Today is the day that small businesses can start to apply to their local banks for corona virus inspired SBA-backed Paycheck Protection loans that can ultimately be forgiven if the employer meets certain goals.
But the Wall Street Journal notes that many financial institutions, both the money center banks and the local lenders, still are unsure of the process.
Wells Fargo said that they will loan to existing customers only and small banks don’t seem to know what paperwork will be required. Others aren’t sure of how much due diligence on borrowers must be documented and whether they will be able to sell the loans into the secondary market. Bank of America just said that they will be the first bank to accept applications.
Since the loans will bear an interest rate of 1% (up from the originally mandated 0.5%), it’s possible that they may not make the effort break even for the banks creating a non-incentive to make the loans.
From what I’m hearing from the local business community, these loans are life-or-death for many small entities, so the government and banks have to make this work.
Capitalism is taking a breather due to the corona virus.
The United Kingdom’s two largest crowdfunding platforms have noted at least a 20% decrease in crowdfunding campaigns going “live” and in public investments in on-going ones.
According to the website Sifted, CrowdCube has 9 of 27 campaigns that have seen zero investment.
Of course, this is not unexpected with the public stock markets in turmoil. When public liquidity diminishes or becomes more volatile there is typically a rush to safety, and that often means that investors want to stay in cash.
In this time of uncertainty as to even whether one will be getting his/her next paycheck, putting money into startups is considered to be even a more risky bet.
Once the clouds clear, it’s likely that this pause in startup investing will accelerate.
Let’s hope it’s sooner rather than later.
Perhaps one of the most significant questions of 2020 will be who, besides the national governments, will take the biggest hit from the global work stoppage due to the corona virus?
In France, Variety reports that film and tv producers, together with the government, are now pressing insurance companies to effectively re-write their policies to share in the pain.
The allies in this effort include the ministries of finance and culture, the National Film Board and the French producers guilds have approached several insurers to cover the gap between what the government will pay to employees who have lost work due to the pandemic.
If the insurers won’t do it, then the producers will petition the government to do something like the fund that was created in 2002 “to cover damages due to terrorist attacks, which had been excluded from insurance policies after 9/11 attacks.”
This essentially makes the taxpayer the insurer of last resort.
The code-named movies “Mission Ice Cream” and “Girona” shut down in Germany just prior to shooting this month due to the corona virus.
Both films were scheduled to start principal photography at Studio Babelberg in Germany, leaving the film crews on both films in the financial lurch.
According to TechZimo, “Mission Ice Cream” (actually the fourth sequel to The Matrix) and “Girona” (real title “Uncharted”) are shooting in Germany to take advantage of the €25 million ($27.55 million) and €21.15 million ($23.31 million), respectively, tax rebates from the German Federal Movie Fund initiative.
The film crews have organized and are seeking compensation from both the studio and/or from the German government to cover their lost wages due to the shut down.
Success is, at present, unknown.
Every crisis brings the fraudsters.
The U.S. Department of Justice filed criminal charges against a bit-part actor in Los Angeles last week for touting a “cure” for the corona virus.
His Instagram posts claimed that he had a patent pending therapy as well as a vaccine syrup that promised immunity from the disease. The DoJ charged him with wire fraud.
Earlier in March it sought to restrain someone for touting “non-existent World Health Organization vaccine kits.”
And the Reverend Jim Bakker, who has already spent time in Club Fed, has been promoting Silver Solution that he claims will cure the disease. Bakker is under several cease and desist orders from various states.
Even right wing conspiracy spieler Alex Jones has been selling a toothpaste that cures it – also the subject to a New York cease and desist.
The moral of the story is to be vigilant and take your information from trusted scientific sources like the Centers for Disease Control and the World Health Organization.
Be safe out there.
The New York Times has a great story of how the road to hell is paved with good intentions.
It’s the history of how Gabriel Jiménez, the creator of the Venezuelan cryptocurrency the “Petro,” thought he could free the population from the Maduro government’s crushing authoritarianism with the digital currency.
Instead, his hubris resulted in the regime’s subversion of his plan by tying the cryptocurrency to its oil reserves.
With the Vice President, who is on ICE’s Most Wanted List for narcotics trafficking, overseeing his project, Jiménez found himself in a “bet that ended costing everything I had in my life: my friends, my partners, my reputation, my love, my company and my country.”
Just wanted to take a moment to recognize the passing of one of the legendary figures who served at the U.S. Securities and Exchange Commission.
Stanley Sporkin, who was the Chief of the Enforcement Division, focused corporate America on doing business the right way.
One of his major contributions was to prosecute those international corporations that bribed foreign government officials in order to win lucrative contracts. His position morphed later into the Foreign Corrupt Practices Act.
Litigators who came to SEC headquarters to plead against the filing of charges sometimes thought Mr. Sporkin fell asleep at the conference table, only to open his eyes and declare that the lawsuit would be filed.
After retiring from the Commission, he became the CIA’s General Counsel and was appointed to the U.S. District Court for D.C. where he served for 14 years.
(Photo: NY Times)