Investing in the nation's crumbling infrastructure is never a tough sell in the business community. After all, businesses benefit when everyone can get from point A to point B without busting an axle, and they also stand to gain from the winning sizable construction contracts.
To wit, the current infrastructure bill, formally dubbed the Infrastructure Investment and Jobs Act, calls for spending $550 billion over five years. In addition to existing authorized funding that number currently stands at just under $1 trillion over five years and north of $1.2 trillion over eight years. But you may chafe at the real price tag--particularly as much of it calls for repurposing some $205 billion in untapped-yet-in-demand Covid-19 relief aid.
Under the current bill, $38 billion would be diverted directly from extant small business relief programs. That includes $17.6 billion from the Small Business Administration's Economic Injury Disaster Loan (EIDL) program, $13.5 billion from the Targeted EIDL Advance, $4.7 billion from the Paycheck Protection Program and $1.4 billion from the Economic Stabilization Program. Another $992,000 is getting yanked from the SBA's business loans account.
It's not as though these programs aren't being utilized. While the PPP is over and no longer supporting loans to small businesses, the other programs are indeed active. Starting with the Cares Act, Congress charged the SBA with making debt relief payments to help hard-hit businesses into certain SBA-backed loans including the agency's flagship working capital loan product, the 7(a) loan program. The Economic Aid Act sweetened the pot, allowing the SBA to increase its loan guarantee to 90 percent from 75 to 85 percent, depending on the size of the loan.
According to National Association of Government Guaranteed Lenders (NAGGL), loan approvals for 7(a) loans shot up to $1.5 billion last week, up from $880 million the week prior. This debt relief program expires on September 30, 2021 or as long as funds last.
Similarly, the pace of EIDL approvals has recently reached more than $5 billion a week, with $7.5 billion EIDLs receiving approval last week. As of July 29, 2021, businesses filed 3.8 million EIDLs, amounting to $236 billion in funding.
And demand is increasing along with lender bandwidth, says Tony Wilkinson, president and CEO of NAGGL. "As our lenders were moving away from the PPP program, they had more time to focus on the regular program," he says.
The news about lawmakers' plans to redirect funds has lenders scrambling to get loans done, adds Wilkinson. By his estimation, the funds for SBA's debt relief program could even dry up by September 20.
Unless lawmakers get to it first. With recess approaching, leaders of the House and Senate could call their members back to vote on an infrastructure bill at any point. The Senate could even approve the measure this week. Should it land on President Biden's desk this month, and as such stimulus funds suddenly expire, many in-need businesses now banking on that money would be left adrift.
Mark Yuska is one. When the pandemic hit his Sterling, Virginia-based events business Alliance Nationwide Exposition, revenue, which had clocked in at $20 million in 2019, dropped to zero in 2020.
"We went from 100 percent to zero. It wasn't like we were doing takeout; it wasn't a downturn, [business] was gone," says Yuska, who had to let his entire staff go, including himself, last year. The company only recently began hiring again; it brought in 100 people in July in anticipation of events picking back up in August. But he has more work than what 100 people can do. "We still have 250 shows on the books this year; 100 people just isn't enough," he says, noting that he'd use the $2 million 7(a) loan for which he applied two months ago, to support the additional hires. Now that plan might fall through.
For small business owners like Yuska, 2020 losses loom large among lenders. The federal stimulus--chiefly, the SBA's boosting of its guarantee to 90 percent and the fee moratorium--helped make those loans more palatable, says Joe Arie, president of the SBA division at Bank of Edison, a national lender based in Edison, Georgia. "It's a matter of risk tolerance," he says. "If we make a $2 million loan, and the SBA drops its guarantee back down to 75 percent, that risk goes from $200,000 to $500,000."
Arie adds that while lenders are trying to expedite existing loan applications, he fears that many borrowers with loans still in the pipeline will get dropped, because 1) they can't afford the fees without the moratorium and 2) the lender might pull the plug. "Washington has created such uncertainty for these borrowers. Now we're having to tell some of them we don't know what will happen," adds Arie. "There's a high likelihood that for several of these loans, it truly becomes a question of access to credit."
Moody’s Corp. , best known for rating corporate and government debt, is diving into disaster and climate-change risk modeling.
The ratings company on Thursday said it had agreed to acquire RMS, a catastrophe risk-management and modeling firm, from its U.K. parent Daily Mail and General Trust PLC for about $2 billion.
The deal is a sign of the big money to be made from selling data that analyzes changing climate patterns caused by global warming. RMS sells data and analytics to the property and casualty insurance and reinsurance sectors. It has grown rapidly alongside the increased frequency of natural disasters that are changing the way insurers price coverage.
Moody’s said the acquisition would help build its business of providing data and risk assessments to the insurance industry.
On a call with analysts, Moody’s Chief Executive Rob Fauber said “climate change is an issue that demands urgent attention.” He added that the acquisition will help customers manage exposure to climate-change risks in their investment and lending portfolios and meet regulatory requirements related to climate change.
New York City is now requiring residents to show proof they've received their COVID-19 vaccine before entering indoor venues such as restaurants and gyms - potentially limiting 40 percent of New Yorkers from engaging in these activities.
The city's new vaccine ordinance is set to begin on August 16 with enforcement beginning September 13. It's the latest in a series of measures Mayor Bill de Blasio has taken to increase vaccinations in the city - such as offering a $100 cash incentive and requiring city employees to get vaccinated or take weekly COVID-19 tests.
The business community's reaction has been varied. Some business owners already see holes in the plan, while others have been mandating vaccines for a while now.
"Why do you need proof of vaccine to exercise or eat but not to get on a crowded bus or subway?" Tyler Hollinger, the owner of Festivál Cafe in Manhattan, told Insider.
Joey Foley, the owner of Pedal House luxury spin studio, has already asked that only vaccinated city residents attend classes and plans to do the same for his soon-to-open Punch House fitness studio.
"We probably lost people, but in all honesty, I have a family to provide for and bills to pay," he said. "And to be honest, our clientele loves how strict we are."© Festivál Cafe Festivál Cafe in New York City. Festivál Cafe
For Hollinger, the concern around the nationwide rise in COVID-19 cases has already begun to negatively impact his cocktail bar and restaurant. He's not afraid to lose business because of unvaccinated people not being able to dine at Festivál - but instead because people are fearful of the virus.
"It seems to me that whenever there is a COVID scare, the hospitality industry is first to feel the effects," Hollinger said. "This pre-emotive panic has already had dire consequences; we have had a 30% dip in business last week and it's even slower this week."
Despite this, for Hollinger, the choice to get the COVID-19 vaccine is a personal choice that shouldn't be mandated by the government. However, all of his restaurant employees are vaccinated and choose if they'd like to wear a mask.
"Masks are a personal risk assessment," he said. "It's a choice. The vaccine is highly encouraged, and everyone should take advantage of this miracle drug, but no one should be forced to inject themselves. This is mismanaged public health strategy and will ultimately only hurt small business by limiting who can enter your business."© Festivál Cafe Festivál Cafe in New York City. Festivál Cafe
He also argues that the impact could be dangerous - with both vaccinated and unvaccinated people still gathering in other parts of the city, and potentially only gathering with those that share their vaccination status.
"Will we just then allow only the vaccinated to gather with other vaccinated and the unvaccinated to gather with the unvaccinated?" Hollinger said. "That seems really dangerous if we are trying to not have a super spreader event. The safest place for the unvaccinated to be is with vaccinated people."
Hollinger said this also adds additional pressure to the restaurant by forcing employees to enforce controversial mandates.
"If the state wants private business to do the policing, then they should compensate us to do the government's job of policing," he said.
The restaurant plans to begin implementing the new policy on September 13 but would like for the new mandate to operate on an honor system.
"Why would someone who is unvaccinated want to enter a restaurant and put themselves at risk?" Hollinger said.© Pedal House Pedal House in New York City. Pedal House
Foley's response to the new mandate was simple: "At the end of the day, we all want to live our lives."
"There are valid points to everyone's argument," he said. "At Pedal House, we require everyone to be fully vaccinated since vaccines became readily accessible to all New Yorkers."
This allows the studio to be at full occupancy without social distancing or masks, and so far, he's had success implementing the policy.
He said that in the first couple of weeks the protocol slowed business, but since mid-May he's had a wait list for every class. For him, it makes sense from a cost perspective.
"I am a bit lost on why anyone would want to make less money with fewer people," he said. "There are so many things that I see other companies not doing and I am in utter shock at how people are still invested in them."© Pedal House Pedal House in New York City. Pedal House
"My wife and I would rather have a packed class of 40 to 50 people instead of 15 to 20 people; giving up nearly 20 to 30 spots at $45 a spot does not make sense to have a 50% occupancy," he said. "The energy is next level. You can't reproduce this with a screen either. This is NYC - rental prices are astronomical every square foot matters."
He sees the vaccine as necessary to move past the pandemic and believes that they will become mandatory soon.
"This current situation is not just short-term turmoil; it is generational turmoil that will affect so many for a long time," Foley said. "The pros simply outweigh the cons.
"Regardless, this is going to affect anyone and everyone for a while. We are already over a year in, and it is still destructive. The situation is not ideal, but we need to get back to normalcy."