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Small-Business Shortfall Leaves Owners in the Lurch: Live Updates Small-Business Shortfall Leaves Owners in the Lurch: Live Updates
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The Small Business Administration has run out of money for its Paycheck Protection Program, officials said on Thursday, leaving millions of businesses unable to apply for emergency loans while Congress struggles to reach a deal to replenish the funds.The Small Business Administration has run out of money for its Paycheck Protection Program, officials said on Thursday, leaving millions of businesses unable to apply for emergency loans while Congress struggles to reach a deal to replenish the funds.
Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening, as small businesses struggle with virus-induced quarantines and closings.Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening, as small businesses struggle with virus-induced quarantines and closings.
Treasury Secretary Steven Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday.Treasury Secretary Steven Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday.
Dr. Nancy Kim, 42, who owns Spectrum Dermatology in Scottsdale, Ariz., tried to get a loan through the program, but her bank, Wells Fargo, never accepted their application and eight other lenders turned her away.Dr. Nancy Kim, 42, who owns Spectrum Dermatology in Scottsdale, Ariz., tried to get a loan through the program, but her bank, Wells Fargo, never accepted their application and eight other lenders turned her away.
“Within the next one or two months, we might run out of money and have to shut down completely,” Dr. Kim said on Thursday. “Our patients are going to suffer.”“Within the next one or two months, we might run out of money and have to shut down completely,” Dr. Kim said on Thursday. “Our patients are going to suffer.”
A Wells Fargo spokeswoman said the bank continued to prepare applications for the funds and would submit them when the funds were available again.A Wells Fargo spokeswoman said the bank continued to prepare applications for the funds and would submit them when the funds were available again.
Doug Martin, 63, a sports marketer in Long Beach, Calif., says the events company he spent the month of February negotiating with went silent when conditions on the West Coast began to deteriorate in early March.Doug Martin, 63, a sports marketer in Long Beach, Calif., says the events company he spent the month of February negotiating with went silent when conditions on the West Coast began to deteriorate in early March.
“There’s a whole domino effect to this thing, and I’m one of the dominoes,” he said. “This morning, I read that the money’s gone and I’m like, ‘Heck, I didn’t even get a shot at this.’”“There’s a whole domino effect to this thing, and I’m one of the dominoes,” he said. “This morning, I read that the money’s gone and I’m like, ‘Heck, I didn’t even get a shot at this.’”
USAA, which serves military members and their families, will temporarily change its policies on overdrawn accounts to let customers collect stimulus money after The New York Times reported that it was not allowing those customers to access the funds.USAA, which serves military members and their families, will temporarily change its policies on overdrawn accounts to let customers collect stimulus money after The New York Times reported that it was not allowing those customers to access the funds.
The Times had reported that USAA and some other lenders were applying stimulus funds to overdraft fees and negative balances and only giving overdrawn customers the balance that remained after the accounts were zeroed out. USAA said on Thursday that it would pause overdraft collections for the next 90 days.The Times had reported that USAA and some other lenders were applying stimulus funds to overdraft fees and negative balances and only giving overdrawn customers the balance that remained after the accounts were zeroed out. USAA said on Thursday that it would pause overdraft collections for the next 90 days.
“This will allow members access to their full stimulus payment to help cover the costs of rent, food and other important necessities,” Matthew Hartwig, a bank spokesman, said in an email. “Beginning as early as today, we will apply this policy retroactively to any member accounts with a negative balance at the time the first stimulus checks were deposited, so that members will have access to their stimulus funds.”“This will allow members access to their full stimulus payment to help cover the costs of rent, food and other important necessities,” Matthew Hartwig, a bank spokesman, said in an email. “Beginning as early as today, we will apply this policy retroactively to any member accounts with a negative balance at the time the first stimulus checks were deposited, so that members will have access to their stimulus funds.”
The Treasury Department has begun electronically depositing funds meant to help with basic expenses into people’s bank accounts. But when funds come into accounts with negative balances, banks are legally allowed to take what is needed to bring the balance to zero.The Treasury Department has begun electronically depositing funds meant to help with basic expenses into people’s bank accounts. But when funds come into accounts with negative balances, banks are legally allowed to take what is needed to bring the balance to zero.
The government checks are meant to cushion the financial blow to Americans hit hardest by the fallout from the coronavirus pandemic.The government checks are meant to cushion the financial blow to Americans hit hardest by the fallout from the coronavirus pandemic.
Bank of America, JPMorgan Chase and Wells Fargo are pausing their collections on negative account balances to give customers access to the government’s stimulus.Bank of America, JPMorgan Chase and Wells Fargo are pausing their collections on negative account balances to give customers access to the government’s stimulus.
After a day of unsteady trading, stocks on Wall Street held on to a small gain even as investors were presented with new data showing the economic damage from the coronavirus outbreak.After a day of unsteady trading, stocks on Wall Street held on to a small gain even as investors were presented with new data showing the economic damage from the coronavirus outbreak.
Thursday’s rally was driven in part by gains in technology stocks that are seen as benefiting from coronavirus pandemic related stay-at-home orders. Amazon rose sharply, as did Netflix. Shares of both companies are at record highs.Thursday’s rally was driven in part by gains in technology stocks that are seen as benefiting from coronavirus pandemic related stay-at-home orders. Amazon rose sharply, as did Netflix. Shares of both companies are at record highs.
But banks continued to slide, as Morgan Stanley added to a string of earnings reports from the sector that show profits tumbling and lenders preparing for damage to come.But banks continued to slide, as Morgan Stanley added to a string of earnings reports from the sector that show profits tumbling and lenders preparing for damage to come.
Energy stocks were also sharply lower, as were shares of major airlines after leaders of United Airlines issued a dire note to the carrier’s 100,000 employees on Wednesday, warning that staffing cuts may be coming and demand for air travel is likely to remain subdued into next year. United fell more than 11 percent.Energy stocks were also sharply lower, as were shares of major airlines after leaders of United Airlines issued a dire note to the carrier’s 100,000 employees on Wednesday, warning that staffing cuts may be coming and demand for air travel is likely to remain subdued into next year. United fell more than 11 percent.
Investors also faced another spate of bad economic news on Thursday, with weekly unemployment claims data showing another mass shedding of jobs.Investors also faced another spate of bad economic news on Thursday, with weekly unemployment claims data showing another mass shedding of jobs.
The S&P 500 drifted between gains and losses for much of the day before climbing late in the session to end less than 1 percent higher.The S&P 500 drifted between gains and losses for much of the day before climbing late in the session to end less than 1 percent higher.
Though still far from the record reached on Feb. 19, stocks in the United States had been steadily climbing in recent weeks as investors began to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.Though still far from the record reached on Feb. 19, stocks in the United States had been steadily climbing in recent weeks as investors began to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.
The pandemic crippling the American economy portends a sharp increase in poverty, to a level that could exceed that of the Great Recession and that may even reach a high for the half-century in which there is comparable data, according to researchers at Columbia University.The pandemic crippling the American economy portends a sharp increase in poverty, to a level that could exceed that of the Great Recession and that may even reach a high for the half-century in which there is comparable data, according to researchers at Columbia University.
The coming wave of hardship is likely to widen racial disparities, with poverty projected to rise twice as much among blacks as among whites. Poverty is also likely to rise disproportionately among children, a special concern because brain science shows that early deprivation can leave lifelong scars. Children raised in poverty on average have worse adult health, lower earnings and higher incarceration rates.The coming wave of hardship is likely to widen racial disparities, with poverty projected to rise twice as much among blacks as among whites. Poverty is also likely to rise disproportionately among children, a special concern because brain science shows that early deprivation can leave lifelong scars. Children raised in poverty on average have worse adult health, lower earnings and higher incarceration rates.
If quarterly unemployment hits 30 percent — as the president of one Federal Reserve Bank predicts — 15.4 percent of Americans will fall into poverty for the year, the Columbia researchers found, even in the unlikely event the economy instantly recovers. That level of poverty would exceed the peak of the Great Recession and add nearly 10 million people to the ranks of the poor.If quarterly unemployment hits 30 percent — as the president of one Federal Reserve Bank predicts — 15.4 percent of Americans will fall into poverty for the year, the Columbia researchers found, even in the unlikely event the economy instantly recovers. That level of poverty would exceed the peak of the Great Recession and add nearly 10 million people to the ranks of the poor.
There is no more campaign trail. Instead of a traveling circus of raucous rallies, press bus gossip and drinks with sources at the hotel bar, there is Joseph R. Biden Jr. in his Delaware basement, videoconferencing into cable news. Journalists, barred from flying for safety reasons, still report by phone and text message, but voters go uninterviewed and swing states unexplored.There is no more campaign trail. Instead of a traveling circus of raucous rallies, press bus gossip and drinks with sources at the hotel bar, there is Joseph R. Biden Jr. in his Delaware basement, videoconferencing into cable news. Journalists, barred from flying for safety reasons, still report by phone and text message, but voters go uninterviewed and swing states unexplored.
“It feels like it’s something that exists only in theory,” said Ruby Cramer, who spent months trailing Bernie Sanders as a reporter for BuzzFeed News. “There’s no tangible element. It doesn’t feel like the living, breathing, changing organism that it has always been.”“It feels like it’s something that exists only in theory,” said Ruby Cramer, who spent months trailing Bernie Sanders as a reporter for BuzzFeed News. “There’s no tangible element. It doesn’t feel like the living, breathing, changing organism that it has always been.”
In interviews, nearly a dozen now-grounded campaign reporters described feeling unmoored without the usual rhythm of journeying from state to state, jousting with aides and badgering candidates — the raw ingredients that, through a subtle alchemy of social media, cable news hits and print deadlines, forge the day-to-day story line of a presidential race.In interviews, nearly a dozen now-grounded campaign reporters described feeling unmoored without the usual rhythm of journeying from state to state, jousting with aides and badgering candidates — the raw ingredients that, through a subtle alchemy of social media, cable news hits and print deadlines, forge the day-to-day story line of a presidential race.
News outlets are also grappling with how to cover voters in crucial states like Florida, Michigan, and Nevada, where journalists often gauge the direction of the country’s politics.News outlets are also grappling with how to cover voters in crucial states like Florida, Michigan, and Nevada, where journalists often gauge the direction of the country’s politics.
Amid the pandemic, much of the country’s political press is now marooned in coastal cities, covering a national race from couches in Georgetown and Brooklyn. Robinhood, a stock trading app popular with young people, is in talks to raise a new round of funding led by Sequoia Capital that would value it around $8 billion, according to a person familiar with the situation.
Robinhood, which was last valued at $7.6 billion and has 10 million users, experienced multiple outages during the market turmoil of March, in which users were unable to buy or sell stocks. Still, stock trading tends to increase during times of volatility, leading to higher demand for Robinhood.
Bloomberg earlier reported the news. Robinhood declined to comment.
The funding comes as many start-ups across Silicon Valley slash costs and lay off workers in response to the pandemic. But some start-ups are thriving and investors continue to pour money in. Stripe, a payments company, recently announced an additional $600 million in funding as an extension of a funding round from September.
Some of the funds that lawmakers in Washington set aside for small businesses in the United States went to companies that are owned or controlled by an entity outside of the country.
Wave Life Sciences Ltd. — a biotech company whose parent is incorporated in Singapore — secured a $7.2 million loan from the Paycheck Protection Program, it said in a filing with the Securities and Exchange Comission.
A company spokeswoman said that 97 percent of its global workforce was based in the United States. The spokeswoman, Alica Suter, said in a statement that a “substantial” number of its employees were unable to do their jobs from home.
The restaurant chain Kura Sushi USA, Inc. said in a securities filing that it had received an almost $6 million loan on Tuesday. It was created in 2008 as a subsidiary of Kura Japan and, while it spun off last year as a public company incorporated in Delaware, the Japanese firm still owns a controlling interest in the American company.
The company had just over 1,300 employees before the pandemic forced the closure of its 25 restaurants, said Ben Porten, a spokesman. Restaurant chains successfully lobbied for an exemption to a rule restricting the program to firms with 500 or fewer employees.
Mr. Porten said the money would be spent on paying its domestic employees who remained on the payroll as well as real estate and utility bills.
“We’re going to use it exactly as we believe it was intended to be used,” he said of the loan. “Not a single penny of this is going overseas.”
The loans to those companies were flagged by Accountable.US, which describes itself as a watchdog group that targets corruption. Accountable.US does not disclose its backers, but is routinely critical of the Trump Administration.
The coronavirus pandemic’s devastation became more evident Thursday with more than 5.2 million workers added to the tally of the unemployed.The coronavirus pandemic’s devastation became more evident Thursday with more than 5.2 million workers added to the tally of the unemployed.
The latest figure from the Labor Department, reflecting last week’s initial unemployment claims, brings the four-week total to about 22 million, roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the last recession and ended with the pandemic’s arrival.The latest figure from the Labor Department, reflecting last week’s initial unemployment claims, brings the four-week total to about 22 million, roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the last recession and ended with the pandemic’s arrival.
It underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.It underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.
“There’s nowhere to hide,” said Diane Swonk, chief economist at Grant Thornton in Chicago. “This is the deepest, fastest, most broad-based recession we’ve ever seen.”“There’s nowhere to hide,” said Diane Swonk, chief economist at Grant Thornton in Chicago. “This is the deepest, fastest, most broad-based recession we’ve ever seen.”
Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file. “We’re still playing catch-up on multiple fronts,” Ms. Swonk said.Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file. “We’re still playing catch-up on multiple fronts,” Ms. Swonk said.
Each day seems to bring unwelcome milestones. On Wednesday, the Commerce Department reported the steepest monthly drop in retail sales since record keeping began nearly 30 years ago, and the Federal Reserve said industrial production had recorded its biggest decline since 1946.
The mounting unemployment numbers seem certain to fuel the debate over how long to impose stay-at-home orders and restrictions on business activity. President Trump has said some measures should be relaxed soon because of the impact on workers. “There has to be a balance,” he said at a press briefing Wednesday evening. “We have to get back to work.”
Fashion brands at all ends of the pricing spectrum are reopening or repurposing manufacturing facilities to produce personal protective equipment.Fashion brands at all ends of the pricing spectrum are reopening or repurposing manufacturing facilities to produce personal protective equipment.
On Thursday, Louis Vuitton said they would reopen five facilities in the United States — one in New Jersey, one in Texas and three in California — to make nonmedical cotton face masks. The masks are intended to be donated “in states currently most heavily impacted by Covid-19,” the company said. The masks will be washable and reusable.On Thursday, Louis Vuitton said they would reopen five facilities in the United States — one in New Jersey, one in Texas and three in California — to make nonmedical cotton face masks. The masks are intended to be donated “in states currently most heavily impacted by Covid-19,” the company said. The masks will be washable and reusable.
The announcement coincided with the release of quarterly results from Louis Vuitton’s parent company, LVMH Moët Hennessy Louis Vuitton, which showed that overall revenue was down 17 percent.The announcement coincided with the release of quarterly results from Louis Vuitton’s parent company, LVMH Moët Hennessy Louis Vuitton, which showed that overall revenue was down 17 percent.
Also on Thursday, the work wear company Dickies said that it would use its factories in Mexico and Honduras to produce F.D.A.-compliant hospital isolation gowns. The company said it expected to make 50,000 gowns in May, up to 675,000 by June, and 3.4 million by September. The gowns would be “distributed to communities throughout the U.S. in cooperation with federal and state government leaders” the company said in a statement.Also on Thursday, the work wear company Dickies said that it would use its factories in Mexico and Honduras to produce F.D.A.-compliant hospital isolation gowns. The company said it expected to make 50,000 gowns in May, up to 675,000 by June, and 3.4 million by September. The gowns would be “distributed to communities throughout the U.S. in cooperation with federal and state government leaders” the company said in a statement.
Facebook said Thursday that it would start showing messages to people who have liked, reacted or commented on misinformation about Covid-19 that the social network had removed. The messages would also recommend credible information from the World Health Organization, the company said.Facebook said Thursday that it would start showing messages to people who have liked, reacted or commented on misinformation about Covid-19 that the social network had removed. The messages would also recommend credible information from the World Health Organization, the company said.
“As this pandemic evolves, we’ll continue focusing on the most effective ways to keep misinformation and dangerous hoaxes about Covid-19 off our apps and ensure people have credible information from health experts to stay safe and informed,” Guy Rosen, Facebook’s vice president of integrity, said in a blog post.“As this pandemic evolves, we’ll continue focusing on the most effective ways to keep misinformation and dangerous hoaxes about Covid-19 off our apps and ensure people have credible information from health experts to stay safe and informed,” Guy Rosen, Facebook’s vice president of integrity, said in a blog post.
As the coronavirus has spread around the world, killing hundreds of thousands of people, so too has online misinformation about it, despite aggressive efforts by social media companies to curb its dissemination. As part of its announcement on Thursday, Facebook said it had removed hundreds of thousands of posts from the social network that “could lead to imminent physical harm,” such as claims that drinking bleach cures the virus and that physical distancing measures are ineffective against its widespread transmission.As the coronavirus has spread around the world, killing hundreds of thousands of people, so too has online misinformation about it, despite aggressive efforts by social media companies to curb its dissemination. As part of its announcement on Thursday, Facebook said it had removed hundreds of thousands of posts from the social network that “could lead to imminent physical harm,” such as claims that drinking bleach cures the virus and that physical distancing measures are ineffective against its widespread transmission.
Still, conspiracy theories about the coronavirus have abounded on the social network. In March, the company said, it also reduced the reach of about 40 million false posts and applied warning labels showing more context based on thousands of articles by its independent fact-checking partners.Still, conspiracy theories about the coronavirus have abounded on the social network. In March, the company said, it also reduced the reach of about 40 million false posts and applied warning labels showing more context based on thousands of articles by its independent fact-checking partners.
For more than four decades, China has never acknowledged that its economy actually shrank, even during major economic crises. But that may change on Friday, when the country announces gross domestic product for the January-to-March quarter. An updated tally from a trade group for big apartment owners and developers shows that 16 percent of tenants failed to make a full or partial monthly rent payment by April 12, compared with 9 percent in a similar period a month earlier. The report, from the National Multifamily Housing Council, surveyed 11.5 million units. In data through April 5, the nonpayment rate had been 31 percent.
China’s National Bureau of Statistics already confirmed last month that domestic industrial production, retail sales and investment all suffered record, double-digit drops in the first two months of this year compared with the same period of 2019. That has prompted most, though not all, economists to guess that overall economic performance for the first quarter of this year will show a decrease from a year earlier. Google said it would grant its employees up to 14 weeks of paid leave to care for family members during the coronavirus shutdown, an increase from the six weeks of paid leave it made available in March. Under the new policy, the leave can be taken in half-day increments, allowing workers to stretch it across more than six months if necessary.
The question is how big a drop it will be.
One survey of 18 Chinese and foreign institutions by Caixin, a Chinese news organization, found that they were forecasting that the economy was anywhere from flat to down 11.5 percent in the first quarter. The average forecast was for a drop of 6.6 percent.
A broader survey by Reuters of 57 analysts found an even wider range of predictions — anywhere from a nose-dive of 28.9 percent to a gain of 4 percent. But the average in the Reuters survey, a loss of 6.5 percent, was practically identical to Caixin’s.
Foreign banks, which come under only slightly less political pressure than Chinese institutions to issue sunny forecasts, have tended to be at the bearish end of the range.
The Transportation Department largely denied requests from JetBlue and Spirit Airlines to stop flying to several destinations, service that is required under the terms of the federal stimulus. The decision suggests that the department may be unlikely to grant the majority of such exemption requests, many of which have been issued by smaller carriers.The Transportation Department largely denied requests from JetBlue and Spirit Airlines to stop flying to several destinations, service that is required under the terms of the federal stimulus. The decision suggests that the department may be unlikely to grant the majority of such exemption requests, many of which have been issued by smaller carriers.
Amazon’s founder, Jeff Bezos, said the company was developing its own coronavirus testing capabilities, including building a lab, and is preparing to start testing a small number of workers soon. In an annual letter to shareholders, Mr. Bezos also advocated “regular testing on a global scale, across all industries,” as a way to reopen the economy.Amazon’s founder, Jeff Bezos, said the company was developing its own coronavirus testing capabilities, including building a lab, and is preparing to start testing a small number of workers soon. In an annual letter to shareholders, Mr. Bezos also advocated “regular testing on a global scale, across all industries,” as a way to reopen the economy.
Morgan Stanley, the smallest of the major Wall Street banks, reported a 30 percent downswing in earnings for the first quarter. Driven by declines in its money management and investment businesses as well as higher costs related to both increased loss cushions and the quarter’s strong trading volumes, Morgan Stanley’s profits fell to $1.7 billion for the quarter, with overall revenues falling 8 percent, to $9.5 billion.Morgan Stanley, the smallest of the major Wall Street banks, reported a 30 percent downswing in earnings for the first quarter. Driven by declines in its money management and investment businesses as well as higher costs related to both increased loss cushions and the quarter’s strong trading volumes, Morgan Stanley’s profits fell to $1.7 billion for the quarter, with overall revenues falling 8 percent, to $9.5 billion.
Reporting was contributed by Michael M. Grynbaum, Alexandra Stevenson, Davey Alba, Neil Irwin, Nelson D. Schwartz, Liz Alderman, Alan Rappeport, Kate Kelly, Keith Bradsher, Niraj Chokshi, Caitlin Dickerson, Vanessa Friedman, Miriam Jordan, Jason DeParle, Jim Tankersley, Stacey Cowley, Emily Cochrane, Emily Flitter, Reed Abelson, Sapna Maheshwari, Ben Casselman, Noam Scheiber, Geneva Abdul, Mohammed Hadi, Carlos Tejada and Mike Ives. Reporting was contributed by Vindu Goel, Kevin McKenna, Michael M. Grynbaum, Alexandra Stevenson, Davey Alba, Neil Irwin, Nelson D. Schwartz, Liz Alderman, Alan Rappeport, Kate Kelly, Keith Bradsher, Niraj Chokshi, DAvid McCabe, Caitlin Dickerson, Vanessa Friedman, Miriam Jordan, Jason DeParle, Jim Tankersley, Stacey Cowley, Emily Cochrane, Emily Flitter, Reed Abelson, Sapna Maheshwari, Ben Casselman, Noam Scheiber, Geneva Abdul, Mohammed Hadi, Carlos Tejada and Mike Ives.