Government bailouts for the wealthy and crumbs for the masses aren’t going to save our society
It took my DigBoston colleagues and I a few days to turn our weekly print newspaper operation into a digital news outlet ready to publish articles and opinion pieces to our new mobile-friendly website seven days a week. With Massachusetts residents basically home or working limited schedules (telecommuting if they’re lucky, driving or taking the T as usual if they’re not), people are online much of the day and night looking for information they can use about the coronavirus pandemic. And, happily, we’re ready to meet that demand.
Now, I am sitting down at my keyboard to write my first piece that’s not a fairly prosaic news roundup since early last week. And I feel like it’s just as well that I gave local and state governments (and the corporations that control them) a bit of quiet time to formulate their responses to the current crisis before I start criticizing them. Spirit of fair play and all that: Affording leaders like Mayor Marty Walsh and Gov. Charlie Baker a chance to succeed.
But quiet time is over. Because they clearly don’t know what to do.
It’s hard to know where to even begin to start teasing out the manifold contradictions in the several rolling disasters-in-the-making that are the government and linked corporate responses to the COVID-19 disaster. However, there is some low-hanging fruit in state government that I might as well start with.
As such, allow me to introduce you to the Commonwealth’s new $10 million emergency loan program for the vast number of small businesses already facing doom from the social-distancing policies that have—quite justifiably, mind you—shut them down with almost no time to prepare.
On Monday, Gov. Charlie Baker announced the initiative—which is being administered by the Massachusetts Growth Capital Corporation, a “component unit of the Commonwealth of Massachusetts,” according to its website.
Here are the application requirements for the COVID-19 Loan Fund online:
General Terms and Conditions
- Open to Massachusetts-based businesses impacted by the COVID-19 with under 50 full- and part-time employees, including nonprofits
- Negative impact must be verifiable
- Loan amounts up to $75,000
- Loan amount not to exceed 3 months of demonstrated cash operating expenses for the 1st quarter of 2020
- No payments due for first 6 months, then 30-months of principal and interest payments (direct debited)
- Annual interest rate 3%
- Personal guarantee required of all owners with 20% or more interest in the company
- Personal credit score under 575 will require an exception
- All asset lien on business
- No prepayment penalty
- Ineligible businesses include companies involved in real estate investment, multi-level marketing, adult entertainment, cannabis or firearms. Companies with past due tax liabilities or tax liens or currently in bankruptcy (Corporate or Personal) are not eligible
Bad enough. But the kicker was in itals at the bottom of the page:
Approval contingent on business being profitable prior to 3/10/20 and no adverse personal credit reports 60 days past due for the last six months.
OK, this is not a loan for small businesses that were just blown off their feet by a global pandemic.
It’s a loan for medium-sized businesses (and nonprofits) that are in decent financial shape. Many restaurants, venues, small retail stores and bars won’t qualify for it. The terms are really no different than any commercial bank loan—except the interest rate is low at 3%.
Seriously, what typical small businesses come out of Q1—a quarter notorious for being the slow time after the holidays when nobody seems to pay what they owe—showing a profit?
What small businesses can verify the negative impact of the crisis on them—or meet any of the other requirements of a (small) loan while they are literally in the process of collapsing because of the coronavirus?
Why is state government insisting that the loan amount is “not to exceed 3 months of demonstrated cash operating expenses for the 1st quarter of 2020?” Don’t small businesses in disaster-induced freefall need as much money as they can get?
And what kind of state leaders think that making these soon-to-be defunct small businesses jump hurdles they can never jump is a good idea?
This is disaster capitalism at its finest. Wealthy individuals and larger corporations are going to be able to cover all their losses (and then some) courtesy of bought politicians at all levels. And the rest of us—as individuals or small businesses people—are going to be made to dance for crumbs from the tables of state and finance. Crumbs which will not sustain us long enough to get through this period of societal shutdown in anything like decent shape. Even if we don’t get the virus.
In the weeks to come I will take a look at other examples of bad government policy that isn’t going to help our state or our nation get back on their feet once COVID-19 has run its course. Because if public coffers are not opened to the public—and corporations and the wealthy aren’t finally made to pay their fair share—we will no longer live in a functioning democracy by next year. I don’t know what we’ll live in, but I’m quite sure none of us want to find out. Nor should we have to. Thus it’s imperative that people organize to improve government response to the winnowing of our economy and our republic by disease and bad leadership before it’s too late to do so.
For now, Gov. Baker and his lieutenants need to do a simple thing to help actual small businesses: Create loans and grants with a much lower bar to entry. Then let mom and pop enterprises access them immediately. Ten million bucks won’t go very far and more money will need to be allocated. But it’s a lot better than nothing. Which is what too many small businesses will get if the COVID-19 Loan Fund isn’t fixed at speed.
NOTE: At 2:40 pm on March 19, 2020, MassLive reported that the state has suspended the COVID-19 Loan Fund program and its website has been taken down.
Massachusetts small business owners that don’t qualify for the COVID-19 Loan Fund are encouraged to send me an email at email@example.com and tell me about their situations.
Apparent Horizon—recipient of 2018 and 2019 Association of Alternative Newsmedia Political Column Awards—is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s executive director, and executive editor and associate publisher of DigBoston. Copyright 2020 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.