More than five million companies received loans under the federal government’s signature relief program for small businesses, but a tiny fraction of those companies gobbled up vast sums of money, newly released data shows.
Detailed loan information released by the Small Business Administration showed that about 600 businesses received loans of $10 million, the largest available under the $523 billion Paycheck Protection Program. And a mere 1 percent of borrowers received more than a quarter of the total amount of money disbursed, The New York Times’s Stacy Cowley and Ella Koeze report.
The data is the first full accounting of how federal money was spent through the P.P.P., which offered struggling small companies forgivable loans to help them retain workers and keep up with bills.
The companies that received the maximum $10 million loan include dozens of restaurant chains including Black Angus Steakhouses, P.F. Chang’s, Legal Sea Foods and TGI Friday’s, which took advantage of an exception the restaurant industry lobbied for.
Prominent law firms like Boies Schiller Flexner, the high-priced firm run by David Boies, and Kasowitz Benson Torres, founded and run by President Trump’s longtime personal lawyer, Marc E. Kasowitz, also collected loans for $10 million.
The data also shows how inconsistently the S.B.A. disbursed money through the Economic Injury Disaster Loan, a still-running aid effort that offers companies and nonprofits low-interest loans directly from the government to help them rebuild their battered operations.
Two organizations received loans in early April for more than $500,000, the cap the agency set on the program later that month. The Jewish Community Center in Stamford, Conn., received $900,000 and the CWC Group, a chiropractic clinic in Bellevue, Wash., received $713,900.
More than 8,000 organizations got loans for $500,000, a limit that was later lowered to $150,000, where it has remained since May. The E.I.D.L. program, has distributed 3.6 million loans, totaling $194 billion, since the coronavirus crisis began — far more than the program had given out in its entire 67-year history.
The pandemic’s toll on the economy will become clearer Thursday morning when the government reports the latest weekly data on unemployment claims.
Initial claims have risen for two weeks in a row, a sign that curfews and other restrictions on business activity in the face of surging coronavirus cases are forcing employers to cut jobs. A third weekly increase would confirm the economy’s downward trajectory.
“The trend has been in the wrong direction,” said Diane Swonk, chief economist for the accounting firm Grant Thornton in Chicago. “The labor market has a long way to go, and we’re likely to go backward instead of forward as we get into winter.”
The pickup in travel over the Thanksgiving holiday was a bit of a reprieve for industries like airlines and hotels, “but it wasn’t enough to change the equation on what is normally one of the busiest travel days of the year,” Ms. Swonk added. “And unfortunately, it will likely result in higher cases of coronavirus.”
The prospect of vaccines to combat the virus is a hopeful long-term signal, but the economy will face serious challenges until inoculations can begin on a mass scale in the spring, said Michael Gapen, chief U.S. economist at Barclays.
He is looking for a U.S. economic growth rate near zero in the first quarter, followed by a rebound later in the year as consumer spending picks up. “I think the economy is on a solid footing, but we may just hit a couple of bumps between now and the end of the first quarter,” Mr. Gapen said.
Wall Street was poised to open unchanged and European indexes drifted lower as investors awaited the latest U.S. weekly unemployment claims data.
The Stoxx Europe 600 index fell 0.4 percent. The FTSE 100 in Britain declined 0.2 percent, the CAC in France fell 0.4 percent and the DAX in Germany was 0.5 percent lower. In Asia, the Nikkei 225 in Japan closed little changed, while the Hang Seng index in Hong Kong rose 0.7 percent.
Initial claims for state unemployment benefits have risen for two consecutive weeks, as a surge in virus cases prompted curfews and other social restrictions across the United States. Investors are watching to see whether claims will keep rising, adding pressure on Congress to deliver a fiscal relief package soon, as President-elect Joseph R. Biden Jr. has urged.
In a sign of progress, top Democrats in Congress endorsed a $908 billion compromise stimulus plan on Wednesday proposed by a bipartisan group of moderate senators. It is far smaller than what they have previously proposed. The group called on Senator Mitch McConnell, the Republican majority leader, to restart negotiations.
Another critical economic data point will come on Friday, when the Labor Department’s report on job growth for November is released.
Oil prices fell. West Texas Intermediate futures were down 0.6 percent to $44.99 a barrel. OPEC and other oil producing nations, including Russia, will meet later Thursday to work out whether they should continue with production cuts or increase output by two million barrels a day starting next month as they had previously agreed.
Three of the biggest supermarket chains in Britain said they would pay just under £1.3 billion ($1.7 billion) in business rates, a type of commercial property tax, forgoing the government’s offer to suspend the tax for the year. The stores were able to stay open during lockdowns, and have reported strong profits. Shares in Sainsbury’s rose 2.7 percent and Tesco shares climbed 1.2 percent.
Shares in Pershing Square Holdings rose 0.8 percent in London, after the FTSE index manager said the investment vehicle, which tracks Bill Ackman’s U.S. hedge fund Pershing Square, will join the FTSE 100 index later this month.
After President Trump’s loss to former Vice President Joseph R. Biden Jr., more than 40 percent of Republicans who were polled for The New York Times said they expected their family to be worse off financially in a year’s time, up from 4 percent in October. Democrats expressed a rise in optimism — though not as sharp as the change in Republican sentiment.
The new polling, by the online research firm SurveyMonkey, reaffirms the degree to which Americans’ confidence in the economy’s path has become entwined with partisanship and ideology. In the days after the election, for the first time since Mr. Trump took office in 2017, Democrats and independent voters expressed higher levels of confidence in the economy than Republicans did, The New York Times’s Jim Tankersley and Ben Casselman report.
Here are some of the survey’s findings:
Democrats in November were nearly three times as likely as they were in October to say they expected good or very good business conditions in the country over the next year. They were more than twice as likely as they were in October to say they expected “continuous good times economically over the next five years.”
Republicans were actually more likely to say that they were doing well in November, compared to October. But nearly three in four said they expected “periods of widespread unemployment or depression” in the next several years, up from three in 10 in October.
Some of Mr. Biden’s proposals earn support from Republican voters. More than four in 10 Republicans support raising taxes on people earning more than $400,000 a year. Three-quarters of Republicans support a proposal to guarantee paid sick leave to workers during the coronavirus pandemic.
Big partisan shifts in confidence have become common following elections in recent decades. Republicans’ economic sentiment fell when Barack Obama was elected president in 2008, then soared when Mr. Trump was elected in 2016. Republicans’ self-reported confidence remained well above Democrats’ for the entire Trump administration, until the election caused the pattern to reverse again.
About the survey: The data in the article came from an online survey of 3,477 adults conducted by the polling firm SurveyMonkey from Nov. 9 to Nov. 15. The company selected respondents at random from the nearly three million people who take surveys on its platform each day. Responses were weighted to match the demographic profile of the population of the United States. The survey has a modeled error estimate (similar to a margin of error in a standard telephone poll) of plus or minus 2.5 percentage points, so differences of less than that amount are statistically insignificant.
Many homeowners at risk of foreclosure can breathe a little easier — for another month, at least.
The Federal Housing Finance Agency, the regulator that oversees federally-backed mortgages, said on Wednesday that single-family homeowners with loans backed by Fannie Mae or Freddie Mac will be protected from foreclosure through at least Jan. 31, 2021. The moratorium had been scheduled to expire at the end of this month.
People living in properties that either Fannie or Freddie has taken over because the owner couldn’t pay the mortgage also received relief: The regulator extended its moratorium on evictions as well.
“This extension gives peace of mind to the more than 28 million homeowners with an enterprise-backed mortgage,” said Mark Calabria, director of the Federal Housing Finance Agency, referring to the two so-called government-sponsored enterprises.
Fannie and Freddie, which buy many loans from lenders and package them into investments, are not the only government affiliated organizations that have enacted moratoriums for loans associated with their work. The Federal Housing Administration, which often insures loans to borrowers who put less money down, has a foreclosure and eviction moratorium through Dec. 31. A spokeswoman for the agency said it is assessing its next steps.
The regulator overseeing Fannie and Freddie said providing the pandemic-related relief to both borrowers and renters was already expected to cost $6 billion because of loan defaults, foreclosures and related losses. The one-month extension will add to that.