The Payroll Protection Plan (PPP), which was designed to keep people employed and paid, has run out of money.
The U.S. Small Business Administration (SBA) posted the news on its website this morning, April 16, under a banner that said “Notice: Lapse in Appropriations.”
“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” the SBA said under the stark heading.
The news was not unexpected. It became clear in the last few days that the volume of financing under PPP was moving at a pace rapid enough that it would hit its roughly $350 billion funding peak soon. This morning, it happened.
Republicans and Democrats in Congress have not been able to agree on the terms of the next phase of funding.
The pending exhaustion of funds led SBA Administrator Jovita Carranza to post on Twitter late on April 15 that she and Treasury Secretary Steven Mnuchin were urging Congress “to appropriate additional funds for the [PPP], a critical and overwhelmingly bipartisan program at which point we will once again be able to protect millions more paychecks.”
An SBA spokeswoman told FreightWaves this morning that as of 8:45 a.m. on April 16, the agency had accepted 1,637,000 applications and approved more than $339 billion in loans, working through more than 4,900 lending institutions.
The PPP program has numerous moving parts. But at its heart, it was designed to provide loans that could mostly be forgiven to companies with 500 employees or fewer, with the money to be used mostly – 75% of it – to maintain payroll for roughly 10 weeks.
Whether trucking was getting enough or too little will always be hard to know. In a status report issued on April 13, the SBA said it had approved 28,181 loans in the Transportation & Warehousing sector, totaling $7.824 billion.
That was 3.16% of all loans disbursed. The loans are first come, first serve so whether they align with an industry’s share of the economy was never guaranteed. Construction led the list with 13.73% of all loans disbursed. A broader category called Professional, Scientific and Technical Services followed with 12.26%.
Earlier this week the SBA posted a clarification on one key question that could be significant to the trucking industry and its ability to get loans. The rules can be complex at times; on a recent webinar sponsored by the Truckload Carriers Association, an inordinate amount of time was spent talking about the eligibility of companies under the 500 employee rule if they were affiliated with other companies.
THe clarification by SBA is for companies that are set up as partnerships, with taxes filed through a Schedule C document. Under such a setup – which could include a small trucking company – how would the partner’s income to be replaced be determined?
The interpretation of the rule by Jack Rybicki of the accounting and advisory firm of CLA is that the SBA rule answered a “key question regarding the proper treatment by partnership for active owners who do not receive W-2 wages.”
According to Rybicki, the SBA’s clarification is that the self-employment income of the “active owners” should be included in the average monthly payroll costs that the company seeking money from SBA would put as its borrowing base. “A partner in a partnership may not individually submit a separate PPP loan application for lost earnings from the partnership,” Rybicki wrote.
(Rybicki was this week’s guest on the Drilling Deep podcast and you can hear his comments on the PPP program here.)
But there are specific limitations on how much an owner can get back. In the SBA clarification statement, the agency said the loan forgiveness for the partnership would be a “proportionate eight-week share of 2019 net profit.” That is less than the 2.5 months of payroll that had been set as the maximum base for borrowing under PPP.
The reasoning for the SBA decision, the agency said, is that “many self-employed individuals have few of the overhead expenses that qualify for forgiveness under the Act.” Those costs include such things as rent and utilities.
“Allowing such a self-employed individual to treat the full amount of a PPP loan as net income would result in a windfall,” the SBA notice said.
Noble1
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On another note check this out , a glimmer of hope .
Quote :
April 16 2020
Stock Futures Soar on Report of Coronavirus Patients Responding to Gilead Drug
U.S. equity futures roared higher on Thursday evening following a report that a drug developed by Gilead Sciences may be showing promise as a Covid-19 treatment.
Gilead stock (ticker: GILD) soared 14% in after-market trading. Dow futures jumped 3.5% while S&P 500 futures rose 3.2%.
Of 125 patients recruited by the University of Chicago for Phase 3 Trials taking Gilead’s drug remdesivir, with 113 cases considered severe, most have been discharged, according to a report from STAT News.
The outlet cited a recording it reviewed of University of Chicago Medicine infectious disease expert Kathleen Mullane discussing trial results with colleagues.
Mullane reportedly said two people had died, while most had been discharged. She did warn against drawing strong conclusions, according to STAT News, given the severe cases did not have a placebo group to compare with. Still, she said her patients have done “very well.”
“Most of our patients are severe and most of them are leaving at six days, so that tells us duration of therapy doesn’t have to be 10 days,” she said on the recording, according to STAT News. “We have very few that went out to 10 days, maybe three.”
Gilead spokesman Chris Ridley said in an emailed statement to Barron’s that the company expects data from its Phase 3 study in patients with severe Covid-19 infections to be available at the end of April, with additional data from other studies coming in May.
“We understand the urgent need for a COVID-19 treatment and the resulting interest in data on our investigational antiviral drug remdesivir,” Ridley said. “The totality of the data need to be analyzed in order to draw any conclusions from the trial. Anecdotal reports, while encouraging, do not provide the statistical power necessary to determine the safety and efficacy profile of remdesivir as a treatment for COVID-19.”
Gilead shares have gained 17.8% in 2020, as investors bet on remdesivir’s potential as a Covid-19 treatment.
Biotech company Moderna’s (MRNA) shares rose about 18% after hours after it said it will receive as much as $483 million in funding from a U.S. government agency to accelerate the development of a vaccine to treat coronavirus.”
End quote.
Noble1
S&P 500 Futures printed and completed a “Measured Move”
Be vigilant !
In my humble opinion ………….
Dave
There will be protests and riots unless everybody is treated fairly and there is enough money. They better get more funds or it’s going to be a legal mess as those that don’t get their money file class action suits……….the new world we live in sucks!!!!!!!!!!!!!!
Noble1
I had predicted such at the beginning of the coronavirus outbreak in North America and posted my comment on the subject on this site .
The mess can transcend through a riot but it goes through stages . They could potentially start destroying and breaking into stores and taking whatever they please if /when it transcends into a riot etc. Then the “riot” can transition to up scale residential areas .
Now let’s take a closer look at what has recently been developing on the subject .
Quote :
April 16 2020
Protests are popping up across the US over stay-at-home restrictions
“Michigan
Protesters in Whitmer’s state crowded the streets of the capital on Wednesday by staying in their cars. The action, dubbed “Operation Gridlock” by its organizers, choked Lansing with traffic for miles. ”
Minnesota
Some protesters met Thursday outside the governor’s mansion in St. Paul to voice opposition to Democratic Gov. Tim Walz’s stay-home order, which has been extended through May 3.
Kentucky
Protesters demonstrated in the Kentucky capital of Frankfort, where Gov. Andy Beshear, a Democrat, had to speak over the noise during a news briefing Wednesday.
Utah
One group protested in Washington County, where they declared Republican Gov. Gary Herbert’s restrictions unconstitutional, CNN affiliate KSL reported Wednesday.
North Carolina
A group of protesters gathered in Raleigh on Tuesday — a demonstration that was in direct violation of Democratic Gov. Roy Cooper’s executive order, according to the Raleigh Police Department.
Ohio
In Columbus, demonstrators also gathered outside the statehouse, where they were overheard during Gov. Mike DeWine’s briefing on Monday, CNN affiliate WSYX reported. ”
End quote .
First it starts with protests . Then it can transcend into riots . Currently we have confirmation of the first element .
The last thing people should be doing during a viral pandemic is gathering in close proximity . Therefore we have confirmation that they are acting irrationally due to their emotions taking over control . These out of control emotions are the ingredient for protests to transition into riots .
This is sad , very sad . Predictable and preventable ,but extremely sad .
In my humble opinion ………..