were good when Congress enacted the massive $2.2 trillion Coronavirus Aid,
Relief and Economic Security Act (the “Cares Act”). The Cares Act was the third
coronavirus relief and emergency bill passed by Congress in March. It included $350
billion for the Small Business Administration’s Paycheck Protection Program.
PPP, loans were designed to provide a direct incentive for small businesses to
keep their workers on their payrolls. The loans would be forgiven if all employees
were retained for eight weeks and the money used for payroll, rent, mortgage
interest or utilities. There was a 500 employee worker limit intended for the
On April 16,
the PPP proved so popular that the program ran out of money, only 14 days after
inception; 1.6 million loans had been approved.
program has been a mess. Lots of the money went to larger businesses. Barron’s
reports that 44 percent of the SBA loans went to 4 percent of loan requesters —
67,000 applications taking almost half of the resources.
dealer organizations, like publicly-traded Penske Auto Group or Auto Nation,
were eligible because applications were done at the franchise level. A loophole
for restaurants and hotel chains allowed Ruth’s Chris Steak House, with 5,000
employees, to pocket $20 million. Shake Shack, with 8,000 employees, received
$10 million from the program.
hedge funds, brokerage businesses, small law firm – all outfits making money –
qualified. They took money away from businesses barely surviving in times of
social distancing and mandated closures. Banks prioritized loans on a
first-come, first-served basis, giving priority to their best customers.
first 14 days of the federal government’s small business rescue program, the
spigot was wide open in Nebraska, where firms got enough money to cover 82
percent of the state’s eligible payrolls. But it was a far different picture in
Nevada where companies did only half as well. Nevada ranked 48thamong
the states, with 8,674 loans approved for a total of $2 billion (42.4 percent
of eligible payrolls).
disadvantaged by the fact that that SBA regulations would not allow companies
generating more than one-third of their revenue from gaming being included in
the Paycheck Protection Program. That left out casinos, taverns and gaming
An example, the
Lakeside Inn and Casino at Stateline, announced it would not reopen after 35
years in business once the coronavirus crisis diminishes. The SBA had denied Lakeside
On April 8,
President Trump said he would consider concerns raised by small casinos and
gambling businesses that couldn’t get access to emergency loans as a result of
the SBA rule. “I will take a look at that strongly,” Trump told Debra Saunders
of the Las Vegas Review-Journal .
Initially , the
Trump administration modified the rule allowing more small businesses to
qualify — those earning less than half their revenue from gaming. That change
didn’t satisfy Nevada’s congressional delegation.
On April 24,
the White House decided to allow small casinos access to Payroll Protection
loans without any legal gaming revenue limitation.
Because of Payroll
Protection loan demand, Senate Republicans sought to immediately replenish the
PPP adding $250 billion. Democrats objected insisting on an additional $160
billion for their priorities.
was a fourth aid bill from Congress totaling $484 billion, with $310 billion
infused into the PPP. On April 27, the SBA reopened new loan applications amid complaints
of delays and glitches.
trillion in coronavirus spending approved since March, the four expensive
rescue packages spiked the exploding federal debt to $24.6 trillion. The
federal budget deficit will rise to $3.7 trillion for fiscal year 2020 — quadruple
the previous estimate — assuming no additional emergency spending.
spending more, Congress needs to address the ballooning list of mistakes and
unintended consequences in all these aid packages, specifically including Paycheck