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Small Businesses Flood Lenders as Applications Open: Live Updates Small Businesses Flood Lenders as Applications Open: Live Updates
(32 minutes later)
Small businesses flooded lenders with emergency loan applications on Friday morning as the spigot opened on $350 billion in relief money.Small businesses flooded lenders with emergency loan applications on Friday morning as the spigot opened on $350 billion in relief money.
Treasury Secretary Steven Mnuchin said that community banks had processed 700 loans for $2.5 million before 9 a.m. An hour later, he said the total was up to $4 million, a sign of the surging demand. Larger banks are expected to go live later in the morning, Mr. Mnuchin added.Treasury Secretary Steven Mnuchin said that community banks had processed 700 loans for $2.5 million before 9 a.m. An hour later, he said the total was up to $4 million, a sign of the surging demand. Larger banks are expected to go live later in the morning, Mr. Mnuchin added.
A senior Treasury official said that Mr. Mnuchin has been receiving continuous updates from counterparts at the Small Business Administration throughout the morning. The community banks were ready to go first thing, then Bank of America went live at 9 a.m. Other larger banks have been lagging in their readiness, the official said.A senior Treasury official said that Mr. Mnuchin has been receiving continuous updates from counterparts at the Small Business Administration throughout the morning. The community banks were ready to go first thing, then Bank of America went live at 9 a.m. Other larger banks have been lagging in their readiness, the official said.
The program is the centerpiece of the Trump administration’s economic stabilization effort and comes as government figures showed that 701,000 jobs were lost last month.The program is the centerpiece of the Trump administration’s economic stabilization effort and comes as government figures showed that 701,000 jobs were lost last month.
Lenders and borrowers have been bracing for a chaotic start to the program, which was assembled by the Small Business Administration and the Treasury Department in just a week. There has been mass confusion about the terms of the loans and the application form that borrowers are supposed to use.Lenders and borrowers have been bracing for a chaotic start to the program, which was assembled by the Small Business Administration and the Treasury Department in just a week. There has been mass confusion about the terms of the loans and the application form that borrowers are supposed to use.
The Treasury Department changed the terms of the loans, increasing the interest rates that banks get from 0.5 percent to 1 percent, on Thursday evening. Mr. Mnuchin posted the final version of the form on Twitter at 10:43 p.m. on Thursday night.The Treasury Department changed the terms of the loans, increasing the interest rates that banks get from 0.5 percent to 1 percent, on Thursday evening. Mr. Mnuchin posted the final version of the form on Twitter at 10:43 p.m. on Thursday night.
“I expect it to be a train wreck,” Brock Blake, chief executive of the small business lending marketplace Lendio, said of the first day of the program.“I expect it to be a train wreck,” Brock Blake, chief executive of the small business lending marketplace Lendio, said of the first day of the program.
Wall Street was set to end a volatile week with a drop, as investors braced themselves for more bad news on the coronavirus pandemic and considered fresh data showing the economic damage that it has already caused.Wall Street was set to end a volatile week with a drop, as investors braced themselves for more bad news on the coronavirus pandemic and considered fresh data showing the economic damage that it has already caused.
The S&P 500 fell about 2 percent. Selling on Fridays has become something of a routine on Wall Street lately, with analysts saying that it reflects caution over what news the weekend might bring. Since the stock market peaked in February, shares have fallen on every Friday bar one. The S&P 500 fell more than 2 percent. Selling on Fridays has become something of a routine on Wall Street lately, with analysts saying that it reflects caution over what news the weekend might bring. Since the stock market peaked in February, shares have fallen on every Friday bar one.
The exception was March 13, when President Trump held a late afternoon news conference in which he promised that a number of businesses, from Google to Walmart, would support the efforts to contain the coronavirus.The exception was March 13, when President Trump held a late afternoon news conference in which he promised that a number of businesses, from Google to Walmart, would support the efforts to contain the coronavirus.
On Friday, investors were presented with more painful — if no longer surprising — economic data. The monthly employment report from the Labor Department that showed the nearly decade-long run of job growth had ground a halt in March. And, a new reading of economic activity in Europe for last month registered its biggest ever drop.On Friday, investors were presented with more painful — if no longer surprising — economic data. The monthly employment report from the Labor Department that showed the nearly decade-long run of job growth had ground a halt in March. And, a new reading of economic activity in Europe for last month registered its biggest ever drop.
Oil remained a bright spot, with crude futures continuing a rally that began on Thursday on hopes that the world’s major oil producers might cut supply.Oil remained a bright spot, with crude futures continuing a rally that began on Thursday on hopes that the world’s major oil producers might cut supply.
The Organization of the Petroleum Exporting Countries, under pressure to end a price war with Russia that has thrown oil markets into turmoil, is planning to hold a teleconference on Monday to discuss world oil supplies, an OPEC delegate said on Friday. The meeting will include the OPEC+ group of producers, which includes Russia, and other countries “if they wish,” the delegate said.The Organization of the Petroleum Exporting Countries, under pressure to end a price war with Russia that has thrown oil markets into turmoil, is planning to hold a teleconference on Monday to discuss world oil supplies, an OPEC delegate said on Friday. The meeting will include the OPEC+ group of producers, which includes Russia, and other countries “if they wish,” the delegate said.
It was not clear if the United States would take part in the meeting.It was not clear if the United States would take part in the meeting.
Mr. Trump has been leaning on Saudi Arabia and Russia to end the damaging price war that the Saudis launched after Russia declined to agree to new production trims at a meeting in Vienna in early March.Mr. Trump has been leaning on Saudi Arabia and Russia to end the damaging price war that the Saudis launched after Russia declined to agree to new production trims at a meeting in Vienna in early March.
The jousting between the two major producers has accelerated the collapse of oil prices, which fell about 55 percent in March. Plunging oil prices threatened to destabilize countries and regions where the local economy depends on oil production.The jousting between the two major producers has accelerated the collapse of oil prices, which fell about 55 percent in March. Plunging oil prices threatened to destabilize countries and regions where the local economy depends on oil production.
The Labor Department on Friday reported the first monthly job loss in almost a decade, reflecting the virtual economic standstill wrought by the coronavirus outbreak.The Labor Department on Friday reported the first monthly job loss in almost a decade, reflecting the virtual economic standstill wrought by the coronavirus outbreak.
It was an abrupt end to a landmark stretch of job creation — 113 months in a row, more than twice the previous record.It was an abrupt end to a landmark stretch of job creation — 113 months in a row, more than twice the previous record.
Compared with the numbers of people recently applying for unemployment benefits — nearly 10 million in the previous two weeks — the figure announced Friday was modest: a loss of 701,000 jobs. But the data was mostly collected in the first half of the month, before stay-at-home orders began to cover much of the nation.Compared with the numbers of people recently applying for unemployment benefits — nearly 10 million in the previous two weeks — the figure announced Friday was modest: a loss of 701,000 jobs. But the data was mostly collected in the first half of the month, before stay-at-home orders began to cover much of the nation.
“This is nothing compared to what we’re going to see,” said Stephanie Pomboy, president of MacroMavens, an independent research firm. Indeed, the March unemployment rate of 4.4 percent may be replaced by double digits as soon as next month. But it was the largest monthly increase in the rate, by 0.9 percentage points, since January 1975.“This is nothing compared to what we’re going to see,” said Stephanie Pomboy, president of MacroMavens, an independent research firm. Indeed, the March unemployment rate of 4.4 percent may be replaced by double digits as soon as next month. But it was the largest monthly increase in the rate, by 0.9 percentage points, since January 1975.
The Congressional Budget Office said on Thursday that it expected unemployment to top 10 percent for the second quarter of 2020 — as high as the peak in the last recession — and to remain at 9 percent at the end of 2021.The Congressional Budget Office said on Thursday that it expected unemployment to top 10 percent for the second quarter of 2020 — as high as the peak in the last recession — and to remain at 9 percent at the end of 2021.
The manufacturing giant 3M said Friday that it has been “working closely” with the White House to shore up its supply of face masks to the United States after President Trump took aim at the company on Twitter.The manufacturing giant 3M said Friday that it has been “working closely” with the White House to shore up its supply of face masks to the United States after President Trump took aim at the company on Twitter.
“The administration requested that 3M increase the amount of respirators we currently import from overseas operations into the U.S.,” the company said in a statement. “We appreciate the assistance of the administration to do exactly that.” For example, the company said, it had gotten approval from China to export 10 million N95 masks to the United States earlier in the week.“The administration requested that 3M increase the amount of respirators we currently import from overseas operations into the U.S.,” the company said in a statement. “We appreciate the assistance of the administration to do exactly that.” For example, the company said, it had gotten approval from China to export 10 million N95 masks to the United States earlier in the week.
But 3M also said that the White House had asked it to stop exporting respirators that are currently manufactured domestically. Such a request, the company said, would put health care workers in Canada and Latin America at risk, and could cause other countries to retaliate by cutting off important supplies of protective equipment to the United States.But 3M also said that the White House had asked it to stop exporting respirators that are currently manufactured domestically. Such a request, the company said, would put health care workers in Canada and Latin America at risk, and could cause other countries to retaliate by cutting off important supplies of protective equipment to the United States.
The response from 3M, one of the world’s largest suppliers of masks, comes after President Trump criticized the company in a late-night tweet on Thursday.The response from 3M, one of the world’s largest suppliers of masks, comes after President Trump criticized the company in a late-night tweet on Thursday.
“We hit 3M hard today after seeing what they were doing with their Masks. ‘P Act’ all the way.’ Big surprise to many in government as to what they were doing - will have a big price to pay!” the president tweeted.“We hit 3M hard today after seeing what they were doing with their Masks. ‘P Act’ all the way.’ Big surprise to many in government as to what they were doing - will have a big price to pay!” the president tweeted.
Earlier in the day, at a White House press briefing, Mr. Trump had announced he was invoking the Defense Production Act, a 1950s-era law, to spur companies to increase their production of masks.Earlier in the day, at a White House press briefing, Mr. Trump had announced he was invoking the Defense Production Act, a 1950s-era law, to spur companies to increase their production of masks.
Sales at big box stores like Walmart, Target and Costco have been booming, as shoppers stock up on food.Sales at big box stores like Walmart, Target and Costco have been booming, as shoppers stock up on food.
At the same time, these retailers, which have been deemed essential businesses by state and federal governments, are also able to sell nonessential items like toys, video games and beach towels.At the same time, these retailers, which have been deemed essential businesses by state and federal governments, are also able to sell nonessential items like toys, video games and beach towels.
That’s changing in Vermont. This week, state officials ordered all big box retailers to block off aisles or sections of their stores selling nonessential goods, or to remove those items to the shelves. The retailers must limit their sales to items like food, fuel and pharmaceutical supplies.That’s changing in Vermont. This week, state officials ordered all big box retailers to block off aisles or sections of their stores selling nonessential goods, or to remove those items to the shelves. The retailers must limit their sales to items like food, fuel and pharmaceutical supplies.
The purpose of the directive by the Vermont Agency of Commerce and Community Development is to limit the number of people coming into the stores. But the measure, particularly if other states follow suit, could put a significant dent in the retailers’ bottom line.The purpose of the directive by the Vermont Agency of Commerce and Community Development is to limit the number of people coming into the stores. But the measure, particularly if other states follow suit, could put a significant dent in the retailers’ bottom line.
While food sales have been booming by more than 30 percent during the pandemic, grocery items have lower profits margins than nonessential goods like electronics and clothing. And big box retailers are incurring additional expenses by giving raises to store employees and providing protective gear, so the spike in sales may not translate into big profits.While food sales have been booming by more than 30 percent during the pandemic, grocery items have lower profits margins than nonessential goods like electronics and clothing. And big box retailers are incurring additional expenses by giving raises to store employees and providing protective gear, so the spike in sales may not translate into big profits.
The Federal Reserve Bank of New York has retained Pacific Investment Management Company, known as PIMCO, to run a program meant to calm the market for short-term business debt.The Federal Reserve Bank of New York has retained Pacific Investment Management Company, known as PIMCO, to run a program meant to calm the market for short-term business debt.
PIMCO managed a similar program during the 2008 financial crisis.PIMCO managed a similar program during the 2008 financial crisis.
The investment manager has been retained on a short-term basis for “its knowledge and experience in the commercial paper market and in credit risk management and its operational and technological capabilities,” according to the New York Fed. State Street Bank & Trust Company will act as custodian.The investment manager has been retained on a short-term basis for “its knowledge and experience in the commercial paper market and in credit risk management and its operational and technological capabilities,” according to the New York Fed. State Street Bank & Trust Company will act as custodian.
PIMCO has many connections at the central bank. Richard H. Clarida, the Fed vice chair, formerly worked at the company. Ben S. Bernanke, who was Fed chair during the Great Recession, is now a senior adviser.PIMCO has many connections at the central bank. Richard H. Clarida, the Fed vice chair, formerly worked at the company. Ben S. Bernanke, who was Fed chair during the Great Recession, is now a senior adviser.
The New York Fed is in charge of running several of the Fed’s emergency lending programs, which it has been unveiling since mid-March in a bid to calm troubled markets. It has previously announced that it would tap BlackRock to set up other programs related to longer-term corporate debt.The New York Fed is in charge of running several of the Fed’s emergency lending programs, which it has been unveiling since mid-March in a bid to calm troubled markets. It has previously announced that it would tap BlackRock to set up other programs related to longer-term corporate debt.
The Treasury Department is also tapping Wall Street to help roll out its programs.The Treasury Department is also tapping Wall Street to help roll out its programs.
At a news conference on Thursday, Treasury Secretary Steven Mnuchin said he picked PJT Partners, Moelis and Perella Weinberg Partners to serve as outside advisers.At a news conference on Thursday, Treasury Secretary Steven Mnuchin said he picked PJT Partners, Moelis and Perella Weinberg Partners to serve as outside advisers.
PJT will be focused on the airlines, Moelis will focus on cargo carriers and Perella Weinberg will concentrate on other companies, such as Boeing. Mr. Mnuchin said that the firms would be charging the rate they use for work for charities, and the contracts would be made public.PJT will be focused on the airlines, Moelis will focus on cargo carriers and Perella Weinberg will concentrate on other companies, such as Boeing. Mr. Mnuchin said that the firms would be charging the rate they use for work for charities, and the contracts would be made public.
Grants, low-interest loans and other government support might seem like manna for businesses under financial strain. But some chief executives and corporate boards might balk at the offer of billions of dollars in aid to help them ride out the coronavirus pandemic and keep the economy from sliding into a deep recession.Grants, low-interest loans and other government support might seem like manna for businesses under financial strain. But some chief executives and corporate boards might balk at the offer of billions of dollars in aid to help them ride out the coronavirus pandemic and keep the economy from sliding into a deep recession.
Already, some corporate leaders are bristling at the potential terms of the grants and loans authorized by the stimulus legislation President Trump signed last week. Boeing’s chief executive, David Calhoun, for one has suggested that the aerospace company could raise money elsewhere if it found the government’s terms too onerous.Already, some corporate leaders are bristling at the potential terms of the grants and loans authorized by the stimulus legislation President Trump signed last week. Boeing’s chief executive, David Calhoun, for one has suggested that the aerospace company could raise money elsewhere if it found the government’s terms too onerous.
The Treasury Department, led by Steven Mnuchin, a former investment banker, might try to avoid imposing conditions that companies find burdensome. But if the aid appears too lenient, popular support for the rescue could evaporate as it did with the bailout of banks and other businesses after the 2008 financial crisis. And some lawmakers and experts argue that Mr. Mnuchin ought to resist the temptation to cut businesses too sweet a deal to prevent them from walking away from the government’s offer.The Treasury Department, led by Steven Mnuchin, a former investment banker, might try to avoid imposing conditions that companies find burdensome. But if the aid appears too lenient, popular support for the rescue could evaporate as it did with the bailout of banks and other businesses after the 2008 financial crisis. And some lawmakers and experts argue that Mr. Mnuchin ought to resist the temptation to cut businesses too sweet a deal to prevent them from walking away from the government’s offer.
Seeking to reverse a nationwide economic slowdown caused by the coronavirus pandemic, China’s central bank announced on Friday that it would give the country’s commercial banks two sizable incentives to lend more money.Seeking to reverse a nationwide economic slowdown caused by the coronavirus pandemic, China’s central bank announced on Friday that it would give the country’s commercial banks two sizable incentives to lend more money.
The People’s Bank of China told small and medium-sized commercial banks that they would be allowed to hold less of their deposits as reserves at the central bank. This would let them lend the money, an estimated $56 billion, to cash-strapped businesses instead.The People’s Bank of China told small and medium-sized commercial banks that they would be allowed to hold less of their deposits as reserves at the central bank. This would let them lend the money, an estimated $56 billion, to cash-strapped businesses instead.
It is about half the amount freed up by an earlier cut in the so-called reserve requirement ratio announced on New Year’s Day. That cut, involving $118 billion, applied to large banks as well as small and medium-sized ones.It is about half the amount freed up by an earlier cut in the so-called reserve requirement ratio announced on New Year’s Day. That cut, involving $118 billion, applied to large banks as well as small and medium-sized ones.
The central bank also said that it would pay interest of only 0.35 percent on money parked with it by banks in excess of their mandatory minimum reserves. The interest rate paid to banks on their excess reserves had been locked at 0.72 percent since late 2008, when it was cut from 0.99 percent in response to the global financial crisis.The central bank also said that it would pay interest of only 0.35 percent on money parked with it by banks in excess of their mandatory minimum reserves. The interest rate paid to banks on their excess reserves had been locked at 0.72 percent since late 2008, when it was cut from 0.99 percent in response to the global financial crisis.
Based on central bank data, these excess reserves totaled nearly $700 billion at the end of last year. If banks now lend a large chunk of that money in response to earning less interest on it, that could have a bigger effect on the economy than the change in the reserve ratio.Based on central bank data, these excess reserves totaled nearly $700 billion at the end of last year. If banks now lend a large chunk of that money in response to earning less interest on it, that could have a bigger effect on the economy than the change in the reserve ratio.
The sportswear giant Under Armour said Friday that it was laying off 6,700 employees that work in its retail stores as well as some in its distribution centers, beginning April 12. Employees who continue to work at the distribution center will receive bonuses. Under Armour had been struggling well before the coronavirus crisis.The sportswear giant Under Armour said Friday that it was laying off 6,700 employees that work in its retail stores as well as some in its distribution centers, beginning April 12. Employees who continue to work at the distribution center will receive bonuses. Under Armour had been struggling well before the coronavirus crisis.
Google said in a blog post early Friday that it is using the data it collects about where people go to help governments and public health officials evaluate the effectiveness of policies — like sheltering in place and working from home — designed to thin crowds in public places. It said it is publishing so-called “mobility reports” for 131 countries based on aggregated and anonymized location data from Google Maps users to show recent changes in travel patterns.Google said in a blog post early Friday that it is using the data it collects about where people go to help governments and public health officials evaluate the effectiveness of policies — like sheltering in place and working from home — designed to thin crowds in public places. It said it is publishing so-called “mobility reports” for 131 countries based on aggregated and anonymized location data from Google Maps users to show recent changes in travel patterns.
Reporting was contributed by Michael Corkery, Nelson D. Schwartz, Patricia Cohen, Alan Rappeport, Stanley Reed, Peter Eavis, Rachel Abrams, Niraj Chokshi, David Gelles, Daisuke Wakabayashi, Keith Bradsher, Jim Tankersley, Julie Creswell, Mohammed Hadi, Carlos Tejada and Daniel Victor.Reporting was contributed by Michael Corkery, Nelson D. Schwartz, Patricia Cohen, Alan Rappeport, Stanley Reed, Peter Eavis, Rachel Abrams, Niraj Chokshi, David Gelles, Daisuke Wakabayashi, Keith Bradsher, Jim Tankersley, Julie Creswell, Mohammed Hadi, Carlos Tejada and Daniel Victor.