Heard on the Street – here’s what we were reading last week:
Coronavirus Surge Is Killing America’s Small Businesses: More owners are permanently shutting their doors after new lockdown orders, realizing that there may be no end in sight to the crisis. Nearly 66,000 businesses have folded since March 1, according to data from Yelp.
Venture Capital Is Not The Funding Reality Of Most Startups—Here’s What Is: In recent years, there has been a glamorization in startup culture and owning a company backed by investors. In reality, the majority of startups fund their ideas with savings, cash flow, crowdfunding and forms of debt, including credit cards.
So far Fed’s Main Street Lending program has made zero loans: So far, the Federal Reserve lending program set up specifically for small and medium-sized businesses like his hasn’t been much help. Fed officials say more than 200 banks have signed up to participate since the program began two weeks ago, but that’s a small slice of the nation’s roughly 5,000 lenders. None have made any loans yet.
The PPP worked how it was supposed to. That’s the problem.: The real goal of the PPP was to keep American workers on payroll, not to simply keep small businesses going. And so the majority of the money was disbursed to businesses with more employees, rather than to tiny ones with small staffs. That’s why a program widely perceived as being meant to boost the United States’ most vulnerable small businesses ended up prioritizing businesses that aren’t actually that small.