Here We Go Again
The PPP Round II application process opens today (for some). The latest pandemic shortage is of chips (semiconductor chips). And here's why some businesses are saying, Just keep it.
RESCUE LOANS
The Paycheck Protection Program re-starts today through a small group of community lenders: “Community lenders are specially designated institutions that focus on underserved borrowers, including women-led businesses and those run by Black, Latino and Asian owners and other minorities. Government officials did not set a timeline for when larger banks and lenders will be allowed to start processing loans, saying only that it would happen ‘shortly.’”
“The move to prioritize community lenders came after criticism that the initial round of Paycheck Protection Program funding was unevenly and unfairly distributed.”
“The program’s structure favored businesses with existing banking relationships, creating unique challenges for some of the most vulnerable business owners.”
“Approvals will generally take at least one day, an agency official said on Friday.” READ MORE
Last time, some businesses got $1 PPP loans (not a typo!): “And then there were the roughly 300 business that received loans of $99 or less. Judith Less, who runs a thrift shop in New Jersey, got $27. Nikki Smith, a baker and caterer in Oregon, collected $96. A.J. Burton, the founder of a record label in Arkansas, got $78. And Susana Dommar, a chiropractor in Texas, received a loan for just $1.”
“The tiny sums were equally frustrating for the banks and other lenders that made the government-backed loans. For each, they were paid 5 percent of the value — meaning they collected just pennies on the smallest loans, far less than they cost to make.”
“The profusion of minuscule loans is yet another illustration of how the relief program’s hastily constructed rules sometimes led to absurd outcomes.” READ MORE
IN CASE YOU MISSED IT
On Saturday, I asked readers to tell us about companies that have impressed them. We got this submission from Sarah Hernholm, founder of WIT: “I feel like many people know this business, Barstool Sports, but what their founder has been doing in response to the struggles small businesses have faced is really inspiring. It's not just emotionally inspiring. Sure, the videos of small businesses receiving funds make me cry ... every.single.time. But it's more about the reminder that as entrepreneurs and founders, we get to pivot our businesses when we see a different need for our audience/customer. It reminds me to continue to ask myself, ‘How can I better serve our teens?’ The things we did a year ago may not be the things our customer needs today. It also has shown me once again the power of story. Whenever they post a video, donations increase. People really want to feel connected to the ‘Why?’ As a result, we have started sharing more videos of our teens talking about what being part of WIT means to them.”
It’s not too late to tell us about a business that has impressed you.
RETAIL
Some retailers are finding it cheaper to just refund the purchase price and let consumers keep unwanted items: “Amazon, Walmart, and other companies are using artificial intelligence to decide whether it makes economic sense to process a return. For inexpensive items or large ones that would incur hefty shipping fees, it is often cheaper to refund the purchase price and let customers keep the products. The relatively new approach, popularized by Amazon and a few other chains, is being adopted more broadly during the Covid-19 pandemic, as a surge in online shopping forces companies to rethink how they handle returns.”
“‘We are getting so many inquiries about this that you will see it take off in coming months,’ said Amit Sharma, chief executive of Narvar, which processes returns for retailers.”
“The number of e-commerce packages that were returned in 2020 jumped 70 percent from 2019, according to Narvar.” READ MORE
There’s a mini-Ikea opening in New York City: “The 115,000-square-foot space at the corner of Queens and Junction Boulevards is the first ‘mini’ Ikea store in the U.S. and is part of the retailer’s plan to reach more urban consumers. (Ikea will also debut mini-stores in Los Angeles and Chicago in the next two years.)”
“And while Ikea doesn’t have any plans to abandon its sprawling warehouse-style stores in the suburbs, the retailer hopes this midsize store will satisfy shoppers who want both delivery options and the instant gratification of traveling home with a new purchase.” READ MORE
HUMAN RESOURCES
Friday’s jobs report showed that all of the 140,000 jobs lost in December were lost by women: “According to new data released Friday, employers cut 140,000 jobs in December, signaling that the economic recovery from the coronavirus pandemic is backtracking. Digging deeper into the data also reveals a shocking gender gap: Women accounted for all the job losses, losing 156,000 jobs, while men gained 16,000.”
“Meanwhile, a separate survey of households, which includes self-employed workers, showed an even wider gender disparity.”
“It also highlighted another painful reality: Blacks and Latinas lost jobs in December, while White women made significant gains.” READ MORE
THE ECONOMY
Automakers are cutting output because of “chipageddon,” a shortage of semiconductor chips: “Ford Motor is planning to idle a Louisville, Ky., factory for a week starting Monday, because of parts shortages stemming from limited supplies of semiconductors now vital to everything from display screens to transmissions. The move will lead to the temporary layoffs of about 3,900 workers at the plant, which builds two popular SUVs, the Ford Escape and Lincoln Corsair. Honda Motor, Fiat Chrysler Automobiles and others are also wrestling with the shortage, leading them to reduce output on everything from big pickup trucks to compact sedans.”
“The problem was first observed at Chinese factories late last year and is spreading to the rest of the world, as demand for electronics has surged during the health crisis, particularly with many people still spending most of their time at home.”
“‘It’s incredible how quickly this just blew up,’ said Jeff Schuster, president of global forecasting at industry firm LMC Automotive.” READ MORE
BREXIT
U.K businesses are already feeling the pain: “Within a week, implications of the Brexit trade deal with the European Union are being felt by businesses up and down the country as food deliveries are delayed for not having the right customs paperwork, logistics companies halt the shipment of goods, and retailers discover their supply chains might be obsolete.”
“For the first time since 1993, British businesses need to deal with customs checks, additional food safety forms, and myriad other paperwork to trade with the European Union.”
“So far, there are few immediate tangible benefits of Brexit for businesses — beyond the fact that ending years of stormy debate and uncertainty may be counted as a benefit.” READ MORE
TECHNOLOGY
The world’s largest tech show, CES, goes virtual this year: “Almost inconceivably sprawling in its pre-pandemic incarnations, the industry extravaganza spanned the entire Las Vegas Convention Center, the nearby Sands Expo and chunks of a dozen or more hotels up and down the Strip. It was like a Disneyland for tech: Since I started covering the annual January event in 2001, I’ve fired a computer-assisted sniper rifle, attended a Tesla-coil music concert, hitched a ride in self-driving vehicles and met countless robots. I once took the controls of a Fujifilm blimp midflight. This year, you actually can see it all—but only from the little screen through which you see pretty much everything else these days. Vegas and CES will be without each other for the first time in decades. No more blimp rides.” READ MORE
THE VIRUS
January is likely to be the worst month of the pandemic: “Newly reported cases, which fell to 100,186 on Christmas Day, topped 283,204 on Friday—the country’s second-highest total of the pandemic, according to a Wall Street Journal analysis of data compiled by Johns Hopkins University. Deaths hit their third record-high in a row on Thursday, according to Johns Hopkins. It was the first time the daily figure has surpassed 4,000.”
“Angela Clendenin, an assistant professor of epidemiology and biostatistics at Texas A&M School of Public Health, said the recent rise in new cases is likely from Christmas travel and gatherings, and soon the country will see a surge on top of a surge, from subsequent New Year’s celebrations and travel.”
“‘What people should expect is following shortly behind the steep increase in cases will be a large surge in the hospitalization numbers and then, subsequently, the fatalities,’ Dr. Clendenin said.” READ MORE
OBITUARY
Bernard Spain held the copyright for the smiley face and launched two retail chains: “A lifelong Philadelphia resident, Mr. Spain and his brother, Murray, sold 50 million buttons with the yellow smiley face after obtaining the copyright in 1971. Although the original symbol was designed by someone else, Mr. Spain added the slogan ‘Have a Happy Day’ and copyrighted the revised mark, which he printed and sold on pins and countless other products, from posters to pajamas, according to Smithsonian Magazine. He later gave Walmart permission to use the mark so the retailer could resolve a legal challenge in Europe, his family said.”
“He founded Spain’s Cards & Gifts in 1960, with the first store in the Cheltenham Shopping Center. The corner store concept sold cards, gifts, candy, and novelties — and grew to 30 locations in Pennsylvania and New Jersey.”
“Mr. Spain later founded Dollar Express in 1990 and, along with his brother, grew the company to 106 stores and $200 million in annual revenue, according to Temple’s Fox School of Business, where he graduated as a certified public accountant in 1956.”
“At its peak, the chain employed 2,300 people before the Spains sold it and the gift shops to rival Dollar Tree for $300 million in 2000, Dana Spain said.” READ MORE