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Taking on Schwab, Robinhood and Wealthfront, the VCs continue to throw money – now $ 153 million – at M1 Finance that it doesn’t need to burn

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Latest $ 75 million venture capital comes after spike in growth, M1 says, correlates with weary Robinhood investors after GameStop fiasco

Brooke’s Note: All PR is good PR. It’s a journalist’s selfish spiel to get editorial attention. But it also has its plausible points of proof. No sooner had M1 risen to prominence for a crash with Wealthfront (we had never heard of it before at RIABiz), than he raised $ 75 million in a D round. barely touched his turn B. Do the math. It’s a big change. Of course, there’s more to the story, hence the article below, although Coatue and other VCs love them. M1 is growing, and, yes, he says internally that he sees a strong correlation in the timing of his peak growth with Robinhood’s GameStop struggles. As the most prominent online broker on the planet decides who he is and when to stop the game of insane trading on his platform, M1 says he’s ready to eat his lunch. See: Robinhood allegedly implied a fiduciary duty to newbie investors in marketing its ‘game type’ trading app, even though it is a FINRA regulated securities broker, new class action charges.

M1 Finance just raised $ 75 million shortly after raising the thorns of Wealthfront and – he claims – is doing a land office business with disgruntled Robinhood investors fleeing after the GameStop controversy. See: Wealthfront calls on M1 Finance.

David Goldstone: This increase will put pressure on M1 to maintain rapid growth.

Chicago’s robo-advisor, which allows investors to drive in the background, announced its latest raise on March 9 and quickly outlined plans to double its workforce to 300, after tripling it in 2020.

“[M1’s] the vision is to dominate the self-directed space with an application positioned like the super SoFi [a burgeoning neo-bank] and as the antithesis of Robinhood, ”said Will Trout, director of wealth management at Pleasanton, Calif., consultant, Javelin Strategy & Research, via email.

M1’s goal, say its executives, is to be the Charles Schwab & Co. of the next generation – making it all cheaper and silkier.

“M1 believes it can do better with lower costs, a more modern platform and integrated tools for all of the clients’ financial needs. No one is saying it’s a five-year vision – it’s a very long term, everything was, and is, with Schwab, ”said Bob Armor, chief marketing officer.

“We can be a next generation Charles Schwab,” Brian Barnes, founder and CEO of M1, told BusinessInsider. “We want to go after the banks. We don’t want you to mess around with the JPMorgans, the Wells Fargos, the Bank of Americas.”

Anti-Robinhood

What M1 hopes to capture is the desire for a forward-thinking brand and mobile technology, but without the aura of an online casino sometimes attributed to Robinhood, says Trout.

Trout
Will Trout: ‘[M1’s] the vision is to dominate the self-directed space. ‘

“This [goal] will mean discouraging day traders and ensuring a seamless user experience, defined by the absence of crashes or outages, hence the need to hire an army of engineers and marketers, ”he explains.

The company’s decision to double its workforce is also tied to its attempt to become anti-Robinhood, Trout continues.

Software engineers and product management positions will make up the majority of M1’s new hires, though it will also join its customer support team, according to the company.

M1 will likely add cryptocurrency trading at a future date, Trout predicts.

David Goldstone, head of research for Backend Benchmarking, an analytics company in Martinsville, NJ, also expects M1 to add new robot-like managed accounts and financial advice.

Barnes, in a Release, has played a lot on its online competitor.

“Our goal is to improve our clients’ finances, as opposed to their financial entertainment,” he says. “Wealth is built through long-term ownership, not playing on short-term price movements.”

$ 10 billion goal

Client M1 has grown its assets nearly five times since the start of 2020, from $ 800 million in January to nearly $ 4 billion by year-end. The goal is to reach $ 10 billion in customer assets by the end of 2021

“We are growing in all areas of our business,” said Amour.

But if M1 hopes to reach $ 10 billion in client assets by January 2022, it is expected to triple its monthly asset inflow, Goldstone says.

The feat is made all the more difficult by the fact that its 12 months of mind-blowing asset gains may soon recede.

“M1 may very well have a hard time sustaining this growth rate. It is easier to go from 100,000 users to 500,000 users than it is to go from one million users to five million,” he said via e- mail.

For now, the company is only seeing growth. “There is no evidence of a cap anytime soon,” Armor retorts.

Slice the apple

M1 has already gained a huge advantage over Robinhood, which is that he is untouched by the GameStop controversy.

Bob Armor
Bob Armor: M1 thinks he can do better [than Schwab].

Robinhood faces lawsuits and regulatory review after briefly banning outraged customers from trading GameStop and other actions in February.

“The growth schedule mentioned in the [latest] the version reflects that, ”says Armor.

M1 advertises itself as “no charge” to customers as it does not charge any commissions or fees based on assets under management for its basic service.

But it takes two bites of apple on the back.

Like Robinhood, he is paid by market makers for order flow, and like Schwab, it lends securities to short sellers (limited to 5% of its assets), collects spreads on deposits, collects debit card transaction fees from traders and earns interest from investors who borrow using their securities as collateral.

The free service includes one trading window per day, access to portfolios to build your own or rebalance, a debit account, and the ability to get personal loans.

Up to the task

For a Schwab-like annual subscription of $ 125, M1 customers also get a second daily trading window, lower loan rates, and 1% interest on cash.

Daniel Senft
Daniel Senft, who will serve on M1’s board of directors, expects the company to reach a market cap of $ 10 billion.

In contrast, Robinhood offers its customers standard and extended market hours.

Wealthfront’s automated investment service is discretionary, meaning that account holders cannot influence specific investment decisions or the execution of trades, according to his website blog.

Today, the company manages $ 23 billion, six and a half times the amount M1 oversees. New York robo-rival Betterment manages $ 27 billion.

M1 administers $ 3.5 billion in client assets, up from $ 3 billion in January and $ 1 billion last February, an increase of 350% in just 12 months, which equates to an average of $ 208 million. dollars of monthly asset growth.

All three offer banking services, but Wealthfront’s introduction of custom wallets and its potential offer for a banking charter have put it on a much closer collision course with M1. See: Wealthfront’s unlikely exploitation of signals from Sheila Bair and Tom Curry will likely push for bank charter, analysts say.

Wealthfront offers planning services. M1 has “no plan” to introduce consulting or planning services, Armor says. See: Wealthfront calls M1 Finance on pretext, but some experts see its damnation as low praise for a growing competitor

Big things

The company’s latest increase also brings its ‘barely touched’ war fund to nearly $ 153 million – an amount M1 has brought in on three rounds of funding in the past 12 months for a total of $ 173.2 million. dollars over the six rounds of funding.

Michel gilroy
Michael Gilroy: We research and invest in companies that we believe to be innovative, impactful and built for the long term.

Coatue Management, based in New York, led the $ 75 million Series D funding round. Clocktower Technology Ventures in Santa Monica, Calif., And Left Lane Capital in New York increased their holdings in the towers M1 series B and C series financing.

Oddly enough, M1 says he has no intention of dipping into the funds he just raised on his D turn – or even his C turn. Round B is practically intact.

“We had no intention of raising new capital. The D-series funding sets M1 up for big things,” he says.

The ultra-surplus capital fills a need in the high-stakes hiring process to show that resources are not objective, Barnes said.

M1 will also soon become a unicorn, or a company valued at over $ 1 billion, according to Barnes. “[We’re] get closer “, he said Business intern.

But even tons of uninvested capital is increasing the pressure, according to Goldstone.

“This increase will put pressure on M1 to maintain rapid growth,” he says.

IPO dream

Coatue’s decision to back M1 is the belief that it will eventually trade in the public markets with a market capitalization of at least $ 10 billion.

Indeed, Coatue’s senior managing partner, Daniel Senft, who will soon be joining M1’s board, insisted he had no interest in supporting a start-up that has not reached this market capitalization target, Barnes told BusinessInsider.

“A partner who supports this vision and who has a big portfolio to fund this vision over long periods of time… is a perfect partner,” he said.

“We research and invest in companies that we believe to be innovative, impactful and built on the long term … [and] M1 Finance has all of these characteristics, ”adds Michael Gilroy, general partner of Coatue, in a press release.

Led by billionaire investor and company founder Phillip Laffont, Coatue declined a request for comment.

Coatue may also have had a bonus look under the hood of the M1.

He recently participated in a $ 850 million investment led by SPAC in custodian Apex Clearing, the custodian of M1. See: After Reaching Nearly $ 100 Billion In Hold, Apex Clearing Closes “IPO” Deal To Raise “Up To” $ 1 Billion To Disrupt Existing RIA Guard.

Trump’s student loan interest hiatus makes no sense

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In response to the coronavirus pandemic, President Trump announced that he would waive interest on student loans held by federal government agencies. The reason for such a waiver is to put extra money in the pockets of student loan borrowers. But the way the policy is structured, it will provide little immediate relief to borrowers, while potentially increasing costs after the pandemic ends.

The Ministry of Education had not issued any official guidelines regarding the student loan policy of interest at time of writing. But Ron Lieber, New York Times Financial Columnist reports that monthly student loan payments will not decrease at all due to the policy, according to conversations with ministry spokespersons. The president of an association of student loan managers said the same thing in a interview with Kery Murakami from Inside Higher Ed.

The interest relief will prevent student loan interest from accruing while the policy is in effect, but the monthly payments will remain the same. This will prevent balances from increasing while the waiver is in place, but most borrowers will only see a benefit once they are about to repay their loans.

How would that work? Let’s say you have $ 15,000 left on your student loan, which carries an interest rate of 5%. You make payments of $ 283 per month. About $ 60 of this goes to interest, while the rest goes to principal. At this rate, you will fully repay this loan over five years and your payments will total $ 16,984.

Now imagine that the federal government waives your interest for the next three months due to the coronavirus pandemic. You still make a monthly payment of $ 283, but for three months it will all be used to pay off the principal rather than the interest. Due to the reduced interest charges, your payments will total $ 16,750.

This equates to a saving of $ 234, which does not make sense for many households. But the borrower will not realize these savings for five years, when he repays the loan. It doesn’t help much for borrowers facing a cash shortage due to the pandemic. But it will cost the federal government money later, hopefully once the pandemic is over.

The interest exemption on student loans could make borrowers who are facing financial difficulties feel better about suspending their loans. In forbearance, borrowers do not have to make payments, but regularly scheduled interest continues to accumulate. Watching your balance increase can be overwhelming, so waiving interest could lead borrowers to make this choice. But the policy still provides no cash relief today, as most borrowers were still eligible for forbearance, pandemic, or no pandemic.

The interest exemption on student loans fails to help distressed borrowers today, although the federal government will still incur costs related to lost interest income in the future. This makes it a poor response to the financial pressures the coronavirus pandemic has placed on American households.

Even if the Trump administration found a way to cut monthly payments today, it would still be a poorly targeted response to the pandemic. Student debt is concentrated among high-income households; rich families hold about $ 3 in student debt for every dollar held by poor families. But low-income people, who are more likely to have service-sector jobs affected by the pandemic, are most in need of financial assistance.

A better way to help people who have been hurt financially by the pandemic is to send money directly to them, rather than providing delayed and inconsistent relief through the student loan system. Fortunately, the White House announced Tuesday afternoon that he was working on a plan to do just that. President Trump should reconsider his flawed student loan interest waiver and instead spend the money in direct relief for families who need it most.

No student loan payments for 60 days

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President Donald Trump says there will be no federal government student loan payments for 60 days.

Here’s what you need to know.

Student loans

In the wake of the coronavirus outbreak, President Trump today announced that federal student loan payments will be suspended without penalty for the next two months. Trump also said, following up on his previous announcement, that interest on federal student loans will be waived as well as. Details of how Trump’s plan for your student loans the work should be unveiled soon.

According to the US Department of Education, all borrowers with federally held student loans will automatically have their interest rates set at 0% for a period of at least 60 days starting March 13. Borrowers have the option of suspending payment to their federal students without penalty. , and can contact their student loan manager to request administrative forbearance. Education Secretary Betsy DeVos has also automatically suspended federal student loan payments for any borrower overdue for more than 31 days as of March 13, 2020. What if you want to keep paying your monthly student loan in full and you don’t want forfeiture? During the 60-day period, you can still pay your monthly federal student loan payment in full, and your payment in full will be applied to your principal balance only (after all student loan interest by the 13th. March have been paid).

Earlier this week, Senate Democrats proposed suspend student loan payments and cancel student loans of at least $ 10,000. Representative Alexandria Ocasio-Cortez (D-NY) tweeted last week that student loan payments should be suspended. The goal is to help borrowers “incur additional fees, compound interest, or negative incidents reflected in their credit scores.”

Student loans: proposals

US public leaders have stepped up to help borrowers get economic relief. New York Andrew Cuomo temporarily suspension of student loan debt collection and also suspended mortgage payments for those who encounter financial difficulties. Senator Bernie Sanders (I-VT), for example, has offered to forgive the $ 1.6 trillion in student loan debt, including federal and private student loans. Former Vice President Joe Biden has his $ 750 billion student loan plan, which he opposed to the Sanders plan. Biden and Sanders both Support the civil service loan forgiveness program. Last month Trump called for the end of the civil service loan forgiveness program in his annual budget in favor of a simplified income-based repayment plan which would offer the same student loan discount plan for undergraduate borrowers, for example. U.S. Education Secretary Betsy DeVos explained why she thinks it’s a good idea to end this student loan forgiveness program.

Next steps

Remember, this announcement only applies to federal student loans (not private student loans). Regular payments for private student loans, at this point, would still be due. This upcoming waiver period is a good time to assess your federal and private student loans and determine your best path. Here are four starting points, all free:

Illegal loan of $ 590,000 will buy you a charger, 2 climbs, a Hummer, jail time

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There must be a special place in hell for people who take advantage of the misery of others, especially in the difficult times we are going through right now, but at least this man has merit in thinking about his family as well.

A 51-year-old Detroit man is under investigation for wire fraud, after applying for and getting a payroll protection loan, and using the money to buy expensive cars. As stated above, he was not entirely selfish: he bought a few cars for his own enjoyment, and two for his family members.

The Payroll Protection Program is a program that provides loans to small businesses affected by the ongoing health crisis, needing help paying staff and utilities. This man with a passion for quality cars claimed that a company he once owned that went out of business in July 2019, Motorcity Solar Energy Inc., was still operational and as such was in need of a additional cash flow to cover staff costs.

He applied for and got a loan of $ 590,900, and within two days he owned a new Dodge charger, a few Cadillac Escalade and one Hummer. Subtlety is not his forte, we can assume.

He kept two of the cars, gave another to his sister, and the fourth was a gift for his brother-in-law, US Attorney Matthew Schneider said. Special Agent in Charge Steven M. D’Antuono of the FBI helped investigate the case.

“Hitting banks for loans is never acceptable, and doing so during our current national emergency is unreasonable” Schneider said.

“The Paycheck Protection Program is designed as a lifeline for businesses struggling to survive the current crisis. Instead of using these loans to save a legitimate business, the defendant allegedly bought expensive personal items for himself and his family ”, SAC D’Antuono adds. “These actions have hurt hard-working Americans and deserving small businesses. “

The man has been charged with wire fraud, but the FBI investigation is still ongoing.

Blockchain Bites: Ripple’s MoneyGram Pump, OKEx’s Bitcoin Cash Plan, Bitcoin Anniversary

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Ripple has invested over $ 50 million in money transfer company MoneyGram during the companies’ working relationship. Forbes published an investigation detailing the Byzantine corporate structure Binance may have created to circumvent U.S. regulations. Ether has grown as a share of Genesis Capital’s total loan portfolio.

Top shelf

No violation
Investors who say they lost around £ 100,000 ($ 130,000) in an alleged cryptocurrency Ponzi scheme will not see any compensation after filing their claims with the police. According to a Metro newspaper survey released on Tuesday, a number of investors said they invested in a cryptocurrency project called Lyfcoin on promises of large returns, but had not received their money. However, West Midlands Police closed the case, saying none of the evidence provided advanced the case “further” and, according to the Metro, “no offense was committed”.

Money transfer company
MoneyGram received over $ 52 million to provide “market development fees” for blockchain payment company Ripple, since the companies have entered into a working relationship. In the third quarter of 2020, Ripple invested more than $ 9.3 million in the money transfer company, after an injection of $ 15.1 million made in the previous quarter, according to Moneygram’s latest financial report. MoneyGram described the Market Development Fee as compensation for providing liquidity to Ripple’s on-demand liquidity network (ODL) – its payment product using the XRP cryptocurrency to send money beyond borders.

Byzantine Binance
Binance Holdings Limited has created a business plan to profit from the U.S. market while avoiding regulatory oversight of the country, Forbes reported Thursday, citing a 2018 document it obtained. The leaked presentation describes a network of compliant entities in the United States that would channel income to Binance, which is currently not regulated to operate in the United States. The Forbes article included a screenshot of a slide but not the entire game. Binance CEO Changpeng “CZ” Zhao disputes the report, saying the project came from a third-party affiliate. U.S. subsidiary Binance.US operates under a corporate structure similar to the proposed network, according to Forbes. Binance.US CEO Catherine Cooley has long refused to discuss ownership of Binance.US.

Huawei’s DC / EP Hardware War
The Chinese digital yuan looks closer than ever to launch with the announcement that Huawei will support the central bank’s digital currency (CBDC) on an upcoming line of phones. Announced on Huawei’s Weibo channel on Friday, the Mate 40 line of devices will feature an integrated hardware wallet with “hardware-grade security, controllable anonymous protection and two offline transactions,” the tech giant said. In recent weeks, a public lawsuit in the city of Shenzhen saw digital 10 million yuan distributed to residents in a sort of lottery. The Mate 40 was announced in October and will be Huawei’s last flagship, along with the Pro and Pro Plus models, according to TechRadar.

Ether Actions
Genesis Capital saw the share of bitcoin in its loan portfolio plummet as the share of ether loans rose to 12.4% of its total loan portfolio this quarter. According to the lender’s report, this was mainly due to the extraction of cash on DeFi protocols such as Compound, Aave and Uniswap. DeFi interest rate arbitrage prompted Genesis – which is 100% owned by CoinDesk’s parent company, Digital Currency Group – to borrow ETH and stablecoins to “take advantage of cash-extraction strategies,” wrote the company. Total transaction volume in the third quarter was $ 4.5 billion, up from $ 5.25 billion in the second quarter, but up 285% from the third quarter of last year.

Quick bites

“That most people still hate bitcoin is not a bad thing,” writes Dylan Grice of Calderwood Capital. The Economist gives an introduction to bitcoin by comparing it to a posh London club known primarily for pushing Mick Jagger out the door.

Citing high gas costs and slow block times, Audius said it will be migrating part of its system to Solana’s blockchain from an Ethereum side chain. The staking and governance features will remain on Ethereum. (CoinDesk)

A change in margin in FTX’s TRUMP futures contract indicates traders are taking into account the diminishing chances of President Donald Trump’s re-election on November 3. (CoinDesk)

OKEx, still paralyzed by the arrest of the founder, details the plans for a hard fork bitcoin cash. (CoinDesk)

Market information

Hash rate and fees
The average price of a transaction on the Bitcoin blockchain is now 0.00086764 BTC (~ $ 11.66), the highest since June 2018. This represents an increase of 573% over the past 12 days. The surge in fees comes amid a rally to annual highs of $ 13,800, and as the number of unconfirmed trade networks has risen 1,800%, reaching highs not seen since December 2018. “In in other words, the mining power dedicated to approving transactions and mining blocks has declined amid rising prices, increasing wait times and network congestion, ”reports Omkar Godbole of CoinDesk.

Stake

Happy birthday, Bitcoin
Tomorrow marks the 12th anniversary of the Bitcoin White Paper.

Posted by pseudonymous developer Satoshi Nakamoto to a small group of cryptographers, the eight-page proof of concept for a fully decentralized peer-to-peer electronic payment system has since sparked a monetary revolution.

In the years since, Bitcoin has been called many things: a scam, a Ponzi scheme, death on arrival, a joke, a tool for criminals, squared rat poison, currency for geeks – and did we mention dead?

While experts are accustomed to predicting the death of Bitcoin, the simple ledger has stuck and even breathed new life into the way companies think about money, financial access and the nebulous concept of ‘trust’. .

Heads are turning. Yesterday, The Economist published an ode to Bitcoin saying, “Even people hostile to Bitcoin will concede that its technology is devilishly smart. It’s basically a way of keeping track of who spent what. Instead of a central exchange to keep score and verify payments and receipts, it uses an electronic ledger that is distributed across the system of bitcoin users.

Wishing Bitcoin a Happy Birthday, cybersecurity firm Halborn produced a video with a number of celebrities wishing him good luck. (It’s a little weird, but well-intentioned.)

In a brief appearance, Wu-Tang Clan’s RZA said, “You know Bitcoin was created by anonymous Satoshi Nakamoto doing his thing. I wanna say one thing about it – If you don’t know, you better know, because yo … at the end of the day scientists can create something, son, but the value of everything is this that we put there. The Bitcoin revolution has begun.

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46% of small businesses worry about lack of liquidity when reopening

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As businesses across the country are getting ready to reopen, they worry about doing it. This according to a survey by Loan tree. Nearly half of small business owners (46%) fear they won’t be able to afford to resume normal activities after mandatory shutdowns to slow the spread of COVID-19.

According to them, a key challenge that could prevent them from opening is the lack of funding to maintain operations. Some 39% of small business owners say they are concerned that they are not generating enough sales to make the opening worthwhile.



LendingTree reopening small business survey

Their fears stem from compliance with safety instructions which would limit their capacity to 25% or 50%. This, they say, would affect their bottom line. Moreover, fears that their staff will return (5%) will also limit their ability to serve enough customers to make a decent profit. While a majority (52%) expect their entire workforce to return to open, nearly a quarter (23%) say they will do so with fewer staff working fewer people. hours.

Those who plan to get all engines running (54%) plan to notify customers of their reopening by email. To further encourage business, 43% plan to offer promotions or special sales. Another 31% plan to use paid social media ads to promote their business in the first month after reopening. 35% expect to profit from unpaid organic social media content. Less than 9% of businesses say they will withdraw from promoting their business after reopening.

Concerns about a second wave

Despite optimism about the reopening, there are fears of a second wave of infections. More than a quarter of those surveyed (30%) are nervous about having to shut down again if there is another spike in infections.

Despite this, nearly six in ten small businesses are expected to reopen as soon as they are licensed. With 15% saying they’re willing to wait and see before opening, while 26% aren’t sure they’ll ever open.

Only 17% of small businesses say they will get the same number of customers spending the same amount as before the coronavirus outbreak. Even more surprisingly, only 11% of those polled say they are not afraid of reopening.

The challenges of reopening for small business owners

As the outbreak unfolded, businesses were forced to shut down as global supply chains collapsed and closures were imposed. In an effort to help businesses withstand the impact of the covid19 pandemic, business support has come through the Small Business Administration’s Paycheck Protection Program (PPP) and the Federal unemployment pandemic program.

The nation has also seen its unemployment rate rise 14.7% in April. Some states are posting unprecedented unemployment records. Nevada had the highest unemployment rate of 28.2%, followed by Michigan, 22.7%, and Hawaii, 22.3%. Some are hoping that a quick reopening would help get people back to work, but will face the challenge of many businesses operating at partial capacity.

This has led about 63% of small businesses to apply for funding through the Paycheck Protection Program (P3). Of those surveyed, only 44% have received funding while 28% are still waiting to see if their application has been approved.

Even those who have received P3 funding say they still face challenges ahead of the reopening and would need additional cash infusions. In addition, fears remain as to their eligibility for the delivery of the PPP.

Concern over PPP forgiveness

According to the program, borrowers are required to spend at least 75% of the PPP loan funds on salary expenses and no more than 25% on mortgage interest, rent and utilities to qualify for a discount. The terms of remission are based on their ability to spend those funds within eight weeks of receiving their loan.

In addition, any reduction in employees during the eight week period; reduction in salary for any employee beyond 25% of the salary year; compensation exceeding $ 100,000 in wages for individual employees could also affect pardon.

Unless Congress passes a law that would extend that eight-week period, many fear it will not meet the requirement given the uncertain business environment.

Despite financial worries and the lifting of restrictions. Companies will always need to allay the concerns of customers and employees being inside their places of business.

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Image: Depositphotos.com


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Here’s Washington’s new fight over small business coronavirus bailout: what to do with the leftover money

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Congress just found over $ 100 billion in extra cash in its paycheck protection program and a Republican senator already has an idea of ​​how to spend it: fixing businesses damaged by riots sparked by the murder of George Floyd by Minneapolis Police.

Senator John Kennedy, a Republican from Louisiana, raised the idea Wednesday with Treasury Secretary Steven Mnuchin during a Senate hearing. As of June 6, the program had 4.53 million loans outstanding, worth $ 511.4 billion. But the loan limit is capped at $ 659 billion and authorization to grant new loans expires at the end of this month, making the full amount unlikely to be needed.

“I am going to present a bill that I would like you and your very capable, and I mean sincerely, that my colleagues at the Treasury consider taking some of this money and making it available to businesses, mainly to companies. small businesses, but businesses that have been lost as a result of fires, looting and criminal riots, ”Kennedy said. “I think they’re going to need some help.

Read also :Small businesses are becoming more optimistic, according to the NFIB, and expect a “short-lived” recession.

Mnuchin said lawmakers gave the Treasury $ 60 billion more than it asked for when the PPP authority was restored in April.

“We hadn’t planned to use some of this extra money, but we would like to work with you to reuse it,” Mnuchin said.

Kennedy said he planned to include a provision in his bill that would require authorities to seek civil damages against looters to help offset the costs of the aid.

Senator Chris Coons, a Democrat from Delaware, had his own ideas of what to do with the surplus: allow companies that had paid off one P3 loan to be able to take on another.

As of mid-May, PPP loans have stalled at just over $ 500 billion as some companies have paid off their loans, others have paid off the money, and new demands have stopped coming in. As of May 30, there was $ 510.2 billion in arrears against 4.48 million loans and as of May 16, $ 513.3 billion had been loaned.

Now see:Some Americans who have been made redundant are returning to work – here are which sectors are rehiring.

The stagnation of PPP loans came as a surprise, given that the initial $ 350 billion tranche was used up in 13 days, prompting Congress to top up the lending authority with an additional $ 310 billion. Although the loan program is an authorization, meaning that there is no real money that will still be available if the authorization is not renewed, the turnaround came as a surprise to lawmakers and d ‘others who were initially concerned that another replenishment might be necessary.

The easing of loan conditions included in a new law signed last week by President Donald Trump could increase the number of loans a bit, but probably only marginally.

Thomas Wade, director of financial services policy at the conservative American Action Forum, said he was “baffled” by the lack of new loans.

He said there were three potential reasons: companies feared potential public relations problems, as has been the case with some publicly traded companies that have taken out and repaid PPP loans; “Fear and uncertainty” about loan terms that might make debt forgiveness less likely and hope that businesses might qualify for the Federal Reserve’s “Main Street” loan programs instead.

While Wade said he believes demand for the program was unlikely to have been exhausted, a recent survey by the National Federation of Independent Businesses indicated that a large majority of its members had already taken out loans. .

The survey, released on June 2, found that 77% of members surveyed had applied for a PPP loan, and of those, 93% had received their money. About a quarter, 24%, of respondents were still in the early stages of their loans, with the program’s initial eight-week lending period ending in July. Under the new law, businesses can now take up to 24 weeks to use the money.

Also see:Who can get a loan through the Paycheck Protection Program?