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PAYBACK'S A B*TCH
Public companies and the Treasury are having second thoughts after a short fling that left both parties feeling a little embarrassed and unfulfilled. Turns out, large companies with access to capital markets and the Payroll Protection Program outlined as part of the CARES Act weren’t meant for each other after all.
After Shake Shack announced that it was giving back $10M earlier this week, the Treasury department pledged to claw back any funds that were given to public companies who don’t actually need them.
Companies have until May 7th to return the funds, or else *checks notes*, well no consequences have been announced yet. The Treasury will get back to us on that one...
Get with the program
The intention of the SBA’s PPP was to help fund payrolls for small businesses, ideally with less than 500 employees. Apparently the team who designed the application didn’t consider asking “are you a publicly-traded company.” As a result, at least 150 public companies applied and were granted a reported $600M in loans.
The cherry on top? As corporations tend to do, many found ways to surpass the $10M loan limit to get multiple loans by filing applications through subsidiaries.
Some government officials have criticized lenders, saying they fast-tracked loans for bigger companies the banks had relationships with vs. small businesses who needed the funds.
Let’s try again
Luckily, the House approved the second $484B stimulus that includes $310B for small businesses. It could be up and running as early as today, assuming everybody’s not a little hungover from the NFL draft last night. Ok, who are we kidding, we’re all just operating with a constant buzz at this point.
The bottom line...
The criticism of the $350B small business funds seems to be the main focus at the moment, but there was $2.2T of aid approved as part of the Cares Act. Isn’t anybody worried about that?!
Turns out, they are. Luckily, the Fed is here to answer our questions and announced that it will provide a list of all the bank lending partners and final borrowers (actual businesses) who have used its different loan facilities.
Public companies will give back stimulus funds [WSJ]
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