PPP Is Likely to Run Out of Money

Today’s Highlights: Pet stores fight back. Toms Shoes plans a comeback. And documenting why businesses perform better with women in management.


The Paycheck Protection Program is likely to run out of money before the May 31 deadline: “The idea of money running out hadn’t been top of mind, at least in this round of the program, until just before the extension passed. In a March 24 hearing before the Senate Committee on Small Business Entrepreneurship, Patrick Kelley, associate administrator at SBA’s Office of Capital Access, noted that the PPP had about $79 billion left, which would be exhausted by mid-April if applications continued at a similar pace. Additionally, at the time the SBA had about 190,000 loans that were being held to address outstanding application issues, further drawing down remaining funds.”

  • “‘This program actually is not going to, you know, continue on until May 30, as the money’s going to run out,’ said Erik Asgeirsson, president and CEO of CPA.com, the business and technology arm of the American Institute of CPAs. ‘I don’t think anybody knew that the money would run out until the SBA made that announcement.’”

  • “Now, lenders and borrowers are calling for further changes to the program. Those include more funding, letting small businesses get second loans and making the new loan calculation formula retroactive for sole proprietors.” READ MORE


Pet stores are trying to fight back against Amazon and Chewy: “As recently as 2015, online sales accounted for a mere 7 percent of the $39 billion pet food market. Last year, though, that figure jumped to 27 percent, and Lummis predicts it will climb to 35 percent by 2024. The winners of this major shift to online ordering were the big dogs: Amazon and Chewy, which now account for close to 90 percent of the online pet food market. In 2020, Amazon saw its pet food sales climb to $9 billion, more than double what it sold in 2019. Meanwhile, Chewy’s share price climbed 200 percent last year as it added more than 5 million new customers — for a total of nearly 18 million — and hit sales of $7 billion. But now the little dogs are biting back. On Election Day 2020, a ragtag group of independent retailers incorporated as the Independent and Neighborhood Pet Retail Association—IndiePet for short. There are an estimated 7,000 to 10,000 pet stores in the United States, and for each retailer, the challenge remains the same: trying to carve out a profitable slice of that remaining 10 percent sliver of the pie.”

  • “‘Amazon has its own line of pet food and wee-wee pads now, which is scary because it is taking marketplace power and completely controlling the entire supply chain and manufacturing process,’ Putillo says.”

  • “Still, he says, many indie retailers are more concerned about Chewy and its marketing machine. ‘Chewy will add a sample of its American Journey dog food in the same box as the food your customer just ordered.’”

  • “The message will be that independent pet retailers offer better products, have more educated staff members, and are more focused on sourcing and sustainability.” READ MORE


An analysis published in the Harvard Business Review explains the impact of women in the C-Suite: “Research has shown that firms with more women in senior positions are more profitable, more socially responsible, and provide safer, higher-quality customer experiences — among many other benefits. And of course, there is a clear moral argument for increasing diversity among top management teams (TMTs). But when it comes to explaining why having more female executives is associated with better business outcomes, and what specific mechanisms cause those positive changes, existing research is much more limited. We set out to explore these questions by examining exactly how firms changed their strategic approach to innovation after appointing female executives. We tracked appointments of male and female executives and analyzed R&D expenses, merger and acquisition rates, and the content of letters to shareholders for 163 multinational companies over 13 years to determine how these firms’ long-term strategies shifted after women joined their TMTs.”

  • “First, we found that after women joined the C-suite, firms became both more open to change and less risk-seeking. In other words, these organizations increasingly embraced transformation while seeking to reduce the risks associated with it.”

  • “Specifically, we observed that when TMTs added female executives, they gradually shifted from a knowledge-buying strategy focused on M&As — which could be described as a more traditionally masculine, proactive approach — towards a knowledge-building strategy focused on internal R&D, which could be described as a more traditionally feminine, collaborative approach.” READ MORE


After a lost year, a Baltimore sports bar hopes for new life: “These are some of the things [Pickles Pub co-owner Tom] Leonard has done to steer Pickles through the pandemic: He used the shutdown to undertake a much-needed and thorough renovation and deep-cleaning of the building. He got serious about social media. On Easter Sunday, he donned bunny ears and delivered baskets full of chocolate and six-packs of beer to his employees. He trimmed down the food menu to focus on quality, and he slashed both the hours and days of the week the bar stayed open. He ditched the third-party security company the bar had been using and started tossing out belligerent drunks himself.”

  • “‘You end up working a lot harder than you ever have for less [return on investment] than ever,’ he said. ‘And that can really grind people down.”

  • “And he learned to lower expectations. One night in November, after realizing they had done $1,100 in takeout sales, Leonard and Cotton found themselves high-fiving each other — before suddenly realizing how absurd that was.”

  • “‘If it were any other year and we only did $1,100 in sales [in a day], I’d have looked at him and said, Why the f--- are we even open?’ Leonard said. ‘And here we were, high-fiving each other.’” READ MORE

On Cape Cod, business owners expect record crowds and too few workers: “Hiring seasonal workers to make beds and wash dishes has long been a challenge, even in the best of times. But with the arrival of a crucial foreign workforce potentially delayed due to just-lifted visa restrictions, and locals content to keep collecting enhanced unemployment checks as COVID keeps spreading — including a current spike in positive cases on the Cape — business owners are struggling more than usual to get their staffs in place. And the prospect of being overwhelmed by a stampede of vacation-starved tourists is putting some of them on edge.”

  • “As of late March, reservations for Cape and Islands properties were up more than 73 percent this year over each of the three years prior to the pandemic, according to the listing site WeNeedAVacation.com.”

  • “About a quarter of the 20,000-plus seasonal workforce on the Cape is made up of foreign workers here on H-2B or J-1 visas, which were suspended last spring after the pandemic hit.”

  • “The ban expired last week, which could create a logjam at US consulates, many of which are still operating at reduced capacity, as workers who haven’t been able to apply for visas try to start scheduling interviews, said Nate Riccardi, an immigration lawyer in Framingham.” READ MORE


The numbers are grim for landlords: “In only a year, the market value of office towers in Manhattan, home to the country’s two largest central business districts, has plummeted 25 percent, according to city projections released on Wednesday, contributing to an estimated $1 billion drop-off in property tax revenue. JPMorgan Chase, Ford Motor, Salesforce, Target and more are giving up expensive office space and others are considering doing so. Jamie Dimon, chief executive of JPMorgan Chase, the largest private sector employer in New York City, wrote in a letter to shareholders this week that remote work would ‘significantly reduce our need for real estate.’ For every 100 employees, he said, his bank ‘may need seats for only 60 on average.’”

  • “Across the country, the vacancy rate for office buildings in city centers has steadily climbed over the past year to reach 16.4 percent, according to Cushman & Wakefield, the highest in about a decade.”

  • “That number could climb further, even as vaccinations allow some people to go back to work, if companies keep giving up office space because of hybrid or fully remote work.”

  • “At the same time, many new office buildings are under construction — 124 million square feet nationwide, or enough for roughly 700,000 workers. Those changes could drive down rents, which were touching new highs before the pandemic.” READ MORE


Subprime borrowers are falling behind in car payments, pointing to the uneven recovery: “Some 10.9 percent of subprime borrowers with outstanding auto loans or leases were more than 60 days past due in February, up from 10.7 percent in January and 8.7 percent a year prior, according to credit-reporting firm TransUnion. It marked the sixth consecutive month-over-month increase and the highest level in monthly data going back to January 2019. More than 9 percent of subprime auto borrowers were more than 60 days past due in the fourth quarter, the highest quarterly figure in data going back to 2005.”

  • “The missed payments are increasing in what has otherwise been a period of relatively low consumer delinquencies, with stimulus payments, unemployment benefits and other measures keeping many borrowers afloat.”

  • “The rising subprime delinquencies point to an uneven economic recovery and a deep divergence between those who can navigate the coronavirus downturn and those who can’t.” READ MORE


Toms Shoes is planning a comeback (without the buy-a-pair, donate-a-pair model): “It starts with expanding beyond the millennials who swooned for its slip-ons and how it donated a pair of shoes to a needy kid for each one sold. To connect with today’s teens and early 20-somethings—a group dubbed Generation Z—the brand has ended the footwear donations that keyed its breakthrough a decade ago and is now giving a third of profit to causes it says this younger cohort cares about, such as gun violence. Marketing has been revamped to focus on teens. It’s also pushing further into sneakers.”

  • “This is all part of the brand’s bid to rebound from a remarkable fall that saw it sink from being touted in Vogue and worn by celebs such as Snoop Dogg and Anne Hathaway to being mismanaged by private equity into near-collapse—creditors took control of the debt-laden company in December 2019.”

  • “Magnus Wedhammar, a former Nike and Converse executive, arrived shortly thereafter as CEO to clean up the mess.” READ MORE


Starting next year, New York’s legal cannabis market could be worth $1 billion, and half the licenses will go to minority- or women-owned businesses: “The new law, the Marihuana Regulation and Taxation Act, provides a framework for a statewide adult-use industry that could quickly become one of the world's largest--an exciting prospect for legions of businesses that are poised to expand operations in the state. Retail sales could begin as early as spring 2022.”

  • “‘We knew that New York was just a matter of time,’ says [Claire] Moloney, the East Coast regional director at New York City-based wholesale cannabis startup LeafLink. ‘It's so exciting to us for this day to finally be here.’”

  • “Moloney, for one, plans to partner with cannabis companies from other states, helping them ease into New York's market while expanding the size of LeafLink's wholesale network.”

  • “Every startup founder's top challenge is access to capital. In the cannabis industry, that challenge is compounded: As cannabis remains illegal on a federal level, federally insured banks and credit unions can't issue loans to cannabis companies.” READ MORE

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Episode 56: God, Loren, You Are Such a Jerk: This week with Paul Downs, William Vanderbloemen, and Laura Zander, the talk leaps from one plague to another—floods, power outages, cyber crime, employee churn, supplier price hikes, and vanished shipping containers—not to mention the actual plague. For Laura, whose wholesale yarn business keeps falling further behind on its orders, these events have necessitated a series of difficult conversations with customers: “They can't get mad about the pandemic,” she tells us. “And they're not going to get mad about the fact that we're moving. And they're not going to get mad about the fact that there's a deep freeze. But at some point, they're going to get tired, whether it's consciously or subconsciously.” Plus: a friendly discussion about whether raising your prices makes you a jerk. (Spoiler alert: It does not.)