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| Flaws in America’s Plan to Save Midsize Business Portend More Trouble | Flaws in America’s Plan to Save Midsize Business Portend More Trouble |
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| Goodwill of San Francisco has too many employees to qualify for the Small Business Administration’s forgivable loans, but its income has ground to a standstill as the coronavirus closes stores and chokes off the clothing donations that make up its inventory. | Goodwill of San Francisco has too many employees to qualify for the Small Business Administration’s forgivable loans, but its income has ground to a standstill as the coronavirus closes stores and chokes off the clothing donations that make up its inventory. |
| William Rogers, the Goodwill chapter’s chief executive, has been forced to furlough most of his 600 employees, many of them formerly incarcerated or recently homeless, and it is unclear when the nonprofit will have the business to bring them back. | William Rogers, the Goodwill chapter’s chief executive, has been forced to furlough most of his 600 employees, many of them formerly incarcerated or recently homeless, and it is unclear when the nonprofit will have the business to bring them back. |
| At the Tuscany Suites in Las Vegas, a privately owned hotel and casino that employs more than 700 people, revenues disappeared overnight as Nevada closed up shop for social distancing. The company laid off more than 600 of its employees, said Grayson McNees, the general manager, who is now focused on cutting costs. | At the Tuscany Suites in Las Vegas, a privately owned hotel and casino that employs more than 700 people, revenues disappeared overnight as Nevada closed up shop for social distancing. The company laid off more than 600 of its employees, said Grayson McNees, the general manager, who is now focused on cutting costs. |
| Both organizations are slipping through the cracks, highlighting a glaring omission in the government’s economic response to the pandemic. | Both organizations are slipping through the cracks, highlighting a glaring omission in the government’s economic response to the pandemic. |
| The government’s small-business loans, which can be forgiven if employers hang onto their workers, are only available to companies with up to 500 employees. Congress has left it to the Treasury Department and the Federal Reserve to help midsize businesses — those with roughly more than 500 employees and fewer than 10,000. | The government’s small-business loans, which can be forgiven if employers hang onto their workers, are only available to companies with up to 500 employees. Congress has left it to the Treasury Department and the Federal Reserve to help midsize businesses — those with roughly more than 500 employees and fewer than 10,000. |
| But the Fed’s recently announced program will offer those companies only cheap bank loans that cannot be forgiven — potentially saddling them with debt loads that would make a post-crisis rebound more painful. Payments on the debt will be waived for a year, but borrowers will need to return the principal eventually. Those who cannot pay the money back quickly would owe interest on the four-year loan. | But the Fed’s recently announced program will offer those companies only cheap bank loans that cannot be forgiven — potentially saddling them with debt loads that would make a post-crisis rebound more painful. Payments on the debt will be waived for a year, but borrowers will need to return the principal eventually. Those who cannot pay the money back quickly would owe interest on the four-year loan. |
| That may be an unattractive prospect for many businesses facing uncertain futures, limiting program use. | That may be an unattractive prospect for many businesses facing uncertain futures, limiting program use. |
| “We’re keeping control of our costs to weather the storm,” Mr. McNees said, explaining that the company operated with low debt and is avoiding piling on more. The end result is that, in contrast to small businesses where forgivable loans incentivize rehiring, Tuscany Suites employees will be left jobless for now, and it is unclear how long that will last. | “We’re keeping control of our costs to weather the storm,” Mr. McNees said, explaining that the company operated with low debt and is avoiding piling on more. The end result is that, in contrast to small businesses where forgivable loans incentivize rehiring, Tuscany Suites employees will be left jobless for now, and it is unclear how long that will last. |
| “We’re not expecting to bring them all back in May,” Mr. McNees said of the casino employees. “We’re planning on running at a lower capacity — I think travel plans will run lower for quite some time.” | “We’re not expecting to bring them all back in May,” Mr. McNees said of the casino employees. “We’re planning on running at a lower capacity — I think travel plans will run lower for quite some time.” |
| Relying on the Fed to help midsize companies weather the coronavirus was never going to be a perfect solution. The central bank can help healthy businesses gain access to credit through its emergency lending powers, but it cannot simply give them cash to help them survive. The Fed chair, Jerome H. Powell, warned lawmakers of as much when they were designing the coronavirus relief package, and has reiterated since that the central bank has no ability to hand out money. | Relying on the Fed to help midsize companies weather the coronavirus was never going to be a perfect solution. The central bank can help healthy businesses gain access to credit through its emergency lending powers, but it cannot simply give them cash to help them survive. The Fed chair, Jerome H. Powell, warned lawmakers of as much when they were designing the coronavirus relief package, and has reiterated since that the central bank has no ability to hand out money. |
| “I would stress that these are lending powers, not spending powers,” he said in a public appearance in April. | “I would stress that these are lending powers, not spending powers,” he said in a public appearance in April. |
| Yet Congress made the Fed the United States’ primary solution for thousands of companies. Lawmakers gave the Treasury Department $454 billion to support Fed lending programs in the late-March coronavirus relief package, specifying that economic policymakers should use some of that money to set up a lending program for midsize businesses, which, while big, are often still too small to raise money by selling stocks or bonds. | Yet Congress made the Fed the United States’ primary solution for thousands of companies. Lawmakers gave the Treasury Department $454 billion to support Fed lending programs in the late-March coronavirus relief package, specifying that economic policymakers should use some of that money to set up a lending program for midsize businesses, which, while big, are often still too small to raise money by selling stocks or bonds. |
| The Fed announced the details of that “Main Street” lending program on April 9, earmarking $75 billion to support up to $600 billion in bank loans for those companies. No start date has been given, though officials have indicated that the program could be up and running within a few weeks. | The Fed announced the details of that “Main Street” lending program on April 9, earmarking $75 billion to support up to $600 billion in bank loans for those companies. No start date has been given, though officials have indicated that the program could be up and running within a few weeks. |
| Companies in need of cash may be unable — or unwilling — to tap the Fed’s facility, leaving a giant section of corporate America vulnerable and with little help. About 19,000 American companies have 500 to 10,000 employees, and they employ 30.3 million workers, Census Bureau data shows. | Companies in need of cash may be unable — or unwilling — to tap the Fed’s facility, leaving a giant section of corporate America vulnerable and with little help. About 19,000 American companies have 500 to 10,000 employees, and they employ 30.3 million workers, Census Bureau data shows. |
| Even if the San Francisco Goodwill branch is eligible for the Fed program once it gets up and running — the initial program design is not well suited for lending to nonprofits, though the Fed may tweak that — taking a Main Street loan would be a difficult business choice. The business is largely self-funded, using the money it makes on resold clothing and goods to pay its associates, hard-to-employ people for whom the program serves as job training. Borrowing money would leave it with debt that it might struggle to pay back. | Even if the San Francisco Goodwill branch is eligible for the Fed program once it gets up and running — the initial program design is not well suited for lending to nonprofits, though the Fed may tweak that — taking a Main Street loan would be a difficult business choice. The business is largely self-funded, using the money it makes on resold clothing and goods to pay its associates, hard-to-employ people for whom the program serves as job training. Borrowing money would leave it with debt that it might struggle to pay back. |
| “It puts us in a precarious situation,” Mr. Rogers said. The company is relying on savings and donations that will run out within four to six months, he estimates. “Really, fundamentally, we need help.” | “It puts us in a precarious situation,” Mr. Rogers said. The company is relying on savings and donations that will run out within four to six months, he estimates. “Really, fundamentally, we need help.” |
| If the coronavirus recession is as deep and painful, and the recovery as slow, as economists increasingly worry, some Fed officials are concerned that the limited safety net for midsize companies could have dangerous implications. Companies could fold, overwhelming bankruptcy courts. Others might scale back drastically, leaving waves of people unemployed. | If the coronavirus recession is as deep and painful, and the recovery as slow, as economists increasingly worry, some Fed officials are concerned that the limited safety net for midsize companies could have dangerous implications. Companies could fold, overwhelming bankruptcy courts. Others might scale back drastically, leaving waves of people unemployed. |
| The Fed has little experience supporting companies directly, but its emergency lending programs — which it can use in times of crisis and has been rolling out since mid-March — are fairly well suited to helping the biggest ones. | The Fed has little experience supporting companies directly, but its emergency lending programs — which it can use in times of crisis and has been rolling out since mid-March — are fairly well suited to helping the biggest ones. |
| By pledging to buy higher-rated corporate bonds in late March, the central bank has already provided a backstop that makes investors comfortable lending to corporations. Big companies make regular use of debt, have strategies for handling their leverage and have ways to restructure without going out of business if times get tough. | By pledging to buy higher-rated corporate bonds in late March, the central bank has already provided a backstop that makes investors comfortable lending to corporations. Big companies make regular use of debt, have strategies for handling their leverage and have ways to restructure without going out of business if times get tough. |
| The middle market is harder for the Fed to effectively support. Because many smaller companies do not issue bonds or stocks, there is nothing for the Fed to buy directly. It is instead working through banks to make loans. | The middle market is harder for the Fed to effectively support. Because many smaller companies do not issue bonds or stocks, there is nothing for the Fed to buy directly. It is instead working through banks to make loans. |
| That structure will put some of the most vulnerable companies at a disadvantage. Banks have to retain a 5 percent slice, based on the program’s current design, which has been open to comment. The idea is that by forcing banks to have skin in the game, the Fed will protect itself against piling more debt on risky, potentially soon-to-be insolvent companies. That will automatically preclude the shakiest companies. | That structure will put some of the most vulnerable companies at a disadvantage. Banks have to retain a 5 percent slice, based on the program’s current design, which has been open to comment. The idea is that by forcing banks to have skin in the game, the Fed will protect itself against piling more debt on risky, potentially soon-to-be insolvent companies. That will automatically preclude the shakiest companies. |
| Updated June 22, 2020 | |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| Those with an alternative might avoid taking the loans if they do not know what the future holds. | Those with an alternative might avoid taking the loans if they do not know what the future holds. |
| “I’ve talked to a number of midsize businesses in our district who say a loan is not that helpful,” said Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, adding that the best the Fed can do is design the program to be as useful as possible, given that it is not a handout. “The Fed is just very limited because we are a lender, not a grant-maker.” | “I’ve talked to a number of midsize businesses in our district who say a loan is not that helpful,” said Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, adding that the best the Fed can do is design the program to be as useful as possible, given that it is not a handout. “The Fed is just very limited because we are a lender, not a grant-maker.” |
| There has been some interest in the program: The Fed has received about 2,000 comments on its initial idea. The design could still change or be clarified, and that might determine whether companies use it. | There has been some interest in the program: The Fed has received about 2,000 comments on its initial idea. The design could still change or be clarified, and that might determine whether companies use it. |
| Right now, for instance, the Fed says businesses must make “reasonable efforts” to retain employees. That is intentionally vague, but if companies believe it means they cannot furlough workers, it could dissuade takeup. | Right now, for instance, the Fed says businesses must make “reasonable efforts” to retain employees. That is intentionally vague, but if companies believe it means they cannot furlough workers, it could dissuade takeup. |
| The government is offering more generous unemployment benefits, so few shuttered companies would want to pile on debt to cover payroll for workers who might actually earn bigger paychecks by filing for unemployment. | The government is offering more generous unemployment benefits, so few shuttered companies would want to pile on debt to cover payroll for workers who might actually earn bigger paychecks by filing for unemployment. |
| Goodwill of San Francisco paid its employees for their first month off, but the cash it used to do that has run dry. The workers are now turning to unemployment insurance, which the government has made more generous through July 31. | Goodwill of San Francisco paid its employees for their first month off, but the cash it used to do that has run dry. The workers are now turning to unemployment insurance, which the government has made more generous through July 31. |
| The question is what will happen to the nonprofit, and its employment levels, in the longer run. Mr. Rogers is continuing to cover health care and is hoping to bring everyone back. His success will matter hugely for people like Natalie Jaspar, who first applied at Goodwill last year after her life sentence was commuted. | The question is what will happen to the nonprofit, and its employment levels, in the longer run. Mr. Rogers is continuing to cover health care and is hoping to bring everyone back. His success will matter hugely for people like Natalie Jaspar, who first applied at Goodwill last year after her life sentence was commuted. |
| “Where do I go if I’m a convicted murderer, and I’ve been in prison for 21 years?” said Ms. Jaspar. She got the job, and said it had allowed her to build skills. “People like me who are formerly incarcerated, we need support, and acceptance, and a sense of belonging. That is what Goodwill has meant to me.” | “Where do I go if I’m a convicted murderer, and I’ve been in prison for 21 years?” said Ms. Jaspar. She got the job, and said it had allowed her to build skills. “People like me who are formerly incarcerated, we need support, and acceptance, and a sense of belonging. That is what Goodwill has meant to me.” |
| Ms. Jaspar has just applied for unemployment insurance, and said that if she did not qualify for enough of a benefit and Goodwill was not open again by June, she may need to look for new work. She is about to lose her transitional housing, and rents are expensive in the Bay Area. | Ms. Jaspar has just applied for unemployment insurance, and said that if she did not qualify for enough of a benefit and Goodwill was not open again by June, she may need to look for new work. She is about to lose her transitional housing, and rents are expensive in the Bay Area. |
| “I may become homeless here,” she said. But she believes that the store will be back in action by then. “We’re ready to roll, whenever we’re given the OK to return to work.” | “I may become homeless here,” she said. But she believes that the store will be back in action by then. “We’re ready to roll, whenever we’re given the OK to return to work.” |