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Comment by mywittyname | Hacker News Reader

You can lookup how much businesses received in PPP "loans." It's staggering.

This is an anecdote, but I feel like it holds true for many small businesses. I personally know a person whose business received $160k in PPP loans and after it became clear that this was not a "loan" but a "cash payout", he went out and bought two new cars and a nice new house. His business was never really at risk due to COVID, since most of his workers work solo in the field where they never have to interact with others (I used to work for him).

The whole PPP process was a shame. There was very little oversight and it's becoming clear now that it was designed up front to be a giveaway to business owners. Businesses should have been forced to pay those loans back.

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I believed the same as well but then last year when I went back to my family doctor after more than 1.5 years, I got to hear another version. My doctor belongs to a group of doctors who have 4-5 offices around San Francisco bayarea. They have been in business for 25+ years and I have been with them for 15+ years. I asked him how did they do during the covid. His response shocked me - he said they came very close to closing their practice and PPP was what saved them. Of course no one was visiting them during pandemic but even when things started opening up they had staff shortages.

I am sure similar scenario would have happened for a lot of people and at the same time some businesses would have taken undue advantage of this as well.

Similar experience on the lower end of the economic spectrum. A local restaurant I love and have frequented for years was saved by PPP. As you can imagine, their employees were among the most economically vulnerable. With PPP they were able to send their people home and keep paying them during the downtime. Without that they'd have been finished.

But as you acknowledge, I'm sure there was abuse. I'll bet there was a lot of it. Gov't needed to get the money out the door fast, and it did, at the cost of some oversight. Hopefully next time we'll do it smarter.

> Hopefully next time we'll do it smarter.

I'm not sure how much smarter you can get. Fighting fraud and security in general is a cat-and-mouse game with a fundamental trade-off of convenience/expeditiousness vs. preventing fraud. When you need to get large amount of money out to a nation in a very small span of time, there might just be an unavoidably high floor on the amount of fraud that will happen.

Because otherwise you get flooded with all sorts of heart-breaking stories of people who were denied money due to some bureaucratic inconvenience put in place to fight fraud.

Exactly. It was a best effort move to reduce fraud and exploitation while still providing the desired benefits. You had to wager that the loan would be forgiven and you had to be approved for the loan by an established lender.

Heart-breaking stories aside, it would have taken far more time and money to roll out a new government bureaucracy merely to duplicate a vetting service banks already provide.

Estonia has a robust digital government infrastructure that made payments easy and much less apt for fraud.

Estonia has a population the size of Maine.

That’s not an argument against digital government infrastructure.

You made no argument for it.

I did, it makes distributing government payouts harder to scam.

You didn't make an argument. You just made an unsupported claim. You did not compare fraud rates, you did not measure costs or benefits, you did not account for the urgency of the established by the context or make any attempt to assess relative feasibility. You made no argument.

More importantly, embedded in your claim is the assumption that comparing two different states with multiple order-of-magnitude differences in size and complexity should be accepted without question. Imagine deploying a solution for a class of 32 students in two weeks. Now imagine you have to do that for an entire university community of 8,000 people including all faculty, staff, and administration. You must account for on-campus and off-campus students; part-time, full-time, and remote employees; labor-oriented staff who do never use computers at work, multiple languages, bureaucratic restrictions to account for, politicking within different departments, and so on. Here's the kicker: you still have the same two weeks you had for the classroom project.

It's an absurd comparison that should never be made without clear disclaimers, caveats and careful specificity about the point.

So is this an argument? You're not comparing any real data either, just making a hypothetical comparison. Can I do that too?

Imagine if every state issued their own digital ID that was part of a national federated system of PKE. That is, each state trusts the certificate authority in each other state, and the fed trusts the states. There's some mechanism to sign into a federal website and to transfer money to a bank account, or perhaps a mechanism involving showing up to a postal office, who knows. Compare this to dispersing funds quickly but without any verification of identity.

By doing the work up front to be able to quickly verify identities it means that the fraud prevention happens before the fact.

Do you think the $76 billion would have been better spent on digital infrastructure or written off as fraud? And what about the next time there's a need for helicopter money?

You know the DoD is fazing out CAC and there's a lot of very cheap tooling around PKE digital IDs...

Doesn’t help when the administration makes it hard to do effective oversight[1]

1. https://www.politico.com/news/2020/04/07/trump-removes-indep...

If we are really smart there won't be a next time where people roll over and let the idiot politicians shut everything down.

Hopefully next time we'll do it smarter by not imposing any lockdowns or forcibly closing businesses.

Report him for fraud. That's our money.

https://sbax.sba.gov/oigcss/

As long as that person had eligible expenses to have the "loan" forgiven, it doesn't look like fraud to me. It looks like the program doesn't care that you would have spent that money on payroll anyway, so by paying part of your expenses, the money you would've spent becomes pure profit.

For reference, the documentation requirements that I see talk about demonstrating your expenses, but I don't see anything about demonstrating you actually needed that money and couldn't pay those expenses yourself. Was that a requirement?

https://www.sba.gov/funding-programs/loans/covid-19-relief-o...

I'm not sure you understand how PPP worked. It was a forgivable loan in exchange for keeping people on payroll. What the company did with the loaned funds was not part of the agreement, as long as they met the payroll/expense requirements.

It was not fraud. The rules were followed exactly (to my knowledge). It's just that the rules were not well thought out.

The loans should have been loans -- not payoffs. If a business took a loan and still could not pay it back, they should have declared bankruptcy.

You're correct - the legislation had fraud baked into it since it didn't have any provisions for oversight other than delegating that to a specific office (and the Sec. Treasury at the time - Trump admin appointee Steven Mnuchin - didn't do any oversight).

It was entirely a corrupt endeavor and everyone knew it. The subsequent write-offs of the loans was also predictable.

Lemme share still another perspective that hasn't gotten any media time... my accountant at the time recommended we apply for EIDL instead of PPP, for various reasons. So here we sit now several years later with PPP as free money, having to start paying on our EIDL loans, all because we legit needed the money but chose the wrong option. So yeah - very, very frustrating to see the ways that so many people who clearly didn't need the money got a free government handout while those that did need the money just ended up with debt.

> The whole PPP process was a sham [...] it was designed up front to be a giveaway to business owners.

Yes. The goal was to put money into the economy to help absorb the shock caused by short-term COVID restrictions that would otherwise have caused businesses to fail permanently. The point was to allow more businesses to "weather the storm" than otherwise. You can argue about the extent to which businesses should invest in "pandemic insurance" (however you want to define that), but the government does have an interest in stability and preventing a vicious cycle leading to economic collapse.

The obvious point was to leverage the resources already available at banks to vet loan applicants and to reduce the total number of applicants in the first place. It's not perfect, but it's a reasonably good idea given the urgency. Sometimes it's reasonable to accept that some people are going to get away with cheating the system. Do the best you can and move on.

Can you imagine how much MORE it would have cost and how much more money would have gone to waste, had the government just said up-front that it was free money for businesses? How much would it have cost the government to arrange for approving applicant businesses? Was it even feasible given the desired timeline?

> The whole PPP process was a sham...

The plan was to get the money out the door as fast as possible to stem the pandemic recession, which is important for stimuluses to work right, based on history. If you add all kinds of paper-work to reduce fraud, it slows down the process.

It was a hybrid in terms of "just send out a check" and a business loan. Perhaps in the future they should just send out a check to all businesses having a threshold # of employees.

Or....just send the checks to the people directly. Not sure why we need to selectively enrich one class over another.

A failed business is more disruptive to the economy.

There were programs aimed at individuals, though, such as ERAP for rent payment relief.

I've never heard someone refer to PPP loans as under the umbrella of "stimulus checks".

Yeah that's an interesting deflection.

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