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The S.B.A. is now blocking most new applicants for a small-business loan program.
A government program offering low-interest loans and tiny grants to small companies harmed by the pandemic has stopped taking nearly all new applications because its funding is exhausted.
Like the better-known Paycheck Protection Program, which is aimed at keeping workers employed, the Small Business Administration’s Economic Injury Disaster Loan has been chaotic, with frequently changing terms and little communication to potential borrowers about the status of their applications. Hundreds of applicants who applied more than a month ago said they were still waiting for a response.
The S.B.A. has not disclosed how many applications the program received or how many loans have been approved. The program was supposed to fund loans of up to $2 million and grants of up to $10,000, but many applicants who were offered loans said they were told that their loans would be capped at a lower amount because of funding shortages.
Tamar Lowell, the chief executive of Access Culinary Trips, a culinary tour company based near Seattle, applied for a disaster loan in mid-March. She sought $860,000, based on her company’s documented operating expenses — but in early April, she got a loan offer for just $15,000. When she asked an agency official how to appeal, the S.B.A. withdrew the offer. A few days later, she received a new offer for $144,500. Badly in need of the cash, she accepted.
“In this environment, if you don’t take the money, you may not get a second chance,” Ms. Lowell said.
Wall Street rallies, and the Nasdaq turns positive for the year.
Stocks rose on Thursday with Wall Street’s technology-heavy benchmark, the Nasdaq composite, closing in positive territory for the year.
Tech stocks have been rallying on the view that giant companies like Amazon, Apple, and Microsoft will emerge from the coronavirus pandemic with even more power than they had before it began. They’re sitting on mountains of cash that will help protect them from the economic downturn, and the nature of the lockdowns — with workers at home and consumers dependent on e-commerce — plays directly to their strengths.
Though the biggest companies have outsize influence over the market, it isn’t just the giants that are seen as benefiting from the pandemic. The Nasdaq also includes companies like the conference app maker Zoom, home fitness company Peloton Interactive, and Netflix, all of which have rallied this year as demand for their services skyrocketed.
The Nasdaq is still well below its highest point of the year, reached in February. The S&P 500 still has to climb more than 10 percent to reach its break-even threshold. Both indexes gained more than 1 percent on Thursday.
Those gains came even after the latest report on weekly unemployment filings showed that more than three million workers in the United States claimed benefits last week. Also on Thursday, the Bank of England projected that the British economy would contract 30 percent in the April-June quarter, and 14 percent for the year.
Investors have been looking past grim economic projections, and the mounting death toll, to bid up stock prices on expectations that the number of coronavirus cases will begin to ebb, and that they can expect more government support for businesses and markets.
Amazon takes its fight with French unions to France’s highest court.
A standoff between Amazon and French unions over safety measures for the coronavirus grew tenser on Thursday when the company said it would ask the French highest court to overturn an appeals court decision last week that ordered the e-commerce giant to stop delivering nonessential items in France during the pandemic to protect workers.
Amazon will also seek approval on Friday from workers councils, which represent around 10,000 employees, to keep its six mammoth French warehouses shut until May 13, as it consults with them on steps to further enhance safety measures against the virus.
“We are working hard to resume business as usual for our French customers, our French employees and our French sellers,” Amazon said in a statement.
Amazon’s warehouses in France have been shut for nearly a month after a court sided in mid-April with French unions that had sued the company, accusing it of inadequately protecting workers from the threat of the virus and failing to consult with the unions on the measures, as required by law. The court ruled that Amazon must restrict deliveries to only food, hygiene and medical products until it addressed the issue, or face millions of euros in potential fines.
Rather than risk the penalty, Amazon put its work force on paid furlough, but it is continuing to deliver items to France from its centers in Belgium, German and Spain. The company lashed out at the unions for bringing the lawsuit, which was upheld by the Versailles Court of Appeals last week. Amazon insists that it has maintained rigorous health safety at its French sites, and has accused unions of seeking to further their own interests amid the health crisis.
For Uber and Lyft, the pandemic hits hard.
Uber and Lyft said in earnings reports this week that demand for their ride services had plummeted in the wake of the coronavirus pandemic. Both companies said usage sank as much as 75 percent in late March, when consumers in the United States stopped traveling and began staying at home under shelter-in-place orders.
On Thursday, Uber said revenue in the first quarter grew 14 percent compared with the same quarter last year but its losses ballooned 190 percent, largely driven by a $2.1 billion loss caused by its investments in international ride-hailing businesses like Grab and Didi that are also experiencing low demand because of the virus.
Financial analysts expect some recovery in the current quarter, as riders slowly return to Uber and Lyft, but the impact could continue for years. Daniel Ives, managing director of equity research at Wedbush Securities, estimates that 30 percent of gig economy revenue could disappear over the next one to two years.
“Based on our analysis of the gig economy and the overall pie of consumers, unfortunately there’s a slice that — until there’s a vaccine — will not get in a ride-sharing vehicle,” Mr. Ives said.
Still, investors see some promising signs as Uber and Lyft cut costs, and the companies’ stocks have risen as a result. Both laid off employees while executives took pay cuts. Uber offloaded its unprofitable bike and scooter rental service and shut down food delivery in certain countries where it was burning cash.
Neiman Marcus files for bankruptcy protection.
At the end of March, the coronavirus crisis temporarily forced the closure of all 43 Neiman Marcus stores, as well as its two Bergdorf Goodman stores and Last Call outlets, all but stopping sales and crushing revenue.
That may have been the immediate cause of Neiman’s filing, but its problems had been building for years. The company took on an untenable amount of debt as part of two leveraged buyouts by private and equity firms, and Neiman’s did not respond quickly enough to changes in shopping habits. Together, those developments left the group in a precarious position even before the virus hit.
The pandemic has been disastrous for the already weakened retail industry. Last month, sales of clothing and accessories fell by more than half. Earlier this week, J. Crew filed for bankruptcy. Retailers have furloughed employees, slashed corporate salaries and hoarded cash in a desperate attempt to make it to the end of the shutdown.
Allbirds says it will return its small-business loan.
Allbirds, a $1.7 billion shoe start-up popular with Silicon Valley’s workers and backed by Leonardo DiCaprio, said Wednesday night it would return a loan it received from a troubled federal stimulus program for small businesses.
The decision makes it one of the most prominent start-ups to return one of the loans after a public outcry about big or well-capitalized businesses taking the money. Its backers include deep-pocketed investors like Tiger Global, T. Rowe Price and Fidelity.
In a Medium post announcing the decision, Joey Zwillinger, a co-founder, said that when it had applied for the loan, the company was “losing money — lots of it” and its “eligibility for the program was clear.” Its stores had shuttered and it was having trouble delivering in some markets, he said.
Mr. Zwillinger said Allbirds was responding to the swell of demand from smaller businesses that had not been able to obtain loans.
When the Small Business Administration opened the loan program earlier this month, some start-ups rushed to apply to extend their “runways,” or the cash they have on hand to burn through while they grow.
A number of large public companies applied for the loans at the outset of the program only to face a backlash when it became clear that smaller operations had been shut out.
The government has urged them to return the funds by next Thursday if they can gain access to other sources of capital. To date, at least 44 public and private companies have returned their loans.
Low-wage jobs are biggest labor market victim so far.
The first two months of the pandemic-fueled economic crisis wiped out nearly 10 million low-wage jobs in the United States, including particularly steep losses at the nation’s smallest companies, detailed new research on the private job market shows.
The loss in low-wage jobs from mid-February through mid-April was larger than the total of all jobs lost, at any wage level, during the previous recession and global financial crisis. The data shows that 35 percent of all low-wage workers lost their jobs, at least temporarily, during the first months of the current crisis, compared with 9 percent of the highest-wage workers.
Evidence has already made clear that low-wage earners, who are the workers most at risk of falling into poverty, and small businesses have born the brunt of the pandemic thus far. But the new research makes clear the sheer scale of the destruction and the degree to which it has exacerbated existing inequalities in the job market.
“The magnitude of the difference between low-wage and high-wage workers is remarkable, from a historical perspective,” said Ahu Yildirmaz, the co-head of the research institute and one of the authors of the paper, which was released Thursday by economists from the ADP Research Institute, the University of Chicago and the Federal Reserve using data from the private payroll firm ADP.
The data shows 40 percent of all the jobs lost so far are in firms that appear to have stopped operating, either temporarily or permanently, amid the crisis, another author, Erik Hurst, said in an interview. That is particularly true among small businesses with 50 or fewer employees, which the data shows are far more likely to have laid off workers than large companies.
Catch up: Here’s what else is happening.
J.C. Penney and Sephora, which had been sparring in court about a potential closure of Sephora’s mini-shops inside hundreds of J.C. Penney locations, said on Thursday that had “reaffirmed their longstanding partnership.” J.C. Penny had filed a lawsuit on Monday that outlined disagreements between the companies, which have been partners since 2006, and highlighted the challenges that many retailers may face with vendors as they try to return to business during the pandemic.
Frontier Airlines became the first U.S. carrier to announce plans to take the temperature of passengers before boarding, a move that would take effect on June 1. Anyone with a temperature of 100.4 degrees or higher will be denied boarding.
On Thursday, Moderna announced that the Food and Drug Administration had cleared its application to proceed to a clinical trial involving about 600 people for an experimental vaccine for the coronavirus. The main goal is to find out if the vaccine is safe and if positive results from the first few dozen volunteers in the first phase can be replicated in a much larger group. If it is successful, later studies will determine exactly how well the vaccine works.
The Walt Disney Company said the 120-acre Disney Springs, one of the largest shopping malls in the United States, would begin a phased reopening on May 20. The lakeside property in suburban Orlando, Fla., has about 170 stores and restaurants. Disney’s theme parks and hotels will remain closed. Disney said that reopening Disney Springs would involve face masks for employees and guests and limitations on capacity.
Ford Motor said on Thursday that it would restart its factories on May 18, the same day that General Motors and Fiat Chrysler have said that they would resume production. Ford said that workers in its parts depots will return to work sooner, on Monday. Gov. Gretchen Whitmer of Michigan said Thursday that manufacturing workers, including those at the automakers, could return to work on Monday.
Democratic senators on Thursday questioned whether Amazon retaliated against whistle-blowers when it fired four employees who raised concerns about the spread of coronavirus in the company’s warehouses.In a letter to the company, Senator Elizabeth Warren and eight other senators asked Amazon to provide more information about its policies for firing employees.
The Bank of England said on Thursday that the economy in the April-June quarter would be nearly 30 percent smaller than at the end of 2019, as consumer spending would fall nearly 30 percent, while business revenue, investment and trade all contracted sharply. The bank said that the full-year economy for 2020 would most likely fall 14 percent — the worst decline for the British economy, it said, since 1706.
ViacomCBS reported Thursday that revenue was down 6 percent to $6.7 billion, with profit halved to $917 million, for the first quarter, largely because CBS benefited from the Super Bowl last year and the NCAA basketball tournament was canceled this year. But the company saw a surge in streaming. CBS All Access and Showtime together had a 50 percent bump in subscribers to 13.5 million. The ad-supported, free service, Pluto, saw an uptick in viewers to 24 million.
Reporting was contributed by Liz Alderman, Brooks Barnes, Vikas Bajaj, Kate Conger, Sapna Maheshwari, Vanessa Friedman, Patricia Cohen, Tiffany Hsu, Neal E. Boudette, Stacy Cowley, Emily Badger, Alicia Parlapiano, Kate Conger, Elizabeth Paton, Edmund Lee, Marc Tracy, Noam Scheiber, Stanley Reed, David McCabe, Erin Griffith, Mary Williams Walsh, Carlos Tejada, Mohammed Hadi, Daniel Victor and Kevin Granville.