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Social Energy, a UK-based solar and battery aggregator, raises funds, plans expansion

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UK residential energy aggregator Social Energy is planning international expansion after securing multi-million dollar backing from US alternative investment manager CarVal Investors.

The parties have not disclosed the amount involved beyond saying that it represents “a significant investment”.

Minneapolis-based CarVal Investors bought Social Energy in December of last year, the energy company said in a press release. Following the deal, CarVal Investors London director Stuart Lammin will join Social Energy’s board.

Seven-year-old Social Energy specializes in delivering low-cost energy to residential customers. It sells solar and Duracell home battery systems, then aggregates their production using an artificial intelligence-based measurement system called the Social Energy Hub.

In addition to providing 24-hour electricity to its customers, Social Energy uses aggregated capacity to provide services such as demand response and frequency response to UK power grid operator National Grid ESO, as well as flexibility services to distribution network operators such as UK Power Networks.

About 70% of the revenue from these services is split among Social Energy customers, allowing the energy company to deliver a faster return on investment than residential solar and battery owners would get with a standard self-consumption model.

In the UK, Social Energy says it can help residential customers save an average of £ 226 ($ 310) per year. The company now has 6,300 UK customers, Daniel Mahoney, Marketing Director of Social Energy, told GTM in an interview.

Famous faces in front of the brand

Prior to the ongoing fundraiser, the company had grossed £ 12million ($ 16.5million) from high net worth individuals, he said.

These include two sports celebrities from the world of cricket: Michael Vaughan and Shane Warne, who were captains of the England and Australia national teams respectively. Warne invested in Social Energy in 2019 and helped launch the business in Australia last November.

Mahoney said Social Energy seeks significant growth in the australian market due to the prevalence of residential solar storage and batteries in this country. “We’ve already seen a really strong uptake there,” Mahoney said, without providing any numbers.

The UK averages between 1,500 and 2,000 residential solar system installations per month, he said, “while Australia peaked at 24,000 per month, so it’s really a market 10 times larger “.

The market for adapting batteries to existing residential solar systems is also much larger in Australia than in the UK, Mahoney said. There are around 3 million residential solar systems without batteries in Australia, compared to 1 million in the UK, he said.

Finally, Social Energy hopes to be able to offer its Australian customers much greater savings. The company stated in a tweet that it could save AUD 2,182 ($ 1,679 USD) per year on energy bills, based on its UK business model of selling services to the grid operator.

“In Australia, we can take this complex income and translate it into the feed-in tariff,” Mahoney said. “We pay feed-in tariffs of 40 cents [USD $0.31] per kilowatt hour, compared to a market average of 10 cents [USD $0.08]. “

Enter new markets and deliver new products

The expansion into the Australian market will be partly funded by the cash injection from CarVal Investors. But Social Energy also hopes to use the money to expand in Asia, Europe and North America, with Mahoney citing Japan, Spain and the Netherlands in particular.

In addition, Social Energy hopes to develop new products for its customers. The company is already testing the use of its software to control water heaters and aims next year to cover electric vehicle charging as well.

“An important thing for us is to become a focal point for the home in terms of smart energy management,” said Mahoney.

GTM squared highlighted social energy last year after it became one of the winners of a November 2019 flexibility tender by UK Power Networks, the London and South East grid operator from the United Kingdom. Lime jump, Moixa and Powervault, representing a sample of the competition he faces in his chosen field.

In the United States, companies including Sunrun, You’re here, Generac, sound and Inflate bundle solar battery systems for grid services, although US regulatory structures do not support the same range of revenue-generating services available in the UK In European markets, Sonnen owned by Shell is a major aggregator of solar batteries, with other players with the support of major energy investors such as Tiko supported by Engie.

Beyond the financial weight, one of the keys to success in the residential space is probably a keen sense of customer acquisition and retention. This week, Social Energy’s customer service won an award from the Renewable Energy Association, the UK’s renewable energy and cleantech industry group, which cited Social’s “efficient platforms” and “excellent” response times. Energy.



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Cash Refinancing, Home Equity Loans Could Stop – Orange County Register

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Who Can Blame Mortgage Lenders Now?

More than 36 million Americans have lost their jobs in the past eight weeks. Nearly 15% of the US workforce is unemployed, according to the US Bureau of Labor Statistics.

Fed Chairman Jerome Powell warned this week: “The scale and speed of this slowdown is unprecedented in modern times, far worse than any recession since World War II.”

Ah, the good old days!

Mortgage lenders calculated their rich returns on cash mortgages by grossing up the cost of their funds. Now they are starting to worry about whether they will ever see a return on their investment.

Nearly 8% of all mortgages are now forborne, according to the Mortgage Bankers Association. Data from the builders survey shows that new mortgage applications fell 25% from March to April.

Foreclosure moratoriums, mortgage loan deferrals, and loan modifications are good temporary balms for saving time. But sooner or later it will be time to pay.

How quickly will these jobs return? Will it be time to replenish your checking account so that you can cover your mortgage? How much is going to get back before mortgage lenders get cranky and start foreclosing?

The largest lending department in the United States, Wells Fargo Bank, stopped cash refinancings a few weeks ago, and it also put the brakes on home equity lines of credit, or HELOCs, after April 30, said spokesperson Tom Goyda.

The Chase Bank stopped home equity loans before Wells did. Several lesser-known HELOC lenders have stopped offering HELOCs or have severely reduced their offers.

Mortgage banking trends eventually turn into a herd mentality, especially once fire sales and foreclosures begin. Median home prices will predictably start to plunge.

The good news: Some lenders still offer cash refinances and HELOCs.

U.S. owners have $ 6.2 trillion in workable equity, according to Black Knight. Thus, 44.7 million homeowners may be able to withdraw a first mortgage and / or a HELOC.

But most lenders have added additional fees in the form of points and require higher average FICO credit scores, tighter income and debt ratios, and have reduced the amount of money you can withdraw when refinancing. of a loan.

Here are some of the more aggressive options that may still be available when it comes to withdrawal:

  1. Conventional, FHA and jumbo financings (over $ 765,600) allow collection of up to 80% of the loan / value ratio.
  2. FHA reverse mortgages can provide up to $ 401,174 withdrawal at age 62 for example or $ 491,515 at age 80. Non-FHA reverse mortgages can lend up to $ 4 million.
  3. VA loans allow up to 100% cash out.
  4. Conventional loans for unoccupied homes offer up to 75% loan repayment to value.
  5. For a HELOC, you can get up to a 95% combined loan-to-value ratio.

The last word: if you think you need the money, get it out now. The longer you wait, the more you risk a complete halt in cash lending of any kind as the mortgage market continues to deteriorate.

If you apply for a HELOC, withdraw the money and put it in your bank account. Lenders have a habit of freezing home equity lines without warning when home values ​​start to plummet.

Freddie Mac Rate News: The 30-year fixed rate averaged 3.28%, up 2 basis points from last week. This is the third lowest rate in 49 years that Freddie Mac has tracked 30-year mortgages, with the lowest (3.23%) occurring two weeks ago.

The 15-year fixed rate averaged 2.72%, down 1 basis point from last week.

The Mortgage Bankers Association said the volume of loan applications was unchanged from the previous week.

At the end of the line : Assuming a borrower gets the 30-year average fixed rate on a compliant loan of $ 510,400, last year’s payment was $ 227 more than this week’s payment of $ 2,230.

What I see: Locally, well-qualified borrowers can obtain the following fixed rate mortgages with 1 point: A 30-year FHA (up to $ 442,750 in the Inland Empire, up to $ 510,400 in Los Angeles counties and Orange) at 2.75%, a conventional at 2.5%, a conventional 30-year mortgage at 2.875%, a conventional high-balance 30-year mortgage ($ 510,401 to $ 765,600) at 3.5 % and a 30-year jumbo variable rate mortgage that is locked in for the first five years at 3.625%.

Eye-catcher loan of the week: A 30-year jumbo mortgage, locked in for the first five years at a 3.5% free rate.

Jeff Lazerson is a mortgage broker and assistant professor at Saddleback College. He can be reached at 949-334-2424 or [email protected] Its website is www.mortgagegrader.com.


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Find a South Dakota Business That Has Got an SBA Disaster Loan

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SIOUX FALLS, SD (KELO) – KELOLAND News reviewed Small Business Administration (SBA) databases of coronavirus-related disaster loans and payments available on the ASB website. KELOLAND News has compiled the following spreadsheets for South Dakota.

These worksheets are for Economic Disaster Lending (EIDL). Spreadsheets do not include EIDL Advance funds. EIDL Advance funds were originally calculated based on the number of employees listed on a candidate’s COVID-19 EIDL application: $ 1,000 / employee, up to a maximum of $ 10,000, depending on the ASB website.

EIDL cash advances are not to be repaid, according to the SBA. Additionally, recipients of the EIDL advance do not need to be approved for an EIDL loan. EIDL Advance money is no longer available.

You can search by clicking on the links below.

SDBA n ° 1

SDBA n ° 2

SDBA n ° 3

SDBA n ° 4

SDBA n ° 5

SBA says if your identity was used to fraudulently obtain a COVID-19 economic disaster loan, you must download the SBA COVID-19 Identity Theft Letter EIDL and resend the documents to [email protected] The SBA says it will then conduct a review of the reported identity theft and take action to release the loan on behalf of the victim so that they are not liable for the debt.


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Coronavirus loan program riddled with potential fraud: watchdog

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Suspected fraudsters have infiltrated a loan program meant to help small businesses weather the coronavirus crisis – and the federal government is letting them through, a watchdog has warned.

The Inspector General of the Small Business Administration has received over 5,000 complaints from lenders regarding alleged fraud under the Economic Disaster Lending Program, which offers assistance to traders facing temporary loss of income.

The suspicious activity includes people creating accounts with stolen identities, attempting to transfer federal money to foreign accounts, or attempting to withdraw funds in cash, according to a Tuesday note of the Inspector General’s office.

The crooks also use “romantic scams and social media solicitations” to convince people to pass on personal information which they then use to apply for a loan, the office said.

Financial institutions have reported more than $ 187 million in suspicious transactions, such as $ 1.9 million in pending deposits from the SBA to accounts to be transferred internationally, the note said.

“We are alarmed by these reports, but they are consistent with our investigations, which indicate pervasive fraudulent activity,” the memo reads.

This money is only a tiny fraction of the more than $ 184 billion in disaster loans and advances the SBA says it has distributed to small businesses and nonprofits since Jan.31. The loans are made directly by the SBA and are separate from the $ 659 billion paycheck. Protection program offering federally guaranteed loans distributed by banks.

But the SBA’s internal controls are not strong enough to weed out potential fraudsters, according to the Inspector General. The office said it found $ 250 million in loans and advances the SBA had made to “potentially ineligible recipients” and more than $ 45 million in possible duplicate payments.

“The SBA should take immediate action to reduce or eliminate the risk of fraud by strengthening existing controls and implementing internal controls to tackle potential fraud,” the inspector general’s office said.

A spokesperson for the SBA said the agency had already put in place fraud prevention measures “which have so far prevented the processing of thousands of invalid claims.” The agency also refers suspected cases to the inspector general’s office and works with financial institutions to tackle potential fraud, the spokesperson said.


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Neglected community lenders ask for help after missing loan frenzy

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“Panic” was how Joe Sky-Tucker described the sentiment of his low-income customers at the end of March.

His Seattle-based organization, Business Impact NW, went out of its way to help clients who often couldn’t get loans from traditional financial institutions. Uneven access to federal aid meant money was shrinking for the institution by $ 12 million, as it faced growing funding requests from panicked clients.

“It was so new that everyone was in a panic: ‘What is going to happen to their business, what is going to happen in the economy, what is going to happen from the point of view of public health, ”Sky-Tucker said. “Everyone was just grabbing, they were desperate for help.”

Congress provided a lifeline for small businesses in late March: the Paycheck Protection Program, a $ 349 billion program to facilitate government-backed forgivable loans to keep businesses afloat. Demand was strong when the program was launched in early April: the funds allocated sold out in less than two weeks and many community development finance institutions (CDFIs) like Sky-Tucker’s have felt left out.

The more than 1,000 CDFIs across the country provide education, investment, and loans to low to moderate income individuals and businesses who typically cannot access credit at major banks and are most at risk in the event. economic downturn.

With Congress set to begin negotiating another back-up plan later in July, CDFIs are looking to the future and seeking new funding mechanisms to support their clients.

“The people we work with feel the effects first, they feel the effects more deeply and it takes them longer to recover,” Sky-Tucker said. “It’s just who we serve.”

First missteps

At the start of the program, hundreds of CDFIs were certified to offer PPP loans, a Treasury spokesperson told Bloomberg Tax, because they were already Small Business Administration approved lenders or because they are federally insured financial institutions or credit unions.

But for many CDFIs, getting an application was almost impossible. Sky-Tucker said his organization was successful in getting eight requests approved into the SBA’s system in the first round of funding, and only after investing in software that processes and submits requests more efficiently.

Tommy Espinoza, CEO of Raza Development Fund, a Phoenix-based CDFI, said the vast majority of his clients are used to dealing with physical cash and paper, unlike the digital submissions required by the program. This barrier alone has delayed her organization’s ability to direct funds to the Latino-owned mom-and-pop stores it supports.

“I would venture to say that the majority of this population, or these companies, have been excluded from this,” Espinoza said. “What is a shame is that some of them may not come back. “

The Treasury spokesman said the government tried, where possible, to include CDFIs from the start of the lending program.

“Since the launch of the PPP, the Treasury and SBA have worked tirelessly to encourage and facilitate the participation of CDFIs so that traditionally underserved communities have the resources they need,” the spokesperson said in a statement to Bloomberg Tax. “We have prioritized and contacted hundreds of CDFIs multiple times since the start of the program with a clear message: CDFIs are sought after as PPP lenders, and it is easy for them to sign up.

Second round changes

The first round of loans was criticized after the money ran out quickly and it was reported that recipients understood large companies like Shake Shack, Ruth’s Chris Steakhouse and the Los Angeles Lakers.

“Banks that have already been approved have gone to their customers,” Lisa Mensah, president and CEO of Opportunity Finance Network, told Bloomberg Tax. “And we knew from the start that their customers weren’t the backbone of the economy.

The Treasury Department has made some changes to program rules when the PPP was relaunched at the end of April with an additional $ 320 billion.

The Treasury has also done more to certify CDFIs, Mensah said, which has required the support of CEOs of some of America’s largest banks, constant harassment from CDFI groups and a surge of members of Congress.

The Treasury spokesman said more than 400 CDFIs were invited to become PPP lenders on April 26, and more than 200 more invited to apply on May 1. noted.

The Trump administration took another step in May to ensure low-income communities have access to P3 funds. The government affected $ 10 billion specifically for CDFIs and later an additional $ 30 billion for small institutions including CDFI.

“I think mistakes were made,” Mensah said. “But the swift response and the surprisingly bipartisan nature of the full-throated set of defenders have been extremely valuable to our industry and our future.”

Until June 27, the SBA had disbursed more than $ 7.3 billion in loans through 303 CDFIs, according to the SBA The data. This number could increase if President Donald Trump signs a bill that authorized Congress to extend the nomination period, which expired on June 30, in August.

Not a universal fit

Even with the increased reach of the Treasury, some CDFIs still chose not to participate.

Inna Kinney, founder and CEO of the Institute for Economic and Community Development in Columbus, Ohio, said her organization refused to participate because CDFI requirements prevented her organization from using the money. The organization has provided nearly $ 6 million in new loans since April.

Kinney cited a provision requiring CDFIs to create, maintain and manage more than $ 50 million in business loans or other trade financial receivables in a consecutive 12-month period in the past 36 months. His organization, one of the largest in Ohio, has total assets of $ 27 million.

ASB relaxed this requirement in early May, but Kinney expressed what many thought: PPP was not designed for organizations like his.

“It’s great for Congress to have all of these programs in place, but they also need to think about how organizations can do it because we don’t have the money like the banks do,” he said. Kinney said.

A direct funding vehicle for CDFIs in the next coronavirus relief measure would go a long way in depleting funds, Kinney said.

Until then, CDFIs will continue to leverage their existing banking partners, local governments and states for more assistance.

“We will strive to be there for our community,” said Espinoza of the Raza Development Fund. “We heard through all this madness: La esperanza que los dieron – everyone, you gave me hope, someone cared.”


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Portland Homes For Sale Dip To All-Time Low As Prices Rise In Auction Wars: “Money Is King”

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The Portland Metro has never had so few homes for sale as seen in November, giving sellers even more power and forcing buyers to face bidding wars or wait for more homeowners list their residential property for sale, forcing them to trust that they can find another one. place to live.

The dead end has long been familiar to home buyers competing in the Portland area market. Stocks in the basement have been driving prices up for years.

But in November, inventories fell again, to the lowest in the Regional Multiple Listing Service’s (RMLS) 30-year history, and the average selling price hit $ 521,200, an increase of 12. 7% compared to November 2019.

The 2,238 Portland metro homes put on the market last month were down 36.3% from the 3,515 listed in October, according to RMLS.

This graph shows the total active listings over the past three calendar years in the greater Portland, Oregon metropolitan area.RMLS

If sales continue at the same rate, it would only take a month to sell all the homes on the market, according to RMLS.

Six months of inventory is an indicator of a balanced market for both the buyer and the seller.

Inventory is calculated by dividing active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.

“We never had more than a month of inventory,” says Dustin Miller of Windermere Realty Trust in Lake Oswego, in response to the RMLS report. “We are still in shock. Fortunately, the median selling price [$457,000] went down a bit from October [$460,000], which is in part due to the number of high-end ads.

Home sales

Average and median selling price of Portland Metro homes since November 2012.RMLS

The median selling price is the midpoint where half of the properties sell for a higher price and the other half for a lower price.

Compared to the previous 12 months, the median cost of buying a home on the Portland subway jumped 6.5% to $ 435,000, according to RMLS.

“We advise clients to list while stocks are still low, rather than risk that after a [coronavirus] the vaccine was made widely available that people could come back to market at normal rates, ”says Melissa Dorman of Living Room Reality, which is licensed in Oregon and Washington.

“A higher inventory could reduce the heavy bidding wars that we are seeing right now,” she said, adding, “in no way do I see the Portland market going down anytime soon.”

In November, 109 homes and condos sold for over $ 1 million and 15 of them sold for over $ 2 million, Miller says.

“It can really skew the average sale price a bit, but if it holds up I would see it as a real trend, at least for the foreseeable future,” he says.

Two ads for over $ 2 million sold quickly and for real money. “Money is king,” Miller says.

Beth benner from Living Room Realty predicts that it will take at least a large part of 2021 for supply to catch up with demand. “Buyers come to Oregon from bigger, more expensive cities,” she says, “because they can work from anywhere and Portland always seems ‘affordable.’

In November, 2,745 residential properties in the Portland subway changed hands, down 13% from 3,155 October 2020 closings, but a 25.3% jump from 2,191 November closures 2019, according to RMLS.

Benner also says that early home buyers found they needed more space than a studio, and the lowest mortgage interest rates in history can make a lower payment than rent, though. the buyer has a deposit.

A fixed 30-year interest rate is in the 2.7% range as of December 10, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac.

Some buyers, not wanting to miss a low rate opportunity in a market with little inventory, offer the full asking price or more. To do this, they expect most repairs found during an inspection to be paid for by the seller, estate agents say.

If the buyer isn’t happy with the repair negotiations, there could be a “sell failure,” in which the buyer pulls out and the property bounces back into the market, Miller says.

Ball of Ilysee, lead broker for I Realty’s team, RE / MAX Equity Group, noticed buyers flinch when asked to absorb the full cost of repairs.

“Buyers are less willing to take on updates and repairs. They leave if they feel a house needs work, ”she said in May. “With the rise in prices over the past few years, people have become more and more picky, and with the conditions of staying at home, it can be intimidating for buyers to think of workers in their homes. “

In the Portland subway, the 2,557 homes with an accepted offer, known as pending sales, fell 20.1% in November from the 3,199 offers accepted in October 2020, but represented a 12.4% jump from compared to the 2,274 offers accepted in November 2019, according to RMLS.

The average time to sell Portland Metro residential properties last month before receiving an acceptable offer was 41 days.

Aggravating shortages of homes for sale are a growing population, with homeowners unwilling to sell during the coronavirus pandemic and the September wildfires that destroyed over 4,000 Oregon homes.

The main driver of no-sale, according to the analysis of the National Real Estate Database, is worry about not finding another home.

Many home buyers have broadened their search and are leaving metropolitan areas.

Interest in suburban living, with homes on larger lots, has been increasing in recent years, real estate professionals say, but the coronavirus has amplified the desire for more square footage as well as a backyard. – relaxing course to replace weekend getaways.

“The suburbs have clearly benefited this year from urban thefts and the general implications of the pandemic related to work-from-home opportunities,” says Jim arnal of Living Room Realty.

– Janet Eastman | 503-294-4072

[email protected] | @janeteastman

Want to research real estate listings in Oregon and use local resources? Click here.



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What Every Student Loan Borrower Should Know About The New Relief Law

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The tax code provides for several exceptions to this logical treatment, one of which concerns student loans. If the loan requires a student to work “for a certain period of time in certain occupations” in exchange for “paying off the loan,” then that paid debt is excluded from taxable income. A similar exception applies to students who work for public interest organizations such as public defender’s offices or non-profit hospitals for at least ten years. But apart from these two situations, when a student loan is canceled, the released balance is generally taxable.

The new provision concerns so-called “income-based repayment” student loans that require a person to pay amounts based on their annual income for twenty or twenty-five years, depending on the specific program involved. After this time, any remaining loan balance is canceled. Prior to the adoption of this new provision, the remaining loan balance was taxable in the year the loan was canceled. The new provision, however, makes the forgiven loan balance tax-exempt if the forgiveness occurs between 2021 and 2025.

This arrangement is remarkable for three distinct reasons. First, while all other payments and tax credits included in the American Rescue Plan Act only apply to 2021, this provision applies for a full five years. Second, there is no dollar limit on the amount of forgiven debt that can be considered tax-free income. And third, there is no income limit for taxpayers who can avail themselves of this provision, unlike the other benefits provided for in the new law.

This new provision is a huge benefit to taxpayers who complete their required payback period within the five-year term of this provision, and other student borrowers may hope that this provision could be extended beyond 2025. Although the new The law does not cancel any student loans, it could foreshadow more important changes to come.

Richard L. Kaplan holds the Guy Raymond Jones Chair in Law at the University of Illinois College of Law at Urbana-Champaign.


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Billionaire Kanye West’s Yeezy Received Multi-Million Dollar PPP Loan

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TOP LINE

On his heels announcement running for president, documents reveal that billionaire Kanye West’s fashion company Yeezy has received more than $ 2 million through the Paycheck Protection Program (PPP) – he owns 100% of the company that Forbes estimates close to $ 1.3 billion in 2019.

HIGHLIGHTS

Yeezy received between $ 2 million and $ 5 million through the PPP and said he saved 106 jobs, according to a report disclosed Monday by the Small Business Administration (SBA) of the US Treasury.

The US Treasury released the names of companies that received P3 loans over $ 150,000 after Democrats, government watchdogs and media required more transparency.

ASB noted that loans over $ 150,000 represent almost three-quarters of the total amount of loans approved, but that 87% of businesses received loans below this amount and the average is $ 107,000.

Other companies linked to the Trump administration I have money this tour, including the family business of Transportation Secretary Elaine Chao, Foremost Maritime and Joseph Kushner Hebrew Academy in New Jersey, named after Trump’s son-in-law and Councilor Jared Kushner’s grandfather.

key background

The PPP was created under the $ 2.2 trillion CARES law, enacted by Trump in late March. Saturday, Trump signed in law a bill to extend the PPP for another five weeks, just three days after it expires.

chief critic

Treasury Secretary Steven Mnuchin hinted last month that the Trump administration would not disclose the names of the companies because it considered the loan information to be owner and confidential to business owners. The Treasury and the SBA later noted they would publish the names and data of businesses with loans of $ 150,000 or more.

further reading

Trump administration releases list of companies that received most money from small business bailout loans (CNBC)

Trump signs PPP extension bill – giving small businesses 5 extra weeks (Forbes)

Elon Musk and Kim Kardashian back Kanye West’s candidacy for president (Forbes)

Kanye West is now officially a billionaire (and he Truly Wants the world to know (Forbes)

Disclosure: Forbes Media LLC confirmed on July 6, 2020 that it received a Paycheck Protection Program loan of $ 5-10 million on April 15.


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Buy cash or get a mortgage?

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Many homebuyers use a mortgage to buy a home, but there are those who are fortunate enough to be able to pay in cash – and in today’s booming real estate market, cash buyers have a lot more leverage. Is buying a house with cash the best financial decision? If you weigh the pros and cons of buying a home for cash versus getting a mortgage, here are the main points to consider.

When should you consider paying cash for a house?

A single cash offer could be profitable in several ways. Here are a few reasons to consider making one:

To beat other buyers

In today’s market, sellers favor cash offers because they will be able to close the sale faster and without the risk of seeing the deal collapse if a mortgage approval does not go through as planned.

To speed up the process

Paying cash can also simplify the home buying process. There’s no loan application, underwriting, or approval, so you’ll save yourself the potential headaches and stress of dealing with a lender, and you might not have to wait that long. to conclude.

To ignore the upfront fees

If you have the funds, paying cash for a house definitely saves you money, since you won’t have to pay the costs associated with a mortgage. Origination fees, evaluation fees and others closing costs can total several thousand dollars.

To reduce your costs in the long run

Without a loan, you also won’t be spending money each month on interest charges, which add up to the typical 30-year mortgage.

“You don’t have a mortgage payment and paying cash gives you the actual opportunity cost of the mortgage,” says Leon LaBrecque, director of growth and certified financial planner at Sequoia Financial Group in Troy, Michigan. “Not having a 2.875% mortgage is like earning 2.875%.”

When should you consider getting a mortgage?

The question is not simply “Can you buy a house with cash?” ” although. It’s important to ask yourself if you should be spending all that money up front. Here are some of the benefits of borrowing a mortgage instead of using your own funds to buy a home:

To earn more than what you save

A compelling reason to consider getting a mortgage is historically low interest rate. Currently, the benchmark 30-year fixed-rate mortgage is 3,000%, according to Bankrate’s survey of domestic lenders. Locking in a low fixed rate on a 30-year mortgage helps you free up money for other purposes, like a mortgage. emergency fund, investments or the financing of your retirement accounts.

To reduce your tax bill

If you normally itemize deductions on your tax return, getting a mortgage can reduce what you owe because mortgage interest is tax deductible. This can be very important for high earners who typically retail and want to maximize their deductions.

To build credit

Having debt is not necessarily a bad thing. Have a mortgage gives you the chance to make those regular payments that make you look great in the eyes of the major credit reporting agencies. In the long run, managing your mortgage debt on a regular basis can help improve your credit score.

“Mortgage debt is good debt because it is about an asset that appreciates, not an asset that depreciates like a car or a boat,” says Allan Moskowitz, a certified financial planner at Transformative Wealth Management in El Cerrito, in California.

Considerations to Consider When Deciding to Buy a Home with Cash or a Mortgage

When considering buying a home with cash, ask yourself these questions to help guide your thinking:

1. What is the state of the housing market?

If you really want to secure this home, keep in mind that another buyer might feel the same way. If so, an all-cash offer can make all the difference. A recent report Real Estate Brokerage Redfin has found that making an all-cash offer improves the odds of winning a auction war by 290 percent.

2. How much more will you pay with a mortgage?

Suppose you want to buy a house for $ 360,000, making a 20% payment of $ 72,000 for a 30-year mortgage for the remaining $ 288,000, with a fixed interest rate of 3%. The closing costs are typically 2% to 4% of the loan principal, so in this case, that’s between $ 5,760 and $ 11,520.

Using Bankrate Mortgage Calculator, at the end of the loan term, you can estimate that you will pay a total of approximately $ 149,167 in interest. By adding your total interest to your closing costs, you will end up paying an additional $ 154,927 to $ 160,687 over a 30-year period.

This cost could be offset to some extent if you are a taxpayer who itemizes deductions on your return. You could get tax savings every year if you are able to deduct your mortgage interest payments. If you are married, you can deduct interest up to $ 750,000 from qualifying home loans. If you are married and file separately, this limit is halved to $ 375,000. If you are planning to buy a house with cash or take out a mortgage, you can use Bankrate’s mortgage interest tax deduction calculator to understand how a mortgage will impact what you owe.

3. How much money will you have left if you pay cash?

If you are paying cash for a house, you might feel good knowing that you won’t have bills for your mortgage, but make sure you don’t stretch your finances too much to achieve this. You will still need to have an emergency fund in place, and you will need enough money to cover home maintenance and repairs. You’ll also want to make sure that your cash purchase doesn’t impact saving for retirement or other overall expenses.

At the end of the line

Ultimately, the competition between buying a home with cash and a mortgage depends on your overall financial situation, not just the home itself.

Buying cash to save on mortgage interest might not be the best choice if you would otherwise be able to invest the money, in the stock market or elsewhere, for a higher return. If you can lock in a mortgage at today’s low rates, you can take advantage of the lender’s money to purchase your home.

Getting a mortgage can offer great financial flexibility by keeping more of your cash to use in an emergency – but, for retirees or those who want to be debt-free, buying cash can offer certainty. and security difficult to implement. price on. Whatever your age or financial situation, paying with cash gives you the peace of mind that you are not in debt on your most important asset: your home.

If you decide to buy your home with a mortgage, you can easily compare mortgage lenders and offers on Bankrate. Whether you’re looking for a 15-year or 30-year mortgage, you can compare rates from lenders in your area, along with estimated closing costs, to find out the true cost of financing your home.

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Here’s how the small business loan program went wrong in just 4 weeks

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Trish Pugh started a trucking business in Ohio with her husband in 2015. Even for a small business, it’s small – they had two drivers, including her husband, until they let go of one. cause of the coronavirus crisis.

And so, his company applied for a loan under the $ 349 billion first round of the Paycheck Protection Program, which the federal government put in place to save small businesses.

It didn’t go well.

First, there was confusion between her, her banker, and the Small Business Administration over the forms needed to apply. And then, once she did, she soon found out that she had missed the money.

“I click on this website and it tells me I have to reapply when more funds are available. I was devastated,” she said.

Not only did that first pot of PPP money run out in 13 days, freelancers like Pugh were only able to apply for a week. after the program opened. This puts them far behind other companies in the first come, first served program.

“We’re basically preparing to lose everything, and it’s really sad because we did it on our own at the start,” Pugh said as she prepared to apply for the second round of the program, which features funding of $ 321 billion. “Now that we need help, we cannot get help.”

Pugh has since informed NPR that she ended up getting a loan of just over $ 10,000. It will help her, but she doesn’t know how long it will keep her business running.

Frustrations like Pugh’s have been common since the launch of the Small Business Rescue Program. But his experience was only part of the problems that plagued the PPP in the first round when the program ran out of money and also the faltering start of the second round. Here is a list:

Some not-so-small businesses, like Shake Shack, have obtained loans

The PPP was created to allow any business with less than 500 employees to obtain loans. But several large companies that operate with fewer employees in separate locations, under a franchise model, have also applied for and received loans. Shake Shack, for example, employs nearly 8,000 people at its 189 US restaurants, but only about 45 at each site.

So the chain applied for and got a $ 10million loan from the SBA, causing public outcry, especially after building up evidence that many small restaurants in need of the cash were unable to obtain. loans. Shake Shack quickly returned the money. The company, which has $ 104 million in cash and cash flow, said he obtained other loans to cover the money allegedly coming from the SBA.

Likewise, the chain of steakhouses Ruth’s Chris Steak House, which has approximately 5,700 employees, received a total of $ 20 million and also returned it.

The LA Lakers also got a loan

Then there were other organizations that are not quite what most people would call a small business. As the Los Angeles Lakers basketball team, the eighth most valuable sports team in the world, valued at an estimated $ 3.7 billion, according to Forbes.

But the Lakers applied and received a $ 4.6 million small business loan. Once again, after media coverage, the Lakers decided to return it.

“Once we found out that the program funds had run out, we repaid the loan so that financial support was directed to those who need it most,” the team said in a statement.

Shortly after public outrage over well-known large corporations escalated, the SBA announced it would take a closer look at PPP loan applications over $ 2 million.

Banks raised $ 10 billion, just in fees

Another big beneficiary of the small business loan program: the banks.

Even though tens of thousands of small businesses were excluded from the program, banks have incurred more than $ 10 billion in fees, according to an NPR analysis of financial records.

SBA guaranteed loans carry very little risk and banks were happy to hand out larger loan amounts, resulting in higher fees.

Much of the money was spent on successful businesses, not struggling

Big business, as we now know, got loans. Now, it looks like businesses haven’t had to struggle to get a loan either.

Chembio diagnosis, a Long Island, NY-based company that manufactures infectious disease tests, has secured nearly $ 3 million from the program.

It was exactly the kind of cash injection the business needed to grow. “In order for us to be able to increase our manufacturing capabilities, we thought having this additional amount or loan would be very helpful,” said Gail Page, Chembio board member and former interim CEO.

The problem is, the program was not designed to help businesses grow. It was meant to save small businesses, nonprofits, and the self-employed who struggled to make their payroll or pay for benefits and utilities.

Some small businesses say loans have too many chains

Business owners lucky enough to get the financing said the money kept their businesses afloat. However, some owners also said The PPP rules do not allow them to use the money in the way they consider best.

Among their biggest complaints: 75% of the amount given back on loans must be spent on payroll. The rest can only be spent on a few categories: rent, mortgage interest, or utilities.

But with many businesses unable to reopen, owners are wondering how to spend so much on wages when they have little to no work for their employees.

“I understand in principle that this encourages us to get people back to work,” said Christian Piatt, co-owner of Brew Drinkery in Granbury, Texas. “But in practice, when you have a retail storefront that is not licensed by local authorities to operate as we did before, there should be some consideration to take that into account.”

Will the loans have to be repaid or will they be canceled?

To further complicate all of this, some businesses and finance professionals are unsure whether loans will need to be repaid or canceled. They were waiting for more details from the SBA on how forgiveness works.

“In some ways they really put these small businesses in a very compromising position because they could end up in a situation where they would spend money to get people back on the payroll which ultimately will not be forgiven. the end, ”said Don Stevens, managing partner of private client services at the accounting firm CohnReznick.

It is important that businesses understand all of this quickly. Forgiveness calculations will be based on how businesses spend their money within eight weeks of receiving it. The program opened on April 3, so there are about four weeks left before the first companies have to report their expenses to the SBA.

And just when you think things couldn’t be worse the site has crashed the first day of the reopening of the second round of financing, April 27.

Copyright 2021 NPR. To learn more, visit https://www.npr.org.


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