[Snorlax94]

One of the flaws of programs like the Payroll Protection Program (PPP) is that it has treated all businesses equally, whether they are hard hit or not. Another problem is that it incentivizes ALL business to keep their entire payroll, whether or not that makes sense.

Earlier, I've said certain businesses that may be particularly dangerous for the spread of Covid may need to be wiped out, but now I think that's too harsh. I think it benefits everyone if we can identify a very narrow sector of businesses that will be hit disproportionately hard and create a narrowly-defined assistance program for them. I call them "Partially Forgivable Hibernation Loans."

Think of all the businesses that perhaps *must* shut down for the public good. I actually think it's a small sliver of the economy: gyms, indoor amusement centers, possibly spas and massage places, possibly outdoor amusement parks, possibly movie theaters, restaurants that cannot shift to a take-out or outdoor seating model. Then think of all the non-profits that really should close for now -- museums, aquariums, orchestras, operas, live theaters, children's centers. It would be sad if they would be all wiped out. Imagine Spring of 2022, everyone is immune, but now there is no theater, no choirs, no spas, no gyms, no YMCAs, no community pools. While many can be re-opened by new owners, many will not, and we'll have too many empty graffiti'ed restaurants with the wrong layout and equipment for prospective buyers. What we really want many of them to do is "hibernate" for as long as it's required, and help them to do so.

First, I do think the owners and lenders to these businesses *should* take a hit. You fund a venture, and if it increases in value, you reap all the gains, but if there's an unexpected disaster, you should lose some of the money you put down. That's the capital part of capitalism.

Why can't these places just layoff employees, shut off the lights, and hibernate right now? I think there are two main reasons why many places would unnecessarily get wiped out: rent and loans (either for equipment or renovations).  So I propose the government help them hibernate. First, landlords should take a hit -- they should have to agree to cut monthly rent for hibernating businesses. Then, the government could give loans for the remaining 70% of rent, and maybe 80-90% could be forgiven if they re-open (again, businesses should take some hit). Then, banks should suspend any payments due for loans for renovations or equipment, maybe the government covers these loans for the hibernation period at near-zero interest.

So, let's say my local swimming school is facing being wiped out. Maybe they pay $40,000 a month in rent and $25K monthly loan payments for the $2M to build the center. It could be sad and wasteful for them to be wiped out, but they can't cover the $65,000 in rent & interest a month. Maybe as part of the program, the bank freezes the monthly $25,000 loan payment at zero interest. The landlord agrees to reduce rent to $28,000, and the government lends the businesses $24,000 a month to cover the reduced rent, at 0% interest, and $20,000 a month is forgiven when they reopen. This way, the school owner loses a manageable amount (for them) and the school re-opens in Summer 2021.

As a requirement, all rent amounts should be verified by past 1099 filings (which businesses MUST file to show what they're paying in rent) and all loans and terms must be made public, and this should only apply for standard equipment/renovation loans from US banks (no, we should not be covering mysterious, hushed financing deals from Russia). For the PPP program, I can see why payroll information could be confidential, but I don't think it's a big deal for people to show their rent and equipment loans as a condition to getting government money.

There are a few major benefits to the general public:
1) It gets these businesses to CLOSE for the public good. Maybe dangerous businesses will stop lobbying to re-open.
2) It means we re-emerge from this with live theaters, vibrant movies, museums, sit-down family restaurants, swimming schools and entertainment centers ready to welcome us back.
3) It also avoids anti-competitive hyper-consolidation. Without this, only big companies will survive and they'll just become bigger (there are only like 3 major movie theatre chains -- just imagine if there was only 1).
4) It's a bit more fair.
5) And, because it's narrowly crafted and figures are made public, it should be surprisingly affordable relative to other programs.

[Snorlax94]

One of the flaws of programs like the Payroll Protection Program (PPP) is that it has treated all businesses equally, whether they are hard hit or not. Another problem is that it incentivizes ALL business to keep their entire payroll, whether or not that makes sense.

Earlier, I've said certain businesses that may be particularly dangerous for the spread of Covid may need to be wiped out, but now I think that's too harsh. I think it benefits everyone if we can identify a very narrow sector of businesses that will be hit disproportionately hard and create a narrowly-defined assistance program for them. I call them "Partially Forgivable Hibernation Loans."

Think of all the businesses that perhaps *must* shut down for the public good. I actually think it's a small sliver of the economy: gyms, indoor amusement centers, possibly spas and massage places, possibly outdoor amusement parks, possibly movie theaters, restaurants that cannot shift to a take-out or outdoor seating model. Then think of all the non-profits that really should close for now -- museums, aquariums, orchestras, operas, live theaters, children's centers. It would be sad if they would be all wiped out. Imagine Spring of 2022, everyone is immune, but now there is no theater, no choirs, no spas, no gyms, no YMCAs, no community pools. While many can be re-opened by new owners, many will not, and we'll have too many empty graffiti'ed restaurants with the wrong layout and equipment for prospective buyers. What we really want many of them to do is "hibernate" for as long as it's required, and help them to do so.

First, I do think the owners and lenders to these businesses *should* take a hit. You fund a venture, and if it increases in value, you reap all the gains, but if there's an unexpected disaster, you should lose some of the money you put down. That's the capital part of capitalism.

Why can't these places just layoff employees, shut off the lights, and hibernate right now? I think there are two main reasons why many places would unnecessarily get wiped out: rent and loans (either for equipment or renovations).  So I propose the government help them hibernate. First, landlords should take a hit -- they should have to agree to cut monthly rent for hibernating businesses. Then, the government could give loans for the remaining 70% of rent, and maybe 80-90% could be forgiven if they re-open (again, businesses should take some hit). Then, banks should suspend any payments due for loans for renovations or equipment, maybe the government covers these loans for the hibernation period at near-zero interest.

So, let's say my local swimming school is facing being wiped out. Maybe they pay $40,000 a month in rent and $25K monthly loan payments for the $2M to build the center. It could be sad and wasteful for them to be wiped out, but they can't cover the $65,000 in rent & interest a month. Maybe as part of the program, the bank freezes the monthly $25,000 loan payment at zero interest. The landlord agrees to reduce rent to $28,000, and the government lends the businesses $24,000 a month to cover the reduced rent, at 0% interest, and $20,000 a month is forgiven when they reopen. This way, the school owner loses a manageable amount (for them) and the school re-opens in Summer 2021.

As a requirement, all rent amounts should be verified by past 1099 filings (which businesses MUST file to show what they're paying in rent) and all loans and terms must be made public, and this should only apply for standard equipment/renovation loans from US banks (no, we should not be covering mysterious, hushed financing deals from Russia). For the PPP program, I can see why payroll information could be confidential, but I don't think it's a big deal for people to show their rent and equipment loans as a condition to getting government money.

There are a few major benefits to the general public:
1) It gets these businesses to CLOSE for the public good. Maybe dangerous businesses will stop lobbying to re-open.
2) It means we re-emerge from this with live theaters, vibrant movies, museums, sit-down family restaurants, swimming schools and entertainment centers ready to welcome us back.
3) It also avoids anti-competitive hyper-consolidation. Without this, only big companies will survive and they'll just become bigger (there are only like 3 major movie theatre chains -- just imagine if there was only 1).
4) It's a bit more fair.
5) And, because it's narrowly crafted and figures are made public, it should be surprisingly affordable relative to other programs.

[stupac2]

Seems reasonable to me. Is this your original idea or did you see a similar proposal somewhere? I wonder if anyone has proposed something similar in congress. There's quite a few bills out there so it's hard to know.

Also, thanks to Georgia we're perhaps only a few weeks away from seeing how important it is to shut down gyms and such. Then again, without contact tracing it might be hard to actually blame any one thing if cases do start to increase.

[stupac2]

Seems reasonable to me. Is this your original idea or did you see a similar proposal somewhere? I wonder if anyone has proposed something similar in congress. There's quite a few bills out there so it's hard to know.

Also, thanks to Georgia we're perhaps only a few weeks away from seeing how important it is to shut down gyms and such. Then again, without contact tracing it might be hard to actually blame any one thing if cases do start to increase.