Small-Business Relief Effort ‘a Mess’


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A $349 billion relief program to help small businesses cover their payroll costs for up to eight weeks will be “up and running tomorrow,” Treasury Secretary Steven Mnuchin said at the White House briefing on Thursday.

But banks and other lenders that are expected to make the loans warned that the relief effort, known as the paycheck protection program, was going to have a rocky start. Late on Thursday, they were still waiting for critical technical guidance about how to make the loans, and pushing back on terms they warned were onerous.

Brock Blake, the chief executive of Lendio, a marketplace that connects borrowers and lenders, tweeted: “Wow. What a mess!”

The lenders appear to have won one concession. Mr. Mnuchin said the interest rates paid by borrowers on the loans would be increased to 1 percent from 0.5 percent after banks protested that they would lose money servicing the loans unless the rate was raised.

The banks were still waiting, however, for guidance about how to underwrite the loans and how the government would handle a provision promising forgiveness for businesses that used the money to retain or rehire workers.

Mr. Mnuchin said borrowers would be able to apply for the loans and receive them quickly: “You get the money, you get it the same day.”

But industry executives said there was virtually no chance of that happening on Friday. Even as Mr. Mnuchin was speaking, lenders still had “nothing” in the way of guidance on critical loan issues, said Tony Wilkinson, the chief executive of the National Association of Government Guaranteed Lenders, an industry trade group.

The Kremlin denied that Mr. Putin had spoken to the Saudi crown prince, as Mr. Trump had said in his Twitter message. “No, there was no conversation,” Dmitri S. Peskov, spokesman for Mr. Putin, told the Interfax news agency.

Still, crude oil futures, which had already been climbing on Thursday, surged and shares of oil and gas companies rallied. West Texas Intermediate, the U.S. crude benchmark, rose about 25 percent, and Occidental Petroleum was the best performing stock in the S&P 500, with a gain of about 19 percent. Apache rose nearly 17 percent, and Halliburton gained more than 13 percent.

The rally bolstered the stock market, with the S&P 500 ending the day up more than 2 percent.

Businesses dependent on consumer spending were battered as a result. Retailers ranging from Gap to Walgreens Boots Alliance fell. Live Nation Entertainment, which produces concerts and sells tickets to events, was one of the worst-performing stocks in the S&P 500, after falling about 13 percent. Kohl’s fell about 10 percent.

Treasury Secretary Steven Mnuchin said he has tapped three Wall Street investment banking firms to advise the government on its bailout of the airline industry and other companies that are critical to national security.

As part of the economic relief package passed by Congress last week, Mr. Mnuchin has allocated more than $40 billion in money to rescue the airlines and other companies that are important for national security. The government will take equity stakes or other forms of compensation in exchange for propping up the businesses.

At a news conference on Thursday, Mr. Mnuchin said he picked PJT Partners, Moelis and Perella Weinberg Partners to serve as outside advisers to the effort.

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.

“No big fees to bankers,” Mr. Mnuchin said. The Treasury has also selected three law firms to be part of the process. Mr. Mnuchin did not disclose their names.

As the coronavirus pandemic worsens and more Americans are told to stay home to avoid spreading the virus, retailers are responding by extending store closings and providing protection to workers in stores that remain open.

Lululemon said on Thursday that its stores in North America and other countries would remain closed until it was safe to reopen and that it would keep employees on the payroll through June 1, even if the stores remain shuttered.

The company’s senior leaders will take a 20 percent salary cut for three months, and its board will forgo a cash retainer, resources that will go toward a fund for Lululemon employees “facing Covid-19 related hardships.”

The athleisure retailer, which recently hit $4 billion in annual sales, will continue to sell its goods online.

Bed Bath & Beyond said that it would extend its temporary store closures in the United States and Canada until “at least” May 2. Its Buy Buy Baby and Harmon stores continue to operate based on state and local regulations.

The chain said it would furlough most store associates and “a portion” of corporate associates until at least May 2. Bed Bath & Beyond said staff affected by its announcement would receive pay and benefits through April 18.

And Target said on Thursday that it would supply face masks and gloves to its more than 350,000 workers in stores and distribution centers, following a similar announcement by Walmart this week. The chain said that starting on Saturday, it would also monitor and potentially limit customer traffic in stores to promote social distancing. Target said that it had already put up signs to promote social distancing, and added plexiglass partitions at registers.

The Congressional Budget Office said on Thursday that it expected unemployment to top 10 percent for the second quarter of 2020 and the economy to contract by 7 percent as the coronavirus takes a toll on economic activity in the United States.

In a blog post on Thursday, the director of the budget office, Phillip Swagel, wrote the decline “could be much larger” and that the virus had made any economic forecasts highly uncertain.

Mr. Swagel said the unemployment rate could have reached 12 percent if not for the expected effects of the $2.2 trillion economic rescue package that President Trump signed last week.

More ominously, the office does not expect a quick return to rapid economic growth later this year. Instead, Mr. Swagel wrote that its analysts “expected the effects of job losses and business closures to be felt for some time” with the unemployment rate remaining at 9 percent by the end of 2021.

Disney, the world’s largest entertainment company, with 227,000 employees worldwide, said on Thursday that it would furlough nonessential workers across its businesses starting April 19, making them eligible for compensation through the government stimulus. A Disney spokeswoman declined to say how many employees could be affected.

Furloughed employees will continue to receive full health care benefits. Disney will cover premiums.

Disney has become the entertainment industry’s biggest coronavirus casualty. With its biggest division (theme parks and consumer products) essentially closed, its movie and TV studios idled, its ESPN operation with no live sports to broadcast, and a new chief executive (Bob Chapek) running things on a day-to-day basis, Disney’s market capitalization has fallen by more than $50 billion over the last month.

Most of Disney’s workers are employed at theme parks. Walt Disney World in Florida ranks as the largest single-site employer in the United States with roughly 75,000 employees. Disneyland in California employs about 24,000 people. Disney closed its domestic parks the weekend of March 13. Disney said last week that it would continue to pay its parks employees until April 18.

Reporting was contributed by Brooks Barnes, Stacy Cowley, David McCabe, Kenneth Vogel, Alan Rappeport, Sapna Maheshwari, Nicole Sperling, Niraj Chokshi, Jim Tankersley, Peter Eavis, Stanley Reed, Ben Casselman, Patricia Cohen, Clifford Krauss, Andrew E. Kramer, Mary Williams Walsh, Keith Bradsher, Neal E. Boudette, Kate Conger, Daisuke Wakabayashi, Stefanos Chen, Keith Collins, David Yaffe-Bellany, Mohammed Hadi, Carlos Tejada and Daniel Victor.



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