As many of you know, we started a site called COVID Loan Tracker yesterday to help small business owners track applications and loan issuance so they can know when money starts to flow.
FINSUM readers gave an enormous response with over 200 small business owners in our space filling out the survey. Overall , as of 7:30 am we have had 440 small businesses report on CTL in the first 18 hours, representing up to $650,000,000 in loan applications across 47 states. Below are the findings:
0% have received PPP loans (i.e. money actually deposited)
0% have received EDL grants (i.e. money actually deposited)
39% are LLCs
28% are S-corporations
Average PPP loan request: $427,000
Average employees per application: 14
96% of applications are for less than $50,000
18% applied for more than $250,000
2% applied for $1m or more
49% applied through small and/or regional banks
16% applied through JP Morgan Chase
The conclusion is that money is clearly not flowing yet (at least at any meaningful level). Please share CTL with your networks so we can aggregate more data to keep small business owners informed and empower the media with data to keep the government accountable.
This is a dark day economically. New data is flowing in from many sources, and all of it is pointing to a severe decline in demand that seems ever more likely to push the US into a depression. Unemployment claims came in at another 6.6m this morning, meaning a total of 16.6m Americans have applied in the last three weeks. In other data, fuel and energy demand has fallen so far that it is now at 1960s level. Electricity usage has plummeted on the back of the sharp decline in industrial output.
FINSUM: Let’s do some rough calculations. The US workforce is about 164m people. We started this coronavirus lockdown with just under 4% unemployment, and have since added 16.6m people. By a rough calculation that means we likely have already hit 14% unemployment.
This is a difficult time to be any kind of investor, but being one trying to get yields out of equities is particularly hard-bitten at the moment. Dividends are being cut left and right, so investors need to turn to other options, but much of fixed income looks very scary. That said “Quality yield is on sale”, according to a fund manager at Tocqueville Asset management who specializes in income investments. “Don’t ignore the rest of the capital structure”, says another fund manager at Socoro Asset Management. For instance, look for things like a JP Morgan Chase preferred security with a fixed coupon of 5% and yield-to-call of 7.72%, or Invesco’s Variable Rate Preferred ETF (VRP), yielding 4.85%.
FINSUM: These are good suggestions. For a yield that will really knock your socks off, take a look at the Virtus Private Credit Strategy ETF (VPC), which owns many BDCs and CEFs and has been beaten up in the selloff, but yields a whopping ~8% net of expenses.
One of the small but important pillars of the recent years of the bull market has been Millennials beginning to invest. However, as this coronavirus meltdown has unfolded, that growing support for the market may evaporate. Millennials mostly invest in the market via retirement plans, such as 401(k)s, but given the huge layoffs occurring, they are likely to have to raid their retirement funds in order to get through these hard times. Because of this there is likely to be billions withdrawn from the market.
FINSUM: Millennials were a growing part of the market, but given their often precarious financial circumstances, it seems like their participation will be less for the next year or so.
Dear readers, like you we are concerned for the longevity of small businesses across the country and are eager to receive the Payment Protection Program (PPP) loans and EIDL grants that hundreds of thousands of small business owners have applied for across the US. Seemingly everyone who has applied is frustrated and confused because of all the issues that the SBA, lenders, and the government are having in issuing the loans. We know thousands of financial advisors are also small business owners and have applied for these loans. Because of this, we have started a site – covidloantracker.com – to track the application and issuance of PPP and other loans. This will help business owners understand when and how many loans are actually being paid and will hold media and the government accountable to provide the aid they have promised. Our aim to is to share this site with as many small business owners as possible and then share results with the media on a daily basis as a way to track what percentage of applicants have received their loans.
Please visit covidloantracker.com and fill out the 60 second form.