Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for April 8:
- Fed expands Wells Fargo capacity to extend Paycheck Protection loans
- Congress could extend additional $250 billion in small business aid
- Job losses could top 20 million
The Federal Reserve has decided to ease restrictions placed on Wells Fargo bank in an attempt to give the lender more capacity to issue small business loans. The lender previously announced that it could only offer $10 billion in Paycheck Protection loans due to the Fed’s cap on its assets. Lawmakers urged the Fed to relax its restrictions, however, so that the bank can participate in the “Main Street Lending” facility.
Speaking of the Fed …
“Members judged that the effects of the coronavirus would weigh on economic activity in the near term and would pose risks to the economic outlook. In light of these developments, almost all members agreed to lower the target range for the federal funds rate to 0 to 1/4 percent.”
The minutes released from an emergency meeting of the Federal Reserve last indicate that the central bank intends to keep the interest rate around 0% until the economy has rebounded from the coronavirus pandemic.
“If you don’t fix what is fundamentally wrong with the program, throwing more money after bad is not going to help small businesses.”
For small business owners worried that there isn’t enough money to go around — well, you’re probably right to be concerned. Congress has already signaled, however, that they’re willing to authorize another $250 billion in aid, though the discussions around forthcoming legislation are already shaping up to be contentious. Despite competing priorities, lawmakers from both sides of the aisle express concerns about handing over more money to a program that isn’t working well to begin with.
Despite the best efforts of the federal government, a study by Goldman Sachs forecasts that the number of unemployed Americans could easily reach 20 million when this is all said and done. Their numbers indicate that the GDP will already have shrunk by 12.8% by June of this year — a monumentally fast collapse that would probably have earned the gold medal, if a “race toward recession” were an olympic sport and had the Tokyo games not been cancelled.