On Thu, 9 Apr 2020 13:24:03 -0400, "Mr. Luddite"
wrote:

On 4/9/2020 1:09 PM, wrote:
On Thu, 9 Apr 2020 01:03:14 -0400, "Mr. Luddite"
wrote:

On 4/8/2020 10:57 PM, wrote:
On Wed, 8 Apr 2020 07:25:06 -0400, "Mr. Luddite"
wrote:



The loans being offered to small businesses as
an inducement to keep their employees employed
is running into some major problems because of
the way Congress wrote the $2T package.

One problem is a result of the Dems insistence
that unemployment benefits be increased to the
point where laid off employees can receive more
money in benefits than they earned at their
jobs.

If a small business owner applies for the loan
and he/she can convince the employees to stay
employed, the loan becomes a grant.
If the employees decide to collect instead, the
loan becomes what it is ... a loan that has to
be repaid.

Another problem is how the money from the SBA
is distributed. A certain percentage can be
applied to payroll, another percentage towards
rent, etc.

In high rent areas, there's not enough money to
pay both rent and the employee wages.

We can thank you know who for this .....

The other problem is there is no protection for the bank for fraud so
they will have to go through the same qualification regimen as they go
through when they are loaning their own money because if the loan
blows up, it is their money. This means, if you don't already have a
credit line with the bank, they are going to be looking through your
books like they would if you just walked in off the street. With the
shutdown, that will take a while.



Technically, they are supposed to be government backed loans, similar
to a VA loan.

The problem for the bank is there is no accommodation for fraud on the
part of the borrower. If the loan defaults and the borrower lied on
the loan application, being ineligible, the bank is on the hook for it
so they still need to vet the loan, just like they would if it was
their money. At least that is the way I heard it described.
Using your analogy, it would be like if the borrower presented as a
veteran and wasn't. The VA might not figure it out until the loan went
into default and the bank came looking for government relief.



Don't know how the VA works today for their guaranteed loans.
I bought my first house under the GI bill with a VA guaranteed loan
but that was over 40 years ago. I know I had to prove that I was
a veteran and the VA confirmed with their records but after that it was
duck-soup.

That still takes time and in this shut down that is longer than the
distressed businesses think this should take. That VA thing was a
fairly easy thing to prove too. When you are assessing the bona fides
of a business you have never heard of, it will take longer. Most of
these small businesses probably didn't pay for a Dunn and Bradstreet
rating.
I would not be surprised if a lot of store fronts in Miami borrow the
ten grand and open up down the street with a different name, stiffing
the bank. That is how the Medicare (pay and chase) scams seem to work.