat has to do with the bailouts given to big businesses in 2008 that turned around and used the money to buy their stock back, triggering executive compensation bonuses based on stock price targets.
You misunderstand, they said that they would be processing first for current borrowers and then for current commercial banking customers. The tweet from Rubio implied that they were only going to process applications from current borrowers, that was never correct.
As far as I know, no bank has said publicly that they will process for new clients.
As for what documentation is required, I’ve worked on 9 applications with 3 different banks and your understanding of what is required doesn’t align with my experience. I think this is partly why they want to work with existing clients, they aren’t entirely sure how to validate the application or how to measure their risk.
I think that webpage was a bit misleading. Their portal was only allowing current borrowers at that time, so the statement was correct but not indicative of the bank’s plans. By the way, I don’t work for a bank.I was going off information posted that included a BoA web page that indicated an applicant was not qualified for BoA processing because they didn't have current debt with the bank.
My hope is that all current 7(a) lenders have to accept applications. I don't believe it was Congress' intent for those with no debt and/or banking relationship with a 7(a) lender be locked out of the program.
https://home.treasury.gov/system/files/136/PPP Borrower Information Fact Sheet.pdf
I'd be interested to see what information your banks are requiring. The PPP is based on payroll, and the calculation is fairly simple. Payroll filings, and proof of employee benefits, are all that are actually required. The EIDL requirements are different. You've worked with 9 PPP applications since the program went live this past Friday?
FWIW, I agree that the documentation should be straightforward, but each bank has it’s own additional requirements based on how their legal team interprets that anti money laundering rules and fair credit act. It’s all complicated by not being able to shake hands with the applicant. In my opinion one bank didn’t ask for everything they should have, but their risk remains small as long as they only lend to current clients.
Believe me, I’ve read it all.It will be interesting to see how the documentation requirements shake out. Based on what I understand, and it's limited, the bank cannot add additional documentation requirements to the process - lawyers be damned. These are not loans that require profitability, collateral or owner/partner/shareholder guarantees. See this link.
https://home.treasury.gov/system/files/136/PPP--IFRN FINAL.pdf
And in NC too.We shoulda done that 30 years ago.
Ok, I misunderstood what you were saying. I'm more in agreement with that.My point is this will break some people that would have otherwise been fine. And my issue with that is the Gov mandates are a big part of the issue. I'm not big on one size fits all decision making. It works for some, fits poorly for most, and screws as many as it fits. We deserve better leadership than that on the state and local levels. Unfortunately, that is sorely lacking. And it's replaced by knee jerk, feel good decision making. It feels like this is based on the premise that Gov can do whatever it wants, force you to do "what's best for you", and when it's over they will make folks whole. It's never going to work like that. And some folks and families won't survive to see any help that is offered.
And I'm not saying society will be the same. There will be changes for good and bad. But as long as Gov does not hinder the recovery, we will bounce back. Like above, some folks won't make it there and some folks will get left behind on the bounce.
Based on models currently running 4x the actual numbersAlmost 10 million ( 10,000,000) people have applied for unemployment over a virus that on the high end is expected to kill 250,000 people,( in US) most of which will have underlying health conditions that would make them more likely to succumb to any number of viruses out there.
The unemployment numbers are going to keep climbing. These are lives, families, businesses that are being devastated over something that is looking more and more like it will have a less than 1% kill rate.
San Diego Sheriff Deputies cite people sitting in their cars eating and brag about it: https://twitter.com/SDSheriff/status/1246336086592258049Governors are sending the NG door to door in some states looking for people with residences in other states.
In California a man was arrested for paddle boarding. Sent a boat and a beach full of cops. His charge was violating the social distancing EO.
Just my opinion----- I do not think we are headed for a depression or even a recession. When these restrictions are lifted, be it in three months or in six months, I think we will see a boom in production and people will be buy everything that could not get during this time. Folks will be desperate to travel and domestic travel will shy rocket. Ib fact I am not looking forward to that part, Living in Asheville we already get 10 million visitors a year, That does not include the out lying cities and towns. Car sales will jump tremendously with the incentives the dealers are already offering. I would bet the 2021 models will be lat arrivin and production of 2020 models will continue for until stockpiles are deleted. Not so sure all restaurants will bounce back that fast, but the traditionally successful ones will grow fast. Manufactures are already planning for the growth. Discounts on the surplus will be a benefit for us all and the new production may be a bit more expensive but will be plentiful. Every country in the world will be wanting to buy our goods. I think good times are ahead especially if SOMEBODY puts a muzzle on the guy in office. He did good his first week with briefings but things are getting out of hand now. Seems like every time he opens his mouth he sticks his foot in it. He is beginning to look a bit like an angry school kid that got his toy taken away. Could someone please write him a scrip to read and then take him away from the podium.
And the little guy needs to be thinking about WHO is benefiting here. WHO is getting bailed out. WHO is getting their bad, overly leveraged, speculative bets on the equities markets covered. Then they need to consider why.If everything was rosy the Fed would not have been involved in the overnight REPO markets like they were before the virus panic. They also wouldn’t need to be holding all the assets they have been or printing money.
You’re asking too much. People in general will never do this work and the only folks that will and that will try to share will be perceived as nut jobs. Not saying that they are are aren’t, but that will be the perception. Much easier to just push a message about shrinking government and shrinking social programs so we have economic capacity to deal with the next catastrophic event. Nothing extreme, nothing harmful to anyone, just start by reversing the growth trend, get the momentum on our side, then we can accelerate the ball once it’s already going the right way.And the little guy needs to be thinking about WHO is benefiting here. WHO is getting bailed out. WHO is getting their bad, overly leveraged, speculative bets on the equities markets covered. Then they need to consider why.
You’re asking too much. People in general will never do this work and the only folks that will and that will try to share will be perceived as nut jobs. Not saying that they are are aren’t, but that will be the perception. Much easier to just push a message about shrinking government and shrinking social programs so we have economic capacity to deal with the next catastrophic event. Nothing extreme, nothing harmful to anyone, just start by reversing the growth trend, get the momentum on our side, then we can accelerate the ball once it’s already going the right way.