My experience with the CARES Act | Hacker News Reader

My experience with the CARES Act

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50 pointsMLEnthusiast55 comments

I personally also had a very frustrating experience with the CARES act, specifically PPP loans. Applied as soon as they came out, directly with the SBA first, then with 3 different banks. Still waiting :(

However, at the end of the day, businesses are not what's essential, people are.

And that's why it's so infuriating that the government has acted pretty much exactly on the opposite view. It has prioritized saving huge businesses and propping up the public markets (stock/bonds/futures/etc).

In my opinion, it would have been a lot more effective to give money directly to people, then let them figure out where and how they need to spend it to get through the crisis. Businesses would then adapt accordingly to survive, or fail if they couldn't. But at least then most people would be ok.

Now inequality is going to be worse than ever. People that already had a lot of money got saved and now they can keep making loads of money, while the people that really needed saving, pretty much got abandoned instead.

If you give money directly to people it disrupts the power system. It gives people options if they suddenly have money that isn’t tied to work. By giving it to companies first you maintain the system of wage slavery that exists for the ~50% who live paycheck to paycheck.

Do you really think that giving the same amount of money directly to consumers has any chance of providing a solution that will outlive the hand out period?

The rationale of the PPP is to help out businesses forced to close during lockdown so that they’re (hopefully) around to employ people when the lockdown ends.

Direct cash might seem more effective in the short run, but it falls apart once the payout period ends. If anything it’d lead to people being less likely to find sustainable work as the null option would be higher valued.

I have to say that yours and the parent comment seem to espouse similar points (despite coming from different ideological perspectives). One of the explicit goals of PPP is providing wage support, after all.

You don’t want to give them the option. You don’t want people to realize how bad they may have it or that their is any other solution. You don’t even want them to be able to think about it.

That is why we don’t give money directly to people unless it’s a last resort to prevent civil unrest.

The reason they prop up markets is there is some belief that the Great Depression was made worse by a market crash.

The Great Depression was greatly exacerbated by runs on the banks which were in turn exacerbated by the Fed not providing adequate liquidity. The stock market crash was an ancillary effect of the lack of liquidity: everyone needed cash and no one had any. The crash in and of itself had almost no direct impact on the depth and severity of the depression. It was just a reflection of the sudden scarcity of money. Propping up the markets in response to an economic crisis is cargo cult economics, kind of like trying to treat a fever by putting the thermometer in the refrigerator instead of under your tongue.

Or because the people making the rules stand to lose a lot of their net worth if the stocks they hold tank.

You cannot apply for PPP loans with the SBA. You may have applied with the SBA under the EIDL program. If so, you should check your bank account--we've heard from many businesses that the SBA deposited money directly in the past few days.

Government just released notification with no clear guidelines that companies who took money but didn't need it (language is heavily biased against VC-backed startups) will need to repay by May 6th for forgiveness, or be investigated and potentially fined/penalized for taking money they didn't need.

This is a good idea in theory but of course the language is hopelessly vague and there are no guidelines, because that would mean we could hold the government accountable. What does "take money you didn't need" mean? My business (non-VC backed, just an SMB) took PPP funds so we could continue to employ our workstaff (the intent of the program), but we were not facing immediate bankruptcy. Is that OK?

Classic regulatory frameworks that don't define anything.

The guidelines are clear.

Entity type: Pretty much any "business" entity is eligible.

Size: The SBA has very clear size standards (based on employees or if you look at alternative size standards a combination of net assets and historical profitability). These are all objective criteria.

Affiliation: The Treasury & SBA intentionally loosened affiliation rules to INCLUDE the vast majority of VC-backed companies.

Credit elsewhere, collateral, personal guarantees: The Congress eliminated these requirements because they would limit and slow capital access.

The Treasury issued new guidance on Thursday in response to a loophole that allowed large companies (aka those that would not qualify themselves) to access PPP funding through their subsidiaries (which previously DID qualify under the law). This guidance is very clear: it applies to "large companies" (aka not "small businesses") and effectively closes the loophole. As a result many companies have returned their PPP loans, which was the intended result. (Q31 here https://home.treasury.gov/system/files/136/Paycheck-Protecti...)

If you're interested, you can read the Treasury Department guidelines here: https://home.treasury.gov/policy-issues/cares/assistance-for...

Not a lawyer but "need this money" seems reasonable to interpret as "you could not pay your employees if you didn't get this money". Which suggests VC-backed startups probably shouldn't have taken it and should return it.

My company technically could have paid our employees if we didn't take the money, but we'd have to cancel 90% of our R&D projects, slash operations, etc etc. So that still doesn't really mean anything, unless the intent was "if you literally could not make payroll after liquidating equipment / canceling all operational expenses," which I hope was not the case.

I hope you're fine in that case... I'd assume they meant without slashing existing work. But yeah I agree, clarity would've been nice :\

Individuals and small business have both been shafted.

There's a provision in the CARES Act which allows employers of any size to give a one time donation to employees towards their student loans in exchange for decreased tax liability. I am currently talking with my employer, but thus far they do not want to participate in this program.

They initially cited the company does not apply for the program due to their company size, but I literally handed them the sections of the bill and it's eligibility criteria which states otherwise. Haven't received a response since last week, but I suspect it's going to fall to deaf ears.

Can you upload / send me those pages and any research you did on it? I'd like to see if I can offer it to my employees. I've never heard of giving money to employees for student loans that also reduces the employer's tax burden.

EDIT: Everything I can find just says the student loan payments from employers are now tax-free for the employee. I would love to know if there are other areas of the bill that give the business tax deductions / tax credits for paying employees' student loans down, because I'll do that in a heartbeat.

Example: https://www.benefitnews.com/news/what-the-cares-act-means-fo...

SEC. 2301. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS SUBJECT TO CLOSURE DUE TO COVID–19.

see "(2) eligible employers" section"

https://www.congress.gov/bill/116th-congress/house-bill/748/...

good luck

Section 2301 is unrelated to section 2106, which provides the employer paid tuition benefit.

I see nothing here that talks about employer tax benefits for paying for employee student loans - just a discussion of payroll tax credits and some stuff about healthcare benefits. Do you have any layperson articles or guidelines from a company like Gusto or other HR companies that give guidance on how to pay employees' student loans down and get tax deductions/credits?

You're mixing up different provisions of the CARES Act, so it's not a surprise your employer didn't do anything.

Section 2206 simply extends an existing tax benefit related to tuition payments made by the employer. The benefit is to the employee not the company.

Section 2301 reduces payroll taxes by up to 50% for businesses that needed to shut down or reduce activities as a result of COVID19

Off topic:

What persuades front-end developers to make their site capture backwards navigation. No TechCrunch, when I press back I should go to the previous page, not yours again.

> What persuades front-end developers

Probably their managers

Engagement, ad revenue... other crap.

The bill was rushed and people who needed it the least ended up profiting more than people who needed it the most and weren't successful in applying. The fault is on the people who designed that bill. The whole "please give back the money" political posturing, is just that, political posturing.

The whole small business == 500 employees PER location is a farce for instance.

> small business == 500 employees per location is a farce

This particular definition was inserted by the Senate Committee on Small Business and Entrepreneurship, led by Marco Rubio (FL). You can also blame the other GOP Senators on that committee: Risch (ID), Paul (KY), Scott (SC), Ernst (IA), Inhofe (OK), Young (IN), Kennedy (LA), Romney (UT), Hawley (MO).

The bill was passed, everyone that voted for it is responsible.

This is reductionist. There is a crowd dynamic here. Something needed to be done quickly. A minority of senators cannot keep waiting until they get what they want. Republicans would then blame the democrats for stalling the bill. GOP has become either stupid or plain evil. I have no doubt any more after events of the last one year.

What needed to be done? Backstopping unemployment? Making sure there is some funding for the medical establishment?

This was the 3rd bailout bill, of many? They had time for 4 hours of debate, but then went for a voice vote so they wouldn't be on the record.

This 2T bailout is going to go down in history as one of the most reckless things / or outright transfer of wealth that has ever occurred. It was bad legislation.

Lastly it was dishonest -- calling a grant with conditions a loan is just a lie. People pay back loans, these will never be paid back.

My point is, you are basically saying, screw them all. That they are all liars and putting them in one big bucket. I am saying that a Dem majority would have gotten us a bill that was closer to what you want here compared to what he have today. And in this case, closer is better.

Yes, exactly. Every last one of the fire breathing soi disant small government conservatives and anti-big business progressives proved their mettle that day.

Why not blame the democrats on that committee too?

Because minority members of a congressional committee can't stop the majority members from getting things through. The Senate is R majority, thus so are the Senate committees, thus the Dems on that committee couldn't have stopped it.

Because only Republicans can do bad things, obviously.

> people who needed it the least

The fee's that banks collected for processing the applications.

Edit to clarify:

The amount of money that banks collected in fees is also a major problem. There are allegations that Banks purposefully shuffled application orders to allow for larger amounts to be processed first, so they would collect more in fees (the fee collected was based on the % of the loan request).

Wow. SO if the bank fee was a constant for instance, the banks might have pushed to process many tiny, simple applications. Thus benefitting more small-business owners. Wow. Such a good example of the law of unintended consequences.

This is one of the most compelling arguments for universal basic income in my opinion. Give everyone the same amount of money-and I mean everyone from Bezos and Trump, to the burger flippers and the homeless-and scrap all this expensive and time consuming crap where the government insists on citizens navigating a Byzantine maze of red tape to prove how worthless they are before they get the money.

Did anyone else here apply for EDIL from SBA? I did on March 30. I've heard nothing. Anyone wanna compare application numbers? I'm 3600058### (masked last three)

I did. 3600001xxx (first 2000 applicants, I believe), basically as soon as it opened up. I've had a hard credit check from the SBA and an email from them on the 4/13 letting me know it would only be a $1k/employee advance, nothing else. So I somewhat doubt their line about handling it first-come first-serve. I only have one employee.

I applied as well and have yet to receive funds. I also received the email about the $1k/employee change and that was last that I've heard from the SBA. As such, it sounds like many of us are in the same boat.

I am 3300137xxx. I also was on March 30 at 10:31 AM. I have heard nothing.

My girlfriend received hers this week but I know she applied after me. Though she is in medical services.

Check your bank account for a deposit that starts with "SBAD TREAS"

SBA has been faster at delivering money than they have been at communicating about it. We've heard from tons of businesses that got EIDL money but never received an email about their application.

33029*, not so much as an email.

I actually have a lot of pity for the auditors who are going to be going over the books for this years. Some of the direction to organizations has been vague and a bit odd (e.g. use existing money and we will send a check to refill those funds). This is another case of the government moving faster than proper rule making can handle.

My wife is helping our sons non-profit preschool apply. Bank of America, where they bank, said they were prioritizing those who had loans outstanding with BofA first.

My experience with crony capitalism was frustrating, confusing and unfair

There, I fixed the title for you.

> crony capitalism

No true capitalism.

I don't see how this is "capitalism" in any sense of the word, crony or otherwise... but yes, your point stands.

Any one who expects a square deal from the present administration is either naive, or in on the grift.

Congress CamperBob... it was the Senate the messed up the cares legislation.

(Shrug) McConnell and McCarthy don't make a distinction, and neither do I. In the absence of checks and balances, they are all complicit.

Trump didn't have to sign it, did he? The bucks stops where, again?

This is a deliciously ironic place for a paywall.

Applied for EIDL 3/18 w/ application number 20001.... was in the first group.

Applied again, twice, as two successive systems had to be deployed after the first crashed.

I've received $15,000 as an advance. The EIDL loan is critical to our survival, but my guess is the program will be void of funds soon, and well before I see any money.

I did get PPP funds. This will keep my people on the payroll another two months though its my sense - and I want to be wrong - that the economic crisis will continue for much longer.

Congress (namely Sen. Rubio who managed the Cares legislation) was a Miami lawyer for an influential law firm there who soon after starting practice entered politics having been groomed for the role (as I understand it). He has next to zero business experience.

The administration had the right priorities, but Congress is incompetent. The administration will get all the blame. Nobody will hold Congress accountable, and even fewer will hold China accountable.

The whole chain of responsibility is hopelessly broken.

> and even fewer will hold China accountable

Accountable for what?

Refusing to regulate a trade in live, rare, and endangered wildlife which has devastated ecosystems worldwide and resulted in multiple global epidemics over the past 30 years?

I thought we were supposed to blame the World Health Organization now.

Seemingly covering up the early spread of covid and willingly exporting it to the rest of the globe?

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