Greg Hunnicutt has almost entirely shut down his Houston-based construction business. At his one remaining job site, he’s being careful to minimize the risk of anyone being exposed to the coronavirus. So he keeps fewer workers on the job.
“My electrician is there now doing some work,” he said. “It’s just him and his helper. So what I’m trying to accomplish here is reducing how people interact.”
With his income sharply reduced, Hunnicutt needs more funds, and fast. He reached out to NPR on Friday, when the Small Business Administration’s coronavirus crisis lending program opened. At the time, he was having trouble getting through online to apply for an SBA loan through his bank, Wells Fargo. I asked him this week how it was going.
“Well, it’s not,” he said, laughing. He says he filled out a form on the bank’s website over the weekend, but he hasn’t heard back yet.
But he says he needs that money soon to keep his business alive.
“I paid my guys two weeks,” he said. “Well, that was two weeks ago. Starting today, this week, they haven’t been paid.”
If the process doesn’t move quickly, he said his business will be in serious trouble.
Business problems with banks
Hunnicutt is one of dozens of small business owners that contacted NPR, describing obstacles in applying for loans. The $350 billion SBA initiative, called the Paycheck Protection Program, is designed to keep workers at small companies on the payroll during the crisis.
The Trump administration had said it hoped the program could give some businesses immediate financial assistance. And administration officials have bragged that hundreds of millions of dollars were disbursed through banks on the first day.
Some small business owners, like Hunnicutt, are waiting to hear from their banks. Others have said they haven’t been able to get through to their banks, due to crashing websites.
Several business owners cited restrictions from Bank of America as a major hurdle. On Friday, Bank of America said a deposit account with the bank was not enough to qualify for loans. Applicants would need loan or credit card accounts with the bank. That left out the many businesses without lending relationships with the bank and sparked an online backlash. Bank of America loosened its requirements over the weekend.
The SBA program reflects the difficulties of quickly setting up a massive new emergency lending effort, and running it through myriad banking institutions.
And it comes at a time when businesses desperately need money. A recent survey from the U.S. Chamber of Commerce found that one in four businesses say they are two months or less from closing permanently, and one in 10 say it’s one month or less.
Bigger problems than banks
Small businesses’ difficulties with the new program go beyond their banks, however. New rules written after Congress created the program are tripping up some businesses, according to Stephanie O’Rourk, a partner at accounting firm CohnReznick.
“The problem with the program is that it doesn’t align with the reality of the situation that a lot of businesses are going through right now,” she said.
For example, she says, the new rules now say that the loans must be paid back in two years instead of the 10 that the CARES Act says. In addition, Treasury added a rule saying three-quarters of the money must be used on payrolls in order for it to be forgiven.
For some businesses, non-payroll expenses are just too high to spend that much on employees.
Chelsea Altman, co-owner of five restaurants in New York City, says that rule will be bad for her and other businesses in high-cost cities.
“In New York state or New York City, your rent is very high,” she said. “So there is a chance that even with this 75 percent going to labor and then the other 25 percent is supposed to go to your rent, there’s times when that won’t” cover the rent.
Some banks displeased
Many banks opened the program up only to their own customers. As NPR has reported, that worried some small business advocates because it threatens to leave out smaller, and particularly, minority-owned businesses.
Banks, meanwhile, had their reasons for wanting to limit their applications, according to Aaron Klein, policy director of the Center on Regulation and Markets at the Brookings Institution.
“The Treasury Department made a major unforced error, leaving anti-money laundering rules on autopilot,” he said.
To lend money, banks have to go through a procedure called Know Your Customer to prevent money laundering. It can be a cumbersome process, Klein explained, and stands to be a serious impediment to an effort that seeks to get tens of billions out the door in a matter of days.
Other banks have voiced their own issues, including forms that changed overnight, unclear guidance from the government, and difficulty with the Small Business Administration website.
For now, at least one concern with the program is being answered: that the initial $349 billion appropriated for it is too small to meet business demand. On Tuesday, the Treasury said it was preparing to ask Congress to spend another $200 billion on the program. Senate Majority Leader Mitch McConnell said on Tuesday that he plans to work with Democrats and Treasury to put more money into the program.
Copyright 2020 NPR. To see more, visit https://www.npr.org.
Need Income? Here Are 8 Safe Stocks That Yield More Than 2.5%
With interest rates at all-time lows, it is becoming increasingly difficult for investors to earn a decent yield in today’s environment. Savings accounts pay a little more than 1% and Treasurys pay even worse.
For seniors or retirees looking for income, there are a handful of companies that have been paying a consistent dividend for more than 100 years that also have a yield higher than 2.5%.
Here are eight companies to take a look at:
Dividend Yield: 3.6%
Coca-Cola is the newest addition to the list, with 2020 marking the 100th year that the company has paid a dividend. The company also announced in February that it was increasing the quarterly dividend, making it 58 straight years where the payout has increased. Even with health trends shifting away from sugary drinks, the company has a robust product lineup. It has also been expanding into new beverage lines like coffee and energy drinks.
Dividend Yield: 2.9%
Chubb is an insurance company based in Switzerland that primarily writes policies for property and casualty, accident, health, life and reinsurance and is the largest publicly traded property and casualty company in the world. In addition to paying a dividend for more than 100 years, the company has also raised its payout to shareholders for 27 consecutive years.
Dividend Yield: 3.2%
You probably recognize General Mills’ brands every time you head to the grocery store. They own brands like Cheerios, Wheaties, Betty Crocker, Pillsbury, Haagen-Dazs and many more. The company has been paying out a dividend for more than 120 years and have increased that payout for 15 straight years.
Dividend Yield: 2.5%
Another company with plenty of household brand recognition, Colgate-Palmolive owns brands like Colgate, Palmolive, Speed Stick and Tom’s of Maine. The company has paid out dividends for 125 years and has raised its dividend consistently for the last 57 years.
Procter & Gamble
Dividend Yield: 2.8%
The company owns iconic brands like Pampers, Tide, Bounty, Charmin, Gillette, and Head & Shoulders. It has been paying a dividend for more than 100 year and has raised that dividend every year for the last 63 years.
Dividend Yield: 3.6%
Based in Cork, Ireland, the company provides fire, HVAC and security systems for buildings. The company has been paying a dividend to shareholders since just after it was founded in 1887, a streak of 133 years.
Dividend Yield: 4.3%
Starting way back in 1823 as the New York Gas Light Company, Consolidated Edison provides gas, electric and steam power to New York City and Westchester County, NY. The company has a long history of paying dividends to shareholders dating all the way back to 1885, a streak of 135 years.
Dividend Yield: 7.7%
The massive energy company started as two spinoffs of John D. Rockefeller’s Standard Oil company, Exxon and Mobil. The two companies merger in 1998, but investors in the companies have been receiving consistent dividend payments since way back in 1882.
Social Media Stocks Slip As Trump Issues Executive Order
Social media stocks slipped yesterday after President Trump signed an executive order granting the government broader authority to crack down on social media companies. Twitter fell 4.45%, Facebook dipped 1.61% and Google’s parent company Alphabet dropped 0.08%. Twitter took the biggest hit because Trump said if the company doesn’t operate honorably, he hinted he would consider shutting the company down.
Trump says social media companies have gained “unchecked power” and have taken on the roles of editors and publishers of the content on their websites. His executive order would remove their “liability shield” if they engage in censorship.
What is Section 230?
Section 230 allows tech companies to moderate user-generated content on their site without becoming legally liable for it as a publisher typically would.
The law allows companies to engage in “good Samaritan” moderation of “objectionable” material. This, then, comes without the companies receiving a publisher or speaker treatment. Section 230 allows platforms like Twitter, Facebook and Google’s YouTube to take down terrorist content. It also allows them to track and take down harassing messages while still enjoying other legal protections.
What the law doesn’t allow, and what Trump says the platforms are doing, pertains to selectively moderating what messages users see to silence conservative voices.
“They’re doing things incorrectly, they have points of view,” Trump said at the White House. “My executive order calls for new regulations under Section 230 of the Communications Decency Act to make it that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield. That’s a big deal,” he also stated.
Trump said the order would also prevent taxpayer dollars from going to any company that engages in what Trump referred to as deceptiveness. This is in addition to limiting these protections for companies that acted with bias.
Trump’s executive order comes just days after Twitter added a fact-checking feature. The social media site added the new feature alongside two of the President’s tweets about mail-in ballots and fraud. After Twitter added the fact-checking features, Trump then accused the company of engaging in “political activism.”
He also tweeted, “So ridiculous to see Twitter trying to make the case that Mail-In Ballots are not subject to FRAUD. How stupid, there are examples, & cases, all over the place. Our election process will become badly tainted & a laughingstock all over the World. Tell that to your hater @yoyoel.”
“Big Tech is doing everything in their very considerable power to CENSOR in advance of the 2020 Election,” the president also said Wednesday night — on Twitter. “If that happens, we no longer have our freedom. I will never let it happen! They tried hard in 2016, and lost. Now they are going absolutely CRAZY. Stay Tuned!!!” he then added.
Facebook CEO Mark Zuckerberg said that his company is taking a different approach to moderating content on his social media platform.
“I just believe strongly that Facebook shouldn’t be the arbiter of truth of everything that people say online. Private companies probably shouldn’t be, especially these platform companies, shouldn’t be in the position of doing that.”
The interest in updating Section 230 to remove the liability shield for publishers isn’t just a goal for Republicans. It actually has bipartisan support.
This past January, Democratic nominee Joe Biden proposed revoking Section 230 completely. “The idea that it’s a tech company is that Section 230 should be revoked, immediately should be revoked, number one. For Zuckerberg and other platforms. It should be revoked because it is not merely an internet company. It is propagating falsehoods they know to be false.” Biden also never responded to follow-up questions about this statement.
Even former Democratic candidate also Bernie Sanders supported the idea, adding, “Tech giants and online platforms should not be shielded from responsibility when they knowingly allow content on their platforms that promotes and facilitates violence.”
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Mark Cuban Proposes ‘Use it Or Lose It’ Debit Cards to Boost Recovery
Mark Cuban hasn’t been shy about voicing his ideas to get our country back on the road to recovery. His latest proposal is that the government issue debit cards to US households to help businesses by boosting consumer spending. The caveat to Cuban’s plan is that the debit cards have a “use it or lose it” feature.
“… I think we need to do a debit card program where we give money literally to each household and make it ‘use it or lose it,’ whether it’s $1,000, or $1,200, or whatever that number is, every couple of weeks and say, ‘You have X number of days to use this debit card, or you lose the money that’s been deposited on there.’”
Cuban came up with the plan. As he said, “we’ve got to get to a scenario where consumers have enough confidence to go out there and spend money… the primary reality is no business can survive without sales. And two-thirds of the economy is consumer-generated demand.”
Without an increase in business, many businesses can’t afford to re-hire their employees. Even if they could, some are receiving more money from their unemployment benefits than they are from working.
Cuban says his plan is a “perfectly timed stimulus program” and “…by doing that, and timing it right, that’s going to create demand for these companies so they can afford to bring their employees back after they’re off of all that unemployment CARES enhancement.”
The CARES Act became law in March. It added an extra $600 weekly payment on top of the amount someone receives under state law. Those additional benefits will end in July unless the government extends it.
Cuban has also proposed that the government start a federally-guaranteed jobs program. He said these should give people “confidence in their jobs” and help start the rehiring process.
“We’re going to have to have a transitional, not permanent transitional federal jobs program,” he said. He also included jobs like the ones created during the pandemic to track and treat COVID-19 patients.
“And so we’re going to need to hire people, millions of people, you know, preferably for testing, tracing, tracking, supporting vulnerable populations, long-term care, you know, giving people jobs that they know, are stable, because that gives them the impetus to spend money,” Cuban added.
While Cuban’s plan would absolutely boost consumer spending, Scott Baker, an associate professor of finance at the Kellogg School of Management at Northwestern University says it won’t help every industry.
“Some industries you won’t be able to stimulate this way,” said Baker. He also said that the plan cant help the tourism industry. He said this because, even with extra money in their pockets, Americans aren’t travelling.
Baker also says that during economic uncertainty, most Americans will delay durable goods purchases, like electronics, appliances and vehicles.
Cuban, who has become more vocal about his ideas to help the country recover from the coronavirus pandemic, also hasn’t officially ruled out a 2020 presidential run.
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