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re: The Payroll Protection Plan shows the ineptness of Govt. and the fleecing of taxpayers
Posted on 4/24/20 at 8:23 am to cuyahoga tiger
Posted on 4/24/20 at 8:23 am to cuyahoga tiger
I might end up hiring another person or 2 in the next few weeks that might be sitting on unemployment otherwise.
Posted on 4/24/20 at 8:51 am to cuyahoga tiger
quote:
But, the real question is...are you using those funds for payroll to folks who would have been laid off without my tax dollars?
I think one issue a lot of companies faced was just the uncertainty going forward. At the time of application, I'm sure many applicants didn't have an immediate need to lay off any employees, but they weren't so certain that would be the case weeks or months down the road. And with the PPP funds being finite, they made the decision to plan for the future to stave off that potential decision to lay people off. I don't have a problem with that at all. It does suck if a company got approved and funded and ends up just sitting on the money, while another company that desperately needed the funding didn't get approved and ended up laying people off though, which I'm sure is happening.
Posted on 4/24/20 at 9:15 am to cuyahoga tiger
I understand the desire to incorporate some sort of "need" into the application.
By doing that, we would have to accept two things:
1) It would slow down the process, create more work for companies and banks, which would mean the flow of funds would dramatically slow down.
2) Like the bailouts we saw in 08/09, it creates moral hazard. The government comes in and helps those who didn't save for a rainy day, while those who did what they were supposed to do don't get any help. It sends the message that you shouldn't do the right thing. It's the "privatize gains, socialize losses" thing.
If I was grand emperor, I would have made the interest rate 10 percent, not 1 percent, started repayment 3 months after funding, not 6 months, and accrued interest from day 1.
If you meet the payroll spending rules, you would not be impacted in the least by that change. But if you are using this program simply as a ways to build future capital, then you would be penalized for that, at a level that would probably cause people to not do it.
By doing that, we would have to accept two things:
1) It would slow down the process, create more work for companies and banks, which would mean the flow of funds would dramatically slow down.
2) Like the bailouts we saw in 08/09, it creates moral hazard. The government comes in and helps those who didn't save for a rainy day, while those who did what they were supposed to do don't get any help. It sends the message that you shouldn't do the right thing. It's the "privatize gains, socialize losses" thing.
If I was grand emperor, I would have made the interest rate 10 percent, not 1 percent, started repayment 3 months after funding, not 6 months, and accrued interest from day 1.
If you meet the payroll spending rules, you would not be impacted in the least by that change. But if you are using this program simply as a ways to build future capital, then you would be penalized for that, at a level that would probably cause people to not do it.
Posted on 4/24/20 at 9:46 am to LSUFanHouston
Yeah, I really don’t get the reasoning for the 1% interest. That rate almost certainly prompted some companies to apply that may not have actually needed the funding.
Posted on 4/24/20 at 9:54 am to The Spleen
quote:
I think one issue a lot of companies faced was just the uncertainty going forward. At the time of application, I'm sure many applicants didn't have an immediate need to lay off any employees, but they weren't so certain that would be the case weeks or months down the road. And with the PPP funds being finite, they made the decision to plan for the future to stave off that potential decision to lay people off. I don't have a problem with that at all. It does suck if a company got approved and funded and ends up just sitting on the money, while another company that desperately needed the funding didn't get approved and ended up laying people off though, which I'm sure is happening.
This.
My employer has enough cash on hand to continue operating through the Summer easily. But we're operating in a negative revenue situation (refunds of prepaids to customers w/ no additional revenue) and can't obviously continue at that pace.
So we applied for the PPP as a protective measure if our revenue doesn't come back until Oct/Nov vs. Aug/Sep
This post was edited on 4/24/20 at 9:55 am
Posted on 4/24/20 at 9:55 am to cuyahoga tiger
It seems as though something more similar to Canada's 75% wage subsidy (for companies with 30% revenue reduction) would have been better in the US, although not sure if that would have been much more expensive for the government.
Posted on 4/24/20 at 9:59 am to Golfer
quote:
This.
My employer has enough cash on hand to continue operating through the Summer easily. But we're operating in a negative revenue situation (refunds of prepaids to customers w/ no additional revenue) and can't obviously continue at that pace.
So we applied for the PPP as a protective measure if our revenue doesn't come back until Oct/Nov vs. Aug/Sep
If I was making the rules, I would have left the program open until the end of the year, at least, and make it clear that all legit apps will be funded.
I understand why your company did that and I would advise the same, given the current rules. But if this sucker is better this summer, and your company has a bunch of pent-up demand, your year-end revenue might be close to normal. And the government just paid 8 weeks of labor costs for your company.
This is where I have to remember that my "CPA" hat and my "fiscal conservative" hats are very different.
Posted on 4/24/20 at 10:12 am to LSUFanHouston
quote:
But if this sucker is better this summer, and your company has a bunch of pent-up demand, your year-end revenue might be close to normal. And the government just paid 8 weeks of labor costs for your company.
Our business model doesn't allow us to make up lost revenue in the same FY.
Posted on 4/24/20 at 10:17 am to LSUFanHouston
quote:
If I was grand emperor, I would have made the interest rate 10 percent, not 1 percent, started repayment 3 months after funding, not 6 months, and accrued interest from day 1.
If you meet the payroll spending rules, you would not be impacted in the least by that change. But if you are using this program simply as a ways to build future capital, then you would be penalized for that, at a level that would probably cause people to not do it.
I couldnt agree more with this.
Posted on 4/24/20 at 10:22 am to Jerrysworld
Then everyone would make sure every last penny I’m was used for payroll, bonuses, hiring family members, etc etc
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