Hacker News Reader

Comment by eric_b | Hacker News Reader

So many complaints here. Based on the comments I think there is some misunderstanding about the nuts and bolts of this program.

These are loans. They are two year low interest loans. They have to be paid back unless some or all is forgiven. Forgiveness requires documentation on employees retained, wage history, and is capped at $20k/employee maximum. And of course a piece of that comes back to the government in terms of payroll taxes. Just because a company took a 1M loan, doesn't mean it will be 100% forgiven.

For those complaining the companies don't "need" the money - I know many households who received $4k+ in stimulus checks that didn't need it. Should they not have taken it?

And anyways, the whole point of this program was to get money to businesses quickly. Means testing takes time. Sure there are going to be some questionable loans. Some fraud too. But overall our government has spent a lot more money and gotten worse returns than the PPP.

View on HN

>These are loans. They are two year low interest loans. They have to be paid back unless some or all is forgiven.

This is a highly politicized way to frame PPP loans. Its more like: "These loans are forgiven, unless you scammed the government." These loans were specifically designed to be forgiven, a minimum of 75% of the loan was to be for payroll and if used for payroll (what it was supposed to be used for) that portion of the loan will be forgiven.

>Just because a company took a 1M loan, doesn't mean it will be 100% forgiven.

Again this is so carefully worded to send a false signal...true "it doesn't mean" it will be 100% forgiven. But again the goal is for at least 75% to be forgiven up to 100%. The idea is businesses were supposed to get a loan with 75% allocated to payroll expenses and the extra 25% to approved non-payroll expenses (example: rent) and the portion used for payroll should be 100% forgiven...which in many cases will be the full amount of the loan, because many businesses didn't add an extra 25% for non-payroll expenses and just took the forgivable payroll portion.

Basically the only reason/way these loans would be repaid is if business took out the loans and spent the money on non-payroll expenses...that should be fraud and result in jail not a nice cushy 1% interest rate for people committing fraud.

Totally agree, and I think this is important to emphasize. I was involved in researching the requirements for a PPP loan for a nonprofit. I can guarantee that the vast majority of businesses (like 95%+) took out these loans with the intention they would never be paid back. Indeed, that was a feature, not a bug, of the whole "loan" program. If you took out the loans to keep employees on staff (and did so), then you had to fuck up hard to not have the loans be forgiven.

So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back. Not only is that not the case, it was never intended to be the case.

>So it kind of irks me to see some people frame this like a large percentage of these loans will be paid back.

I constantly see this..."its not free money, its a loan, and the money will be paid back with interest, just like in 2008."

No, its free money for businesses, many of which will fail and let their employees go anyway.

Then you hear people claim how somehow it was a victory to keep people off unemployment for 8 weeks, but not a single person can explain why that is such a benefit. Its sort of like saying hey when Corona virus began I stopped flights from Country X and saved 10's of thousands of lives...maybe deaths were delayed but there is no evidence they were prevented.

I think it's helpful to follow the money.

If it goes to salaries, those salaries are taxed (both payroll taxes for the employer and income taxes for the employee).

Those salaries, for the most part, get spent - on things with sales tax, creating business profits that are taxed, and supporting the employment of employees' whose wages are also taxed.

The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game.

>The idea that it's one giant money suck for businesses with no immediate return to the economy is not really accurate - it's not a zero-sum game.

No one argues $600B wouldn't help the economy. Can you point to where I said PPP will not help the economy?

Most people are starting to understand the fraud involved with PPP and understanding those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster as its not distributed out over 8 weeks with 25% reserved for non-payroll business expenses.

Of course there are arguments for why the money should have gone to businesses as it did and not people...but you don't hear any lawmakers making those argument publicly and if you do its limited to "we are saving jobs." My argument, if you feel compelled to call it that, is that there is no proof these jobs have been saved unless delaying unemployment by 8 weeks is considered a job.

> those funds could have gone to individuals and the money would have found its way back into the economy just the same...only faster

how could this possibly be true? the economy started tanking because people stopped going out and spending money. giving people money wouldnt fix this.

>the economy started tanking because people stopped going out and spending money.

People continued spending money...mortgage/rent; car loans/insurance; food; etc...

>giving people money wouldnt fix this.

PPP didn't fix it did it?

There is an eviction and foreclosure crisis looming...giving people money may have done a better job than PPP in avoiding this coming disaster.

> People continued spending money

i must be misunderstanding. surely you're not claiming that ordering people to stay inside and restricting building capacities didn't severely lower business revenue, are you?

> PPP didn't fix it did it?

i dont know why you said this. the PPP almost certainly fixed the short term problems created by a national quarantine. we're not out of the woods yet, but what do you think happened to all the money? you think hundreds of thousands of small business owners simultaneously committed fraud and didnt use the PPP for payroll? the PPP gave people money for rent, how did it not?

If you can help a business stay afloat, then people get to keep their jobs long term. Many businesses are on a threshold, especially a place like a restaurant. They might be still doing take out, people are still working, but business isn't as good as it was previously.

If you do nothing and let tons of businesses close, then there's a huge chunk of the machinery of the economy missing once you start loosening the health regulations.

Politicized? Give it a rest.

Yes, if a company spent 60% (down from 75%) of their loan on payroll, and does not exceed the 20k cap per employee, and retained the same number of employees they had at the beginning of the covered period, and can document all this, and they followed the initial SBA guidance when deciding how big of a loan to apply for, then they will get most or all of the loan forgiven.

There are lots of comments here about "what about the nail salon who has 14 employees and took 5-10M?!?!". Well, assuming that isn't just a case of bad data, there is no reasonable expectation that the loan will be forgiven in it's entirety. The majority will need to be returned to the lender plus interest.

>"what about the nail salon who has 14 employees and took 5-10M?!?!".

If true that is an obvious case of fraud and you are making my point, the only time a loan will be repaid is if the money was spent on things other than payroll...which amounts to fraud.

Who cares if its a nail salon? Math is math, if you have 14 employees the maximum eligibility would be 8 weeks of payroll with a cap at $100k salary + up to an addition 25% for non-payroll expenses. $5-$10M for a business with 14 employees is fraud on its face.

I know lots of folks who got PPP loans. I don't know anyone who's getting 100% of their loan forgiven. Mainly because they took 2.5x monthly payroll as a loan - but then did an 8 week covered period (2x monthly payroll). Most of them will owe ~20% of the loan back to their lender since they had minimal other expenses.

I believe that ~20% portion is forgivable as well so long as it was an approved expense and they the ~80% was put towards payroll.

It's all forgivable. And the PPP Flexibility Act raised the cap on non-payroll spending from 25% to 40% of the amount of the loan.

> I don't know anyone who's getting 100% of their loan forgiven.

I don't think you know that many people then. I don't know a ton, but everyone I know is expecting to get 100% of the loan forgiven. Main reason being you just need to show that money is spent on payroll, mortgage interest and utilities. For a lot of businesses it isn't that hard to shift accounts around to show those costs are higher than their PPP amounts.

>Most of them will owe ~20% of the loan back to their lender since they had minimal other expenses.

That was my entire point is that the loans were designed to forgive a minimum of 75% of the loan, but it is 100% forgiven if they limited their loan application to 8 weeks of payroll.

All the people you know took 20% more for salary than they were supposed to and they should pay it back. Even based on your personal experience you should know this isn't the way to describe the program:

>These are loans. They are two year low interest loans. They have to be paid back unless some or all is forgiven.

Rather in your personal experience most of the loans will be 80% forgiven.

Eh, I think the way I described it was fine. These are loans. I don't know anyone who's had even a single dollar forgiven yet. As far as I know there has been no official "forgiveness".

What do you call a loan that you still owe? A loan. Once the forgiveness guidance is finalized and people are actually receiving it, then perhaps I will recharacterize my description.

If I give you $80,000 and loan you $20,000, the semantically important part of my action is as a "gift", not a "loan". Why do you want us to ignore the $80,000 and only pay attention to the $20,000?

>I don't know anyone who's had even a single dollar forgiven yet.

This is what I meant by political couching: Do you know any one who has paid back a single dollar?

>These are loans.

Fine care to loan me $1M and I'll pay you back 20% with interest.

Loans always have delayed payment terms, you're being willfully obtuse.

>Loans always have delayed payment terms, you're being willfully obtuse

And how often do they have forgiveness terms?

What are you talking about? Every loan I've ever taken out (car, mortgage), except for school, had a payment due the first month after I took out the loan.

It is not true that entire loan is forgiven if the payroll percent is met. Only the actual money spent on forgivable expenses (payroll + rent + interest on some debt) is forgivable. If you read the forgiveness application this is clear.

Overall though I’d expect 75-95% of program funds to be forgiven as they have extended the time window from 8 to 24 weeks making it much easier to use all funds in a forgivable way.

>It is not true that entire loan is forgiven if the payroll percent is met.

Where did I say that?

It says exactly what the parent said: loan funds must have been spent on legit essential expenses, 80% or more of which must be payroll.

I think this is a misunderstanding of the intention. The 80% means "we want you to spend this money on employee payroll, not a new boat" and they expressed that wish by saying "it needs to all be spent on payroll" , modified with "well, at least 80% on payroll and the balance on other essential non jetski expenses". So if the business spent 100% on payroll expenses that's just fine. It's the 79% and less they're worried about.

Why would they have be limited to an 8 week covered period? It is possible to elect that, but the PPP Flexibility Act extended the “covered period” with respect to loan forgiveness from the original '8 weeks after the loan is disbursed' to 'the earlier of 24 weeks after the loan is disbursed, or 12/31/20.'

I thought the period got extended to 24 weeks?

Is there actually a nail salon that took 5-10MM with only 14 employees? The guidance, at least initially, was to apply for 2 months of gross income and see what you get. You also had to supply supporting documentation.

I'd be shocked if someone somehow got something that egregious through.

>I know many households who received $4k+ in stimulus checks that didn't need it. Should they not have taken it?

I'd rather have some of the waste money going to families over businesses for once. Families have to worry about loss of income and loss of health during this. Businesses just have to worry about income. Families are more fragile and should be prioritized.

Yeah, I don't understand the obsession with means testing support through such a crisis. Forgetting the issues with means testing in general [0], in this specific case, you can genuinely go from not needing it to needing it pretty quickly.

0 - https://en.wikipedia.org/wiki/Means_test#Criticism

I am not necessarily disagreeing with you but a lot of small businesses in the US survive on thin margins and the owners also don't make a lot of money necessarily. So it is not always the case that a company only has to worry about income. They have to worry about paying employees, ensuring they can meet payroll (which in turn helps families of those workers), keep liabilities in check and many other issues.

I am totally with you when it comes to companies with deep pockets but a lot of very small businesses are really just a group of individuals trying to survive together.

The outrage is that the money didn't go to small businesses, but rather large ones who had the means to cheat the system.

Why would there be outrage? There is $130b+ in PPP remaining for small businesses and it's incredibly easy to apply now.

Why would there be outrage at the government handing billions of taxpayer dollars to people who are already billionaires while only giving $1200 to everyone else? My guess is because the government is handing billions of dollars to people who are already billionaires while only giving $1200 to everyone else.

While that could possibly be true, it's worth noting that the database this thread is about can't really help support that claim as it exclusively contains data for loans over $150k (which might still cover some smallish businesses, but definitely not the smallest).

True. My comment was based on prior reporting on PPP funding problems, not based on the recently released names.

I don't see how this is an argument against giving it directly to families/individuals rather than businesses. The reason the government has an interest in subsidizing payroll is to make sure the employees don't suffer due to not having income, so the question is why not just give 75% of the allocated directly to individuals anyways (since it's supposed to be used for payroll anyways), and then just have businesses apply for the non-payroll portion? If anything, that would be _better_ for small business owners; they'd get money as individuals from the 75% to keep rather than using for payroll, and then they would still get as much non-payroll money as they would before from the remaining 25%. The only other differences from what I can see are that giving it as payroll preserves existing salaries rather than distributing equally to all individuals (which could be a pro or a con depending on your views) and potentially enabling businesses to use the money for things that they're not supposed it, in which case it ends up being a loan that they have to pay back.

There's a lot of weirdness lately about people expecting companies to not take the money.

The virus wasn't any company's fault. The choice to respond to the virus by shutting down the economy wasn't any company's fault.

Previous epidemics in human history have been dealt with by simply accepting a death rate that modern society, via government policy, has chosen to not accept. This was an unprecedented response that no business could have predicted.

Why do so many of us view businesses who pay employees as the enemy? Agreed 100% on the fact that many of us on this board got stimulus checks that were later spent on mountain bikes or other luxury items. Members of the privileged keyboard class didn't need them at all. People who work with their hands ought to be pretty pissed off they simply didn't get double what they got while we received nothing.

I agree with this. Any argument about moral hazard is out the window. Any argument about this being like “too big to fail” is misapplied. Banks in 2008 created the crisis and their risky loan portfolios and balance sheets. No company created Covid or state shutdowns. Let’s come together with a spirit of generosity and cooperation. Not petulance and resentment.

Those things didn't cause covid, but they did cause the companies to be unable to handle the crisis. The outrage is mostly centered around companies who are wildly profitable and/or spend tons of money on stock buybacks and dividends instead of planning for an inevitable disaster.

Look at this: in 2019 Delta Airlines spent around $2b buying their own stock [1]. They also spent $300m buying their own stock in March 2020. In April 2020 they received $5b in government assistance [2]. What if instead of spending billions of dollars to improve their stock price, they saved some of that money in case they ever had a crisis to deal with?

It's not like this is the first time the airlines have been bailed out before, either. 9/11 wasn't that long ago.

[1] https://ycharts.com/companies/DAL/stock_buyback

[2] https://finance.yahoo.com/news/major-u-airlines-accept-gover...

Valid points. My argument though is that focusing on these types of cases will result in preventing other, more deserving businesses from getting and using funds. When the SBA threatened criminal prosecution to stop companies that are public, highly profitable and well financed from using PPP the real effect was to scare EVERY business and loans stopped almost immediately. I know a few businesses that need funds that chose to go out of business because the owner “didn’t want to go to jail”.

The thing is, if we don’t want to help companies that conduct stock buy backs during times of plenty, then need help during times of famine, 1. The time of famine or pandemic is not the time to fight that battle. Let’s revise stock but back law later. 2. Honestly, no policy can be designed to handle a global pandemic. This is not a normal time. Let’s leave the blame and moralizing for a few years from now.

Stock buy backs used to be illegal. Maybe they should be again. Or maybe only after a company has passed a financial stress test.

The thing is, the more we design the system for these unexpected edge cases the more complicated it gets. Maybe it just be better to have something like FDIC insurance that all companies buy and kicks in automatically.

All the talk about companies shouldn't take the money happened after the fact. At the time the program was publicized as "we're injecting cash, no questions asked, into all businesses". Basically just like the "checks mailed to everyone" done at the same time.

Not all businesses shutdown. The issue is that a bunch of businesses took the free money who didn’t need it. We made a choice not to take it because we are booming during crisis. The stimulus checks had criteria to receive them and most people who are doing very well did not get a stimulus check. PPP could easily had a requirement that it had to be paid back if sales/rev increased during 2020 tax year. Instead the more likely scenario is that businesses that were most affected by covid will have to pay back the loan because their revenue fell to 0 and they had to cut employees. This money isn’t free, it is added to our national debt.

There's a strong case to be made that, given our position as the world's reserve currency (without any clear challenger) and our dirt-cheap borrowing costs, the national debt is pretty close to free money. It's not like we're ever going to roll up our sleeves and pay it off, or even down. We'll just inflate it away. I'm not arguing for unrestricted spending, but a couple trillion to avoid economic collapse, borrowed at effectively 0% interest, seems like a deal worth taking.

The issue with this line of thinking is that it doesn't end...until it does. Neither you nor I will likely be alive, but our children may very well be :/

I'm not arguing for unrestricted spending, but a couple trillion to avoid economic collapse, borrowed at effectively 0% interest, seems like a deal worth taking.

Would it be better to let the city burn down today because we're worried about a water shortage in 100 years?

Why do we pay taxes then if the government can just borrow that money?

Taxes are significantly lower than government spending and have been for decades. This is a good question.

> We made a choice not to take it because we are booming during crisis.

What's strange about that is that there were/are so many unknowns. Sure, you could be booming, but what if the unexpected strikes and you are suddenly not booming due to yet another unforeseeable event? The worst estimates were that millions would die and we'd be heading into an era that would eclipse the great depression.

As prepped as you were, and as well as you were doing — taking every opportunity to add layers of resilience would seem like the smart thing to do, especially when you've got employees with families, customers that depend on you, etc.

These loans may as well be grants. Any company with even a half decent accountant will make sure that most of the loan amount is forgiven.

> Should they not have taken it?

I seriously considered not cashing my stimulus check until I talked to multiple well off people that cashed their dead relative's checks. There just isnt a cultural expectation in the US that you wouldn't take what you're given.

EDIT: Rethinking my comment I'm giving myself too much credit. Since I never got a physical check, I couldn't have "not cashed it" if I wanted to.

>’ cashed their dead relative's checks.’

Unless there is some weird allowance (widower/widow inheritance, etc.) wouldn’t this be straight fraud?

I know in some countries people don’t report their relatives’ deaths in order to keep receiving their benefits, but obviously that’s illegal too.

Short answer is likely yes. Long answer is that depending on individual bank policy regarding depositing 3rd party checks, relationship with tellers/branch manager/what have you, or whether person verifying exceptions for remote deposit is sleepy that day, it may very well end up being undetected. And thats checks. ACH is a whole different can of worms.

In a sense, I am glad it is getting some scrutiny as clearly people who did not need the money benefited ( likely at the expense of people who really needed it - the currently public fraud cases are pretty amazing already ), but I am worried that this kind of scrutiny will make people hesitant to apply in the future just to avoid the headache.

Doing some of that could get people into lots of trouble. Not sure if they could get them with wire fraud if it’s a physical check but at least financial fraud, impersonation, faking a signature, caching someone else’s check, etc...

It is straight fraud good for years in prison.

>Unless there is some weird allowance (widower/widow inheritance, etc.) wouldn’t this be straight fraud?

I'd think if the estate is still open, it'd get rolled into that as income legally.

Though that would be a rather small percentage of disbursements... but aside from those corner cases it would be financial fraud...

Almost certainly, yes.

Yes, people should not be cashing checks for the deceased, but part of the issue was that the IRS was sending them out in the first place before deciding that they shouldn't have.

> Q13. Why did the IRS send Economic Impact Payments (EIPs) to deceased individuals? (added June 26, 2020)

> A13. Upon enactment of the CARES Act, the IRS worked with unprecedented speed to issue Economic Impact Payments to individuals. The IRS initially implemented the legislation consistent with processes and requirements used with the 2008 stimulus payments, which resulted in EIPs being issued to certain deceased individuals. After further review, it was determined that such persons are ineligible, and the IRS has taken action to prevent future payments to deceased individuals.

https://www.irs.gov/coronavirus/economic-impact-payment-info...

Those people broke the law though cashing checks made out to their dead relatives. I understand that's part of some Americans' expectations of the world as well though.

You pay taxes. You should take what the government gives you in return. I suppose there are many opinions here, but I have plenty of friends who refuse to take unemployment insurance, when they've paid into it for years (sometimes decades).

Why do you think that is?

Some people think it is charity (it isn't) and they are too proud to take charity. Some people fear they will be less employable if they do because it is a record of a gap in employment.

I was in that situation last year (in UK). There was about 2 months we could have claimed for help as I was out of work. I had secured a job though, and we had some (small) savings, so it was going to be messy.

There's lots we could have spent the money on, but we didn't need it - we've had to go without meals before, this wasn't that.

I think one can easily justify taking the money when you don't need it. Possibly the most moral action would have been to take it and help people who couldn't get the help and really needed.

We've had no problem taking charity, still most of the kids clothes are hand-me-downs from other families; and I don't see income support as charity per se, and we take income support of other types not related to being jobless.

The "you've paid in" argument would probably not be on our side either.

Maybe that fleshes things out anecdotally.

> I talked to multiple well off people that cashed their dead relative's checks.

I wouldn't judge a program because of people committing outright fraud.

To your point, I know a bunch of people who applied for the forgivable loans just to see if they could get it. I know a guy who owns over two hundred Domino's franchises and got a $6M forgivable loan and his business has been up 30% since covid started. He can't hire people fast enough. Another friend was pissed that he wasn't approved for a loan too even though he has zero employees.

Taking on a lot of new employees and increasing production cost a lot of money up front that you won't recoup instantly, cashflow is a killer

He may not have known these facts at the time he applied for the loan. There was extreme urgency projected from the banks at that time (get your application in at 10pm on the Friday the program opened up to stand a chance of getting a loan). So business owners had to decide on that day if their business was going to turn down in the next few months. An essentially unknowable thing for many/most businesses.

And this, ladies and gentlemen, is why universal healthcare, free college, basic income, and general socialism won’t work in the American culture. It may work in other cultures like nordic countries where people usually don’t take what isn’t theirs.

I think this program is generally well intentioned. I directly know organizations that benefited from it and it absolutely helped cushion the blow of initial lock-down. I also think that any time the US federal government is offering out free or low cost money it is imperative that we look closely and carefully, especially when the program was thrown together in a week or two.

"Need" is probably not the way to look at this, anytime there is "free money" there will be incredibly wealthy businesses and organizations with "need." There is a school of thought that you should "always need" free money. I think that's just business. I think the actual distribution is where you look.

It would be completely foolish, ATMO, to believe that every organization, bank, and business were treated equally or fairly in this process. We already know that banks like Cross River handled what appears to be a disproportional amount of the approved "loans," presumably because they are a slick fintech business. When the dust fully settles, I would be shocked if the distribution of the funds or the forgiveness was in any way egalitarian, the country just isn't. I fully expect that it will be another mechanism in which certain classes benefit from the US system and others will have been overlooked. And maybe there will be another excuse, minority owned small businesses may not have been as "well banked" as others or something and your choice of bank will be another differentiator. I've heard a couple stories of orgs that didn't even get applications from their banks until the fund was depleted. There will be some great success stories too, I'll reiterate that I think the program is based in good intentions. I just can't see it being executed fairly though, not when they're actually debating on whether the Bubba Wallace noose was a "hoax" or not and the president chimes in...

> and is capped at $20k/employee maximum

Only owners are capped at $20K. Employees are capped at $46K over the 24 week period, which works out to be that any employee making $100K or less annually is full covered under forgiveness.

my original comment was misinformed

There's still PPP money left so I'm not sure what your point about the finite sum is.

There is money left because people were scared shitless after the SBA threatened criminal prosecution for misleading certifications. The problem is that issued a statement redefined the certification after the fact and made it much more strict and than when they were initially released. All of the sudden a bunch of people thought accepting the PPP funds would land them in Jail. Go to the reddit PPP or small business threads and you’ll see tons of people returning funds and expressing fear.

It’s important to note that the SBA issued its announcement after the public outrage of large companies receiving PPP. They have since back tracked and issued a blanket protection from audit for loans under $2M but the damage was done and the $130B hasn’t been touched since.

> They have since back tracked and issued a blanket protection from audit for loans under $2M

anything I can read about that?

https://www.journalofaccountancy.com/news/2020/may/sba-safe-...

To be fair, this is mostly conjecture on your part. Reddit threads aren't a good way to get a handle on what millions of businesses of all different sizes are doing or why.

It's a survey selected by an independent factor - it's like a twitter thread, or local cafe gossip. It's not gonna hold up to a strong scrutiny but it's a valuable place to start.

I stand corrected. Early reports were reporting that many were not able to obtain loans due to the fund being consumed. I’ll delete my comment.

Your comment is not entirely wrong. The reality is the $130B is left because people were too scarred to touch it after the government threatened to criminally prosecute companies after public outrage of large public companies obtaining loans. The public outrage was driven, in part, by the fact that lots of small businesses didn’t get loans before funds ran out the first round. That’s not a sign that there were adequate funds.

There are estimates that we actually need a second PPP of the same size ($600B) because lock downs are going to start again.

You're not actually wrong, to be fair.

They allocated 350bn, it all got spent.

Then they allocated more, and some of that second round of money is left.

Actually, the PPP was re-funded and was set to expire a week ago with $130 billion unused until they extended it until August.

I’ve said this a few times above but I’ll say it here. The funds are unused because the SBA threatened to criminal prosecute borrowers for obtaining loans when “they had alternative capital”. Lots of businesses owners worried that if they had home equity or credit cards available that would be “alternative capital” and they would go to jail.

After the SBA guidance application volume dropped off a cliff so the SBA, backpedaling, issued new guidance that they wouldn’t audit loans under $2M, but by then no one wanted to take the risk.

https://www.nbcnews.com/business/business-news/here-are-some...

> Forgiveness requires documentation on employees retained, wage history, and is capped at $20k/employee maximum. And of course a piece of that comes back to the government in terms of payroll taxes. Just because a company took a 1M loan, doesn't mean it will be 100% forgiven.

I think your misunderstanding is that the rules actually get followed. What happens when everyone in the scheme comes back and says "the economy is shit, we can't pay that regardless" or more optimistically businesses that have 100's of employees that simply plea with the government that they can't repay their loans, but should be given 100% forgiveness in the spirit of "keeping unemployment low". It's far too political to introduce/enforce anything that makes unemployment numbers worse. It's like a "too big to fail" on a much larger order of magnitude.

> the whole point of this program was to get money to businesses quickly. Means testing takes time. Sure there are going to be some questionable loans. Some fraud too. But overall our government has spent a lot more money and gotten worse returns than the PPP.

I consider rape less evil than murder so hey I guess I shouldn't be so critical of rapists! Look, I know those things aren't totally analogous, but the point is that it's OKAY to be critical of the government, especially when a government program benefits those who need it the least.

Why would it be a problem to redesign a social policy in the social interest? So what if everyone one comes and says PPP needs to be amended to do better in service of the country. Isn’t that what we want. It’s a good thing that they increased the spending period from 8 weeks to 24. Most restaurants were closed by state orders and were faced with forcing employees to come off unemployment (and employees resisted because unemployment was way better for them as they got an extra $600 week on top of regular pay) only to then pay them to stay home. Instead, by extending the spending window we give restaurants a fighting chance to have money to start operations again when it’s safe.

Let’s tone down the rhetoric a bit, in no way are PPP loans close to rape or murder in magnitude of harm so it’s an inflammatory analogy with no purpose.

In terms of the actual problems with PPP and percent of bad loans. Think of the counter factual. Would you rather have 1% bad loans or a wave of bankruptcies and layoffs triggering a depression that last 10 years? What about 10% bad loans? 50%?

The PPP was well designed and administered under the circumstances. Let’s make improvements because we are not out of the woods yet. But let’s not scape goat or focus on the edge case problems and then destroy all of the benefits prevented harm.

> Most restaurants were closed by state orders and were faced with forcing employees to come off unemployment

And yet those businesses either didn't get the loans or got a minuscule amount comparatively speaking (especially to those who knew how to game the system).

> in no way are PPP loans close to rape or murder in magnitude of harm so it’s an inflammatory analogy with no purpose

It was meant as a comparative analogy (murder to rape, as PPP to <whatever is worse>) not from (rape as to PPP, as murder is to <whatever is worse>). That was my purpose - two bad immediately recognizable crimes in society with one being considered worse.

> Would you rather have 1% bad loans or a wave of bankruptcies and layoffs triggering a depression that last 10 years? What about 10% bad loans? 50%?

I'd rather have a civil debate about whether that's effective (see Japan's lost decade for comparisons of why quantitative easing has even longer potentially more disastrous issues). You're kidding yourself if you unilaterally think that the PPP program is the only way to alleviate yourself from a "wave of bankruptcies and layoffs triggering a depression that last 10 years". Again, we're just kicking the can down the road, like we always do.

"It's far too political to introduce/enforce anything that makes unemployment numbers worse. It's like a "too big to fail" on a much larger order of magnitude."

Yes and ?

It makes the overall premise of the rules moot. There are no incentives for any business NOT to take advantage; thus creates a zero sum game provided by tax payers that enhances the rich. In other words, it's just kicking the can down the road for the poor to pick up the pieces.

You're not wrong

Care to elaborate how could a household receive 4k plus in stimulus? Was it 4 different people who had earned 99k or less in one household?

> Care to elaborate how could a household receive 4k plus in stimulus?

Married couple with up to $150K AGI ($2,400) + 4 dependent children ($500 × 4) is $4,400.

Edit: Removed my comment, the original comment was refuting the $20k cap, but I misinterpreted the parent's comment when first reading it. Sorry!

https://home.treasury.gov/system/files/136/3245-0407-SBA-For...

> if a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owneremployee or self-employed individual/general partner, capped at $20,833 per individual; and

> if the Borrower has elected an 8-week Covered Period, does not exceed 8 weeks’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $15,385 per individual.

> unless some or all is forgiven.

RIPE for favoritism, aka, corruption.

I don't think favoritism is a concern. The forgiveness guidance is not, to my knowledge, finalized. But what we've seen so far is pretty cut and dried. It's possible some people could convince their lender to forgive more than they should - but certainly those meeting the forgiveness criteria will get it.

Corruption and fraud are certainly possible - though the lenders got paid from the government just for originating the loans. That is, they already made their money. There's no extra money in them over-forgiving a loan.

Favoritism on the part of banks was real.

Source - applicant for 4 separate, PPP loans that were eventually awarded.

Banks are not stupid. They awarded funds first to their clients that had outstanding loans with them. That meant the banks' own portfolio was not impaired, thanks to influx of PPP

Huh? There are rules that if followed allow for forgiveness. The rules will presumably be applied fairly and equally to everyone. That's about the exact opposite of favoritism.

Fairly does not entail equally. Chances are there will be a political calculation done by whoever is in power at the time, and loans will be disproportionately forgiven in a way that offers the most political benefit. The approach taken will be touted as "fair" and the recipients "most deserving of forgiveness".

I don't see why @IG_Semmelweiss comment here is dead, it's not wrong...banks were incentivized to provide capital to their highest debtors / longest clients who otherwise were at greater risk of default and loss to the bank shareholders. It's not complicated, they acted in their best interest because there was by design nothing stopping them.

Reply on news.ycombinator.com