May 14, 2020 - Economy & Business

Treasury announces new guidance on PPP loans to help small businesses

Illustration: Aïda Amer/Axios

America's small businesses are breathing much more easily now that the government has announced that anybody borrowing less than $2 million under the PPP will simply be presumed to have needed the money.

By the numbers: The new guidance, as laid out in the answer to question 46 of the official FAQ, applies to 4,198,656 of the 4,232,534 loans issued through May 8. That's more than 99% of all the PPP loans.

The big picture: When the PPP was first launched, to bipartisan acclaim, it raised hopes across the country. Those hopes were dashed when it ran out of its allotted $342 billion quickly, leaving millions of small businesses without any government-backed funds at all.

  • There's nothing worse than raising hopes only to dash them, and the result was a wave of anger and recrimination. Politicians soon turned to vilifying larger companies that had applied for funds.

The PPP's second round freed up another $310 billion for loans. As of yesterday evening, there's more than $117 billion of that money remaining.

The bottom line: When the government moves the goalposts, that's a function of how cash-constrained the PPP program is.

  • Initially, businesses were encouraged to apply for loans, so the money could be put to good use.
  • When it became obvious that there wasn't enough money to go around, politicians became very strict about who should get it.
  • Now that the program's funding exceeds demand, the policy rhetoric has been loosened up significantly.

Why it matters: The PPP did little to help many small businesses, including restaurants, and was designed primarily to funnel cash to employees rather than to support struggling owners. Within its narrow and flawed design parameters, however, it now seems at least to have been adequately funded.

Of note: Axios applied for a PPP loan, received it, and then returned it when the program became politicized. Thanks in large part to the Fed, we found an alternative source of capital in the private markets.

Go deeper: How the push against large PPP loans moved the program's goalposts

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Mark Zuckerberg: Social networks should not be "the arbiter of truth"

Photo: Drew Angerer/Getty Images

Facebook CEO Mark Zuckerberg argued on CNBC's "Squawk Box" Thursday that social media platforms should not police political speech, and that "people should be able to see what politicians say.”

Why it matters: Zuckerberg was responding to Twitter's decision this week to fact-check a pair of President Trump's tweets that claimed that mail-in ballots are "substantially fraudulent." Twitter's label, which directs users to "get the facts" about mail-in voting, does not censor Trump's tweets.

House Democrats pull FISA reauthorization bill

Speaker Nancy Pelosi. Photo: Saul Loeb/AFP via Getty Images

House Democrats pulled legislation Thursday that would have renewed expired domestic surveillance laws and strengthened transparency and privacy protections amid broad opposition from President Trump, House GOP leadership and progressive Democrats.

Why it matters: The failure to reauthorize the Foreign Intelligence Surveillance Act (FISA) comes as Trump continues to attack the intelligence community, which he claims abused the law to surveil his 2016 campaign and Trump administration officials.

U.S. GDP drop revised lower to 5% in the first quarter

Data: Bureau of Economic Analysis; Chart: Axios Visuals

The U.S. economy shrunk by an annualized 5% in the first quarter — worse than the initially estimated 4.8% contraction — according to revised figures released by the government on Thursday.

Why it matters: It's the worst quarterly decline since 2008 and shows a huge hit as the economy was just beginning to shut down because of the coronavirus. Economists are bracing for the second quarter's figures to be the worst ever — with some projecting an annualized decline of around 40%.

2 hours ago - Economy & Business