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Comment by unethical_ban | Hacker News Reader

There are several scenarios that frustrate me.

Examples like law firms or physicians' offices. These are relatively small firms with very wealthy principals. They are asking for taxpayer money to maintain their wealthy lifestyles, so they don't have to sacrifice their Bentleys to pay staffers. Examples: Thomas J Henry in San Antonio.

LLCs and franchisees that probably have millions of dollars in holdings and cash, but act under the guise of "small business" because they operate fast food or something.

Religious organizations. It's one thing if something like a local YMCA gets funds, but a church outright getting funds without proving it is going to public services (why don't we just have better public services?) is not proper. Churches already don't pay taxes.

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> Religious organizations. It's one thing if something like a local YMCA gets funds, but a church outright getting funds without proving it is going to public services (why don't we just have better public services?) is not proper. Churches already don't pay taxes.

They still have to pay their employees, which is the point of the PPP. Those employees are paid from the funds that come in via donations, which are likely down during the pandemic (especially when many couldn't hold services). Put more simply, their income is down the same way my employer's is, as a result of the pandemic.

> a church outright getting funds without proving it is going to public services

The requirements of the PPP require that at least 60% must go to salaries.

> Churches already don't pay taxes.

Their employees do.

> The requirements of the PPP require that at least 60% must go to salaries.

My understanding was that 60% of what you don't have to pay back goes to salary. The money that went to salaries and an additional 67% you just keep. Is that right?

No that’s not right. The company has to spend 60% on salary. Then there are a range of forgivable expenses which is a very narrow category. Any PPP funds spend on any thing else 1. Risk criminal charges of misuse of funds at the worst, or 2. Become a loan. And right now we don’t know which option, 1 or 2 the government will favor.

A lot of misinformed generalizations here.

I work for a firm where staff took 20% pay cuts, partners took much larger cuts and the principals likely will not be paid at all this year. I had to lay off a dozen people personally. Other firms took similar or more extreme measures. Law firms are getting hit fairly hard like a lot of other businesses. We didn't take PPP funds, but if we did and it saved some of the 70 of my coworkers who lost their job in the worst economy anyone alive today can remember, then I wouldn't feel the least bit guilty about it.

Nobody is buying used Bentley's so I don't know where you get the idea that someone can just liquidate one to pay employees. And why should someone have to liquidate personal possessions to pay someone else anyway?

What franchisee do you know who is sitting on millions in cash? It doesn't work that way. Someone who franchises a fast food place makes an enormous investment, takes a significant risk, works their ass off and then pays substantial fees to the company. These are generally small business owners.

I think this feels like a misunderstanding of what the PPP loans were designed to do. They were an economic incentive to keep people on payroll instead of a mass layoff or long term furlough. The correct business decision if you are no longer allowed to operate a business or you are no longer bringing in revenue to support the business you currently have is to do layoffs. If you have anticipation that the revenues will return to normal you can try a furlough. There's no economic incentive to keep people employed if all expenses including payroll suddenly eclipse the revenues of a business, and there's no incentive for a business owner to put personal wealth into their business if it has a great chance of never recovering.

The fact that the fixed expenses during this pandemic did not stop for corporations made the expense of payroll which provided significantly reduced revenue stand out. Even law offices and physicians have very high recurring expenses like insurance that they just can't stop and start on a dime and stay in business. It made no sense to keep people on the books until PPP gave a compelling reason to do so. It isn't about 'keeping a wealthy lifestyle' as much as 'keeping a functioning business' a lawyer or physician with no practice is just as much a drag on the economy as anyone else.

> They are asking for taxpayer money to maintain their wealthy lifestyles

The one comforting limitation was that payroll calculations were capped at $100k. So if you had 10 people with a $250k salary, the maximum loan amount is calculated based on having a salary of $100k.

Although you're allowed to add in the cost of healthcare and 401k contributions without limitation.

I think the $100k cap was quite generous and probably too high.

There's a comparable program in Canada where the government covers up to $750/week in wages - essentially $40k/year - from March to August depending on your revenues. Feels a little better than the $100k cap (although probably a bit on the low side).

First, you don’t know the nature of these businesses. Second, the PPP has a salary cap of 150k specifically to ensure that it doesn’t “support wealthy lifestyle”. Third, most companies, even law firms and physicians offices have a range of employees, most of which don’t generate any revenue. PPP covers their salary. Finally, do you want to let law firms and doctors go out of business? Are you ok with the economic impact of a wave of spending cuts and bankruptcies?

It's the class of people telling others that they should have "saved for a rainy day" who are the first to stick their hand out and take free money.

The law offices and fast food places would just lay people off anyway without this.

One way or another the government is going to pay to keep these people employed.

Those things only frustrate me if they aren't loans, which they would be, right?

Kinda sorta loans. They're made to be forgiven if:

> 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 employee retention criteria are met, and the funds are used for eligible expenses.

https://www.sba.gov/funding-programs/loans/coronavirus-relie...

They are forgiven if you use them to fund payroll, rent, mortgage interest, or utilities.

They're also forgiven if your company goes bankrupt IIUC.

But there's still not enough of those loans to go round, so it is still very meaningful who gets them.

The second round still has funding available.

No, they're not really loans, they are basically free money.

They only have to be paid back if you end up firing the workers you were supposed to keep employed with the loan. If they stay employed then your "loan" is fully forgiven.

That's what I mean. You have to explicitly use them for payroll within 2 months of acceptance, and retain 75% of your staff, and a lot of companies are not bothering with that and just taking the low-interest loan. A loan is still something, but it's not even in the same area code as a grant.

That’s not really free money. It’s money earmarked for employees or to maintain some basic infrastructure so employees have a place to work.

To add to what some others said, the interest rates are also at a massive 1%, assuming they for some reason do have to pay them back.

Seems like even if you didn't need a PPP loan for staff, there are opportunities to create a scenario where it appears justified you need to loan to cover employees salaries, then divert the previous capital for your labor to an opportunistic expansion while others are scraping by. You got a large loan, with low interest, during a time period many were struggling. Great way to accumulate wealth.

> so they don't have to sacrifice their Bentleys to pay staffers.

You get that they'll keep the Bentley's and they just won't pay staffers? This program was the easiest way to keep people getting paid.

> LLCs and franchisees that probably have millions of dollars in holdings and cash,

Your "probably" is doing a lot of work there. You don't really have any idea. But the issue is you wan't "wealthy" corporations to bear the brunt of the economic shutdown. But why single them out? The PPP is an imperfect and blunt way to socialize the costs of the shutdown.

That breaks down pretty quickly, once you get past the idea that every single billionaire is a bad person. Becoming financially successful involves money-saving habits, and personally taking a hit goes against it. Many more are trying to elect a politician who would tax them more, than are trying to simulate the effect with their own money. Many donate to charities but it's something like health or the environment, not the financial stability of local middle-class people.

To see how deep money and time-saving habits run, watch this documentary about Warren Buffet, where he goes to McDonald's and gets a cheap meal. https://www.youtube.com/watch?v=PB5krSvFAPY (3 minutes in)

A significant fraction of billionaires "became financially successful" through nothing more than the deaths of their ancestors. The idea that a saving habit contributes to financial wealth, rather than is simply associated with it, has no basis in research.

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