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Comment by julianozen | Hacker News Reader

Please EILI5. Since these are loans - these companies are not receiving free money - and since these companies represents several millions of jobs, isn’t it kind of ok that these companies have taken the loans to keep their all those employees on payroll instead of suspending pay?

If there is something I’m missing or not taking into consideration, please let me know. Thanks

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Well, firstly, these aren't loans in the traditional sense. The Paycheck protection programme (which is what this funding was) was a scheme where you could borrow money from the government and as long as you use 75% of the money for payroll, and don't lay off any staff for 8 weeks, then the loan is forgiven and you don't have to pay it back.

So the point is that it's actually not a loan, for the people who got the money, it's almost certainly just free money. Which is why people are outraged that the money overwhelmingly went to the well-connected large businesses who had the most resources to weather the storm, and the money ran out for real small businesses.

On the bright side, if it is true that they can't layoff anybody for the next 8 weeks and there is no loophole. This could save the economy from incredibly large rounds of layoofs, remember that large companies each employ many people. This could dramatically help to stabilize the economy if the lock down is relaxed before the 8 weeks term.

Thank you! Aren't these payouts still serving their purpose though if these large companies keep people employed. These large companies represent a lot of jobs

These are PPP loans. It converts into a grant if you use 75% of the money for payroll, and have (almost) the same number of employees by the end of June 2020.

These were for small businesses like restaurants, hotels, etc. But most of the money is gobble by big business.

Personally, its time to change the defination of the small business.

IIRC the loan is forgiven if used on payroll?

In any case, the fact they are on the hook for it is not the point. There are lots of firms who want to be on the hook but can't get the loan they need.

In addition to the other comments, this also means the small business which didn't get the loan will compete with the extra cash in the hands of the larger business, meaning the small business (probably already operating on thinner margins) is now even more likely to close in the future.

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