This is random af, but I was curious if anyone here realizes the magnitude of free money that was handed out during the pandemic. I'm not talking about the stimulus checks, child tax credits, etc. I'm talking about the PPP Money that was given to business owners.
For those unaware, "Round 1" PPP Money was given to a business regardless of whether or not they felt negative impacts from the pandemic. There are thousands of very successful business owners (think $1-5MM+/year in EBITDA) that received $1-3M++ PPP checks when they didn't even need it. So where did all this money go? After it was forgiven, it went straight into the Owner's bank account via distributions because the business didn't need it.
Some already very wealthy people essentially got million dollar ++ paydays. It boggles my mind that they didn't have to give this money back.
The ERC Credits are just another example of how incredibly stupid all this stimulus money was - one of the many contributors to the outrageous inflation.
Heard so many anecdotes of business owners buying multiple homes with PPP money. Left pocket, right pocket type situation. Technically, they used the money for payroll.. then the money they saved when right to their bank account.
Meanwhile the peons got trump/Biden bucks and are arguing about BLM lol
lmao 100%. Definitely made it possible for the already successful business owner to buy that second house in FL, etc.
It was also first-come, first-serve, so those business owners with better private bankers backed by an efficient organization were able to get their applications in on time.
Lol trust me I've seen the details of it. I'm a CPA in Transaction Advisory but still help with some audit stuff in my firm, and was heavily into audit during 2020/early 2021. Lots of absolute bullshit with businesses getting the PPP Loans.
Some of my clients that actually THRIVED because of the pandemic still got PPP money. Many of them have used the money to buy exotic cars, investment properties, stocks, crypto, you name it. Some had the gall of going back for Round 2 and take Economic Injury and Disaster Loans ("EIDL"). The SBA even made 6 months of payment for many borrowers, amouting to hundreds of thousands of dollars in some cases.
Very frustrating since it was taxpayer dollars, AND now W-2 employees are being taxed for it via inflation.
Ridiculous. I wish there was a way to claw-back the PPP money for businesses that didn't truly need it.
I wonder if the government has any clue that this scenario was much more common than they may have originally thought.
Working as intended
https://apnews.com/article/virus-outbreak-donald-trump-ap-top-news-poli…
I mean there technically is a way (with the AG or whatever suing people in federal court), embezzlement of federal money is by its nature hyper illegal, but it's a joke that the IRS can penalize regular people for back taxes while another federal agency supervises the distribution of federal funds to 'businesses' that don't need it at all.
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PPP first round made sense. Lots of confusion and Covid was hitting businesses hard for the first two months. PPP second round was not really needed much, but okay some businesses didn't recover. PPP third round was an absolute waste of money.
Most states had several grant programs as well where they gave free money to every business. I know a plumber in upstate NY who got grant money related to work from home equipment. The guy is a plumber and has two other plumbers that work for him. They are never in the office and yet the get a WFH grant. They received $15K and had no idea what to do with it so they ended up buying Iphone 12s and brand new laptops. They even told the state administrator that they werent sure what to do with it and the admin person didnt care and said just spend it on anything you need. People got all this money and now we have record inflation. Its coming back to bite us.
Family's business got around $10 million from PPP, used that money for payroll and used the other $10 million saved to fund a property deal. I also know of someone who got $80 million from PPP by inflating the number of employees they had.
Meanwhile the masses got $1500 stimulus checks and should be eternally grateful about it. Said checks are also the focus of vitriol from certain individuals as to why we're facing significant inflation, hilariously. If the plebs knew how much politicians and corporations are robbing them there'd be bloodshed. Good thing they have their culture wars to distract.
The culture wars are far more important than debates over spending and taxation. A few points of GDP are utterly irrelevant if we have a generation of drug addicts, social media addicts, and porn addicts who don’t get married, have kids, and become self-sufficient. The marginal tax rate is irrelevant with a generation of miserable, lonely people. The problem is that we have focused too little on culture and far too much on GDP and material benefits.
There's no doubt culture is important. But I'd argue that the rape of the middle class is directly related to the decrease in marriage and increase in drug habits, for example. Focusing on culture wars just to focus on culture wars with no foreseeable solution to real problems is counterproductive. And that's where we are at.
The PPP program was a resounding success and incredible emergency lending tool / public private partnership. It happened during peak COVID confusion and help stabilized both markets and economy. Going through lender amendments I know it saved an incredible amount of businesses to bridge cash flow and jobs until not only reopening of the business but risk appetite returned across lending. Yes, like any government program there is going to be grift and excess. Should there be an existing infrastructure in place to properly send citizens and businesse's stimulus payments... yes absolutely. Particuarly, when the infrastructure is in play to receive tax payments shame on them. Dont forget the PPP programs were introduced because of government mandated shutdowns, which could have never been predicted or prepared by a business. It would of been criminal and immoral for the Gov't not to provide assistance.... if the Gov't doesn't help in emergencies whats the point of them.
Is part of inflation driven from the PPP program or general financial stimulus .. absolutely. Like anything in life, there a tradeoffs and inflation is one of the risks with fiscal stimulus. But overduing stimulus is a far more effective and a better outcome than a global depression & breakdown of society, which was very much on the table pre-fiscal stimulus. Easy to complain about inflation and the economy now, but i expect people would literally be begging for this outcome in retrospect at the time of this stimulus. Equities and credit markets are such a confidence game and Gov't action is needed to stabilize otherwise its pretty brutal doom loop.
Also, if your paying attention quite frankly a major cause of inflation is energy led by idiotic esg gov't policies not fiscal stimulus. I would add housing supply as an issue as well. Which has been underbuilt for the past decade due to scares from the GFC and to some extent of not doing enough fiscal stimulus at the time to support the economy.
Here’s a thought: don’t destroy society over a disease with a 99.5% survival rate that kills disproportionately people who are in [checks notes] the nursing home. Then you won’t have to irresponsibly spend trillions of dollars that the poor will have to pay for by being dashed into greater poverty.
While I agree that ESG is the biggest grifting movement in modern US history, the PPP program has been an absolute disaster. It is the main driver of inflation, oil prices are not currently a problem of supply/demand in the US, this is what happens with all prices when you pump this much cash into the system. I don't even think the stimulus payments were that bad. The other huge driver would be the moratoriums - millions of people abused the opportunity to stop paying rent for literally more than a year in many cities and started buying televisions, cars, jet skis, boats, you name it. I mean think about it, demand should have collapsed. Who the hell goes out and buys a new car if they are truly as "fearful" as people lead everyone on to be. Why are car dealerships swamped with demand if people aren't driving as much? Where are you driving if you believe in slowing the spread and you're doing to die? I'm amazed that people didn't realize rents would rise. What you think proerty owners are being screwed over wouldn't have to raise prices to try and get back to even?
A drop in growth is not the end of the world. If you've studied history, then you know the worst thing for any society is stagflation, which is more and more real everyday at this point. Even if you got your PPP check and you went out and bought a Lambo, have fun driving around when literally every poor person hates your guts. Rich people are not the problem, but I can guarantee that stagflation will make more of the US look like SF/NCY every single day it continues on, and the crazies will want to smash your windows, throw stuff at it, rob you, push you in front of the subway. We are already very polarized as a country, the last thing we want is stagflation right now.
Governments should be as small as possible. Small governments are nimble and can pivot when wrong. Our government has become so big and bloated that it's fairly obvious why two weeks to slow the spread turned into two years to generate stagflation. They all wanted their slice of the pie, whether law changes, bailouts, etc. Now they will pretend like the rise in crime, poverty, homelessness, etc is not their fault, but it is 100%. I'm just glad I escaped Gotham and got the hell out of one of those miserable and corrupt cities.
Lastly, governments are not for protection. Sure they may help in some sense, but if they can't even feed those in poverty, pretending like they can solve the equation of "slow the spread" is absolutely ridiculous.
I used PPP at three of our portfolio companies to keep the businesses alive while we dealt with COVID related issues including:
-Mandatory shut downs when we have live inventory that can essentially expire.
-Insane churn brought about by COVID. Tons of labor just outright quit once the juicy unemployment benefits were unleashed.
-Working capital requirements going up as supply chains were severely disrupted.
I'm sure a ton of people abused it, the process was strangely simple. But, let's not pretend it didn't also do a lot of good. I know a lot of people who were able to survive COVID thanks to PPP. Helped overcome the sudden shock to working capital, etc.
I run a vertical SaaS roll-up and 100% of the 20+ companies I have acquired received $250K-$1M in PPP money and none of them needed it. The value and handling of ERTC is now a consistent diligence point because we'll pay $3-5M for a $1-3M ARR business but they are expecting a $300-500K ERTC payment from the IRS (make that math make sense on $ needed). People really have no clue how much free money went around and how much is left in the form of credits.
And the biggest problem is that it is not fraud. It's just a part of the program. Restaurants struggled to get a dime but the boomer that recently made his license-maintenance to SaaS transition on his niche business can easily get his buddies doing his revolver at a decent sized regional bank to get him some $$$.
Absolutely insane.
This has to be one of the biggest examples of how the modern Republican party is big-government for the rich and small-government for regular people. Trump blocked any oversight into the PPP loans, some of which enriched politicians, but they complain time and time again about people using welfare benefits they don't deserve and add means tests to make sure people qualify for welfare.
You can make the case that welfare for specific people or businesses who are really in need is more effective than universal welfare programs, but don't be such a blatant hypocrite about it.
https://www.reuters.com/article/us-health-coronavirus-usa-stimulus/trum…
Yes, the Democrats were known warriors for fiscal restraint and oversight during the last 2 years.
Lol Drumpfy’s autism is next level, but somehow he manages to top himself on a regular basis
I’m covering banks right now at my job and I’ve gotten a close look now at dozens of banks. They are flooded with deposits because of all the stimulus and PPP money—many banks have more cash than they can even deploy into investments. The government’s behavior during Covid was utterly egregious and irresponsible. No wonder inflation is so bad right now.
I wrote on WSO 2 years ago that the govt was selling out the future of our nation for quick political paybacks and the general cowardice of the public. Where I was wrong was thinking that future generations would pay for our irresponsibility. Fortunately, this evil generation of Americans is having to pay for its own greed and cowardice. It makes me so happy. Edit: but it makes me upset the poor are paying the biggest price for the cowardice and irresponsibility of the rich and elite.
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