A PPP Deal Is in the Works

Today’s Highlights: How businesses blow money on technology. Amazon is building another supermarket chain. And is your banker your friend or your enemy?

GOVERNMENT SUPPORT

There’s a deal in the works to extend the PPP for two months: “In addition to delaying the PPP's loan application deadline to May 31, the deal would give the Small Business Administration authority to continue processing pending applications for 30 days after that date, lawmakers told POLITICO. The agreement, struck by House Small Business Chair Nydia Velázquez (D-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.), comes after business groups and the lending community pressed the Biden administration for an extension. Last-minute changes requested by the Biden administration on February 22 left both business owners and lenders with little time to implement the changes and submit accurate applications.”

  • “During a House Committee on Small Business hearing on Wednesday, the American Institute of CPAs's vice president of firm services, Lisa Simpson, noted that these issues could take at least two to six weeks to resolve.”

  • “As a result many larger banks such as JPMorgan Chase and Bank of America, have stopped accepting applications.”

  • “The measure could reach the House floor for a vote as early as next week.” READ MORE

TAXES

For business owners, this year’s tax season will be trickier than ever. For example: “The CARES Act, a $2 trillion relief package signed into law last March, created an employee retention credit, giving employers an incentive to pay workers through the pandemic, but the law barred businesses that took Paycheck Protection Program loans from claiming the credit. In December’s relief bill, Congress eliminated that restriction and allowed employers to retroactively claim the credit for quarters in 2020. It also expanded the credit for 2021 and lowered the threshold for qualifying for it. This year, the credit — which businesses usually claim through a quarterly filing — is available to businesses that had a 20 percent decline in 2021 quarterly gross receipts compared with the same quarter in 2019. They can get up to $10,000 an employee, per quarter, through June.”

  • “The revamped credit ‘is a better program — there’s more money, and it’s available to more employers,’ said Shelly Abril, the head of tax compliance at Gusto, a payroll services provider. ‘But with that comes all this extra complexity.’ READ MORE

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BUSINESS TECHNOLOGY

One way companies waste money on technology is by building instead of buying: “Creating tools like a website or app from scratch can cost hundreds of thousands of dollars, says Oliver Dore, technology partner at Work & Co., a New York-based firm that works with brands to build customer-experience technology. So, why do so many companies build software instead of buying it off the shelf? Sometimes it is company politics. In businesses that have strong technology capabilities, teams that oversee the company’s technology may push to develop new tools or services in-house instead of buying them, says Mr. Dore.” 

  • “‘We have worked with companies where the insistence to build versus buy is so great, [and] there’s such a bias toward that,’ he says. ‘You end up doing a lot of work that, to be honest, is already available either cheaply or for free in the open source community.’” READ MORE

Thanks to virtual-reality headsets, Zoom tours and TikTok videos, students can check out college campuses without visiting them: “The spring tradition of school-by-school cross-country road trips is under way, and some families with juniors in high school are finding novel approaches to get a sense of campus.  Some are taking Zoom tours, while others are experimenting with more creative university offerings, like exploring campus mock-ups in the video game Minecraft, tasting their way through college-inspired cookbooks and strapping on Oculus headsets for virtual-reality tours.”

  • “The University of Southern Indiana replaced traditional walking tours with ‘safari-style’ driving tours last June.”

  • “Prospective students and their families log into a Zoom audio call before setting out from the visitors center in a line of cars.” READ MORE

Netflix wants to crack down on password sharing: “Netflix is testing a new pop-up message that warns people who are sharing a password — and don’t live with the password holder — that they need to pony up and pay for their own account. ‘If you don’t live with the owner of this account, you need your own account to keep watching,’ reads the message that a limited group of people saw on their TVs, according to screenshots from online publications The Streamable and GammaWire. The service then offers a free initial trial.”

  • “Password sharing is incredibly popular on Netflix and other streaming sites, where people might piece together a portfolio of streaming subscriptions by sharing passwords with their parent, ex-partner, friend or college roommate’s dad’s cousin.

  • “Restricting people from sharing passwords could force some to pay for their own accounts — but it also might drive others to simply give up on Netflix and turn to one of the other myriad streaming options.” READ MORE

THE 21 HATS CONVERSATION

Is Your Bank Your Friend or Your Enemy? On Tuesday at 3 ET, 21 Hats will host a webinar conversation on what business owners should expect from their banks and how they can better manage that relationship. The conversation will feature Ami Kassar, founder of Multifunding, the prominent loan broker for small businesses; Chris Myers, CEO of Colorado Lending Source, a lender that focuses on small businesses and has plans to expand nationally; and Violet Alexandre, CRO of Bryllyant, a fintech company building a frictionless banking experience for entrepreneurs. Bring your own questions!

Register Here

AMAZON

Amazon has opened 11 Amazon Fresh supermarkets: “As many businesses struggled to survive the pandemic, Amazon.com was quietly building a national grocery chain. The first Amazon Fresh store opened to the public in Los Angeles in September. Store No. 11 opened Thursday, and Amazon is working on at least 28 more, from Philadelphia to the Sacramento suburbs. The company is also testing the ‘Just Walk Out’ cashierless shopping technology created for its Go convenience stores at an Amazon Fresh location in Illinois.”

  • “Amazon Fresh, industry watchers say, is a way for the company to become even stickier with devoted Prime members, as well as appeal to a broad cross-section of America—from lower-income shoppers who frequent discounters like Walmart to wealthier customers looking to pick up online orders.” READ MORE

STARTUPS

Travis Kalanick’s latest venture, CloudKitchens, is angering neighboring businesses: “The startup, funded by Saudi Arabia's sovereign wealth fund and Kalanick's money from Uber, sets up small industrial kitchens focused exclusively on takeout and delivery orders and used by everyone from mom-and-pop owners to the biggest names in fast food. The ‘ghost-kitchen’ strategy has taken off across companies with venture backers and customers who can order a burrito that's cooked in a kitchen space rented by a local or national restaurant, then delivered by a DoorDash or Uber Eats driver. Orders at the North Rockwell location spiked in recent months, thanks to stay-at-home rules, Chicago's snowy winter, and popular Chick-fil-A, which set up shop in one of the site's kitchens in November.”

  • “More orders led to an influx of drivers on the two-lane street. Suddenly, neighbors told Insider, CloudKitchens has upended a block where small local businesses have coexisted peacefully with each other and residential neighbors.”

  • “Some of these local businesses told Insider they were losing customers after parking staff hired by CloudKitchens yelled, sans face masks, at their clients. Delivery drivers have taken up parking spots, caused car accidents, and added congestion, they said.” READ MORE

Cheese is a digital banking platform aimed at Asian Americans: Co-founder and CEO Ken Lian came to the United States from China in 2008 to attend college. In the years after his move, Lian said he paid thousands of dollars in bank fees and got rejected ‘multiple times’ for basic bank accounts, despite having a FICO score over 800.Those experiences led him to come up with the concept behind Cheese, which he said will offer its banking services via a multi-language platform. The one-year-old startup also has a social component, giving customers a way to support Asian-American businesses and organizations.” READ MORE

THE MORNING REPORT PODCAST

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FINANCE

SEALS are a finance option for startups too small for venture capital: “In such an agreement, a firm like Earnest will write a check  — about $200,000 on average — to a startup. Typically, the startup has revenue of anywhere between a few thousand dollars a month and a couple million dollars a year, Tringas said. The company then can pay that money back over time at a 3-to-1 ratio, typically, to buy back two-thirds of the ownership stake the firm took. An example would be a company receiving a $100,000 check from Earnest for a 9 percent stake. Over time, the company could pay back $300,000 and get a 6 percent stake back.” READ MORE

THE 21 HATS PODCAST

Episode 52: I Need a Vacation: It was a year ago this week that the W.H.O. declared a pandemic, the NBA suspended its season, and toilet paper started to disappear. It has all taken a toll. “This is where it gets tricky,” Jay Goltz tells us. “Just because everybody shows up every day and looks like they're happy-go-lucky, they're not. People have stresses in their life, whether it's their kids, whether it's their aging parents, whether it's their financial situation, whether it's their physical well-being—any of the above. This is just layered on top of whatever was going on in their life before.” Plus: Karen Clark Cole’s company goes to Mars, Dana White gets a smart question about expansion from a retailer in Canada, and Jay discovers that ESOP companies don’t have to pay federal income tax.

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