Collectors Universe (read PSA)

[Zact]

The rules of the PPP CAres act explicitly state that the employee salary and benefits are capped at a value of $100k per annum. So a highly compensated employee can only receive a maximum of $8,333.00 compensation per month for the 8 week grant period, and health insurance cost and 401k employer match goes against it.
I don’t have an opinion with regards to whether CU should access the funds as a publicly traded company. The business also had to attest that the grant funds are necessary.

[Exhibitman]

They wrote a convoluted law to do what could have been accomplished much more simply by directly paying 75% of payroll to employees for qualified small businesses for two months and covering up to 25% of payroll in overhead costs directly paid to the businesses. But if they'd done that the banks wouldn't have been able to rake off 5% in admin fees and it would have been perceived as a direct transfer payments to people (something they only do with tax cuts), not as a small business loan, so we get this bizarre 'take it, spend it, apply to get it forgiven' mechanism instead.

My take on the PPP is that the Federal government is making employers into unemployment insurers: It doesn't matter if the same employees are hired or if they even show up, so long as the level of employment (head count and 75% of payroll) is maintained. According to the SBA’s Interim Final Rule:

“...the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgiveable [sic] purposes described below and employee and compensation levels are maintained.” [emphasis added]

They don’t even care if you are open or have any trade to speak of, they just want you shoveling the money out the door to employees.

I also think there is a really shitty bit of bureaucratic interpretation going on here. The initial information stated that you could use all of the money for fixed operating expenses at your discretion, including payroll if you actually need it, but the SBA’s Interim Final Rules modified that:

“While the Act provides that PPP loan proceeds may be used for the purposes listed above and for other allowable uses described in section 7(a) of the Small Business Act (15 U.S.C. 636(a)) ... the Administrator... has determined that 75 percent is an appropriate percentage ... This limitation on use of the loan funds will help to ensure that the finite appropriations available for these loans are directed toward payroll protection...”

The reason that interpretation sucks giant elephant ass so badly is that if you are a restaurant, for example, the payroll is the only thing you can control. If you are closed, you still pay your rent and pass-through expenses, interest, etc. That's what small businesses needed help with, not being unemployment insurers. And the spend and hope it gets forgiven? A hell of a risk to take. One of my clients pointed that out to me. I expect that there will be litigation over this eventually--regulators are not allowed to rewrite laws and the SBA explanation can be construed as an admission that the regulators understood the law but decided not to follow it as written.

Honestly, there are so many inconsistencies and holes in this that I don’t think anyone has any definitive answers. For example, it appears that you could take the loan, hire no one, bank the proceeds, pay the fixed overhead (rent and utilities and so on) with it, and then apply for forgiveness of what you actually spent up to the 25% of the loan cap. When the bank then decides what part of the loan is forgiven, you could pay off the balance immediately with the 1% interest accrued to that point and walk away with a few months of free rent and utilities. It also creates a perverse incentive: since you have to shovel the money out the door at no real benefit to your business if you are actually shuttered and with the risk that you might even owe it if the loan isn't forgiven for some reason, your better choice may be to hire no one: your ex-employees can stay on unemployment and you don't risk owing a debt. Or you could hire your family and friends for no-show jobs to fill out the payroll for eight weeks then get it forgiven. Meet my new executive VP of strategic management:



It is a stupid scheme…Sure hope I get my money

[MULLINS5]

Originally Posted by Zact

The rules of the PPP CAres act explicitly state that the employee salary and benefits are capped at a value of $100k per annum. So a highly compensated employee can only receive a maximum of $8,333.00 compensation per month for the 8 week grant period, and health insurance cost and 401k employer match goes against it.

So Joe Orlando, and others who make $100k/ year at Collector's Universe, will receive a FREE $16,666 + benefits. Even if it is that, vs $100k, that's money taken right of the hands of small business owners who are struggling to pay employees, rent, and utilities during this pandemic. Most small businesses are only asking for $15 to $30,000 to help keep them afloat.

Honestly, this is shameful of Collector's Universe who CLEARLY did not NEED the $4.4 MILLION they received (about $3.4 MILLION GRANT). I know small businesses who can't receive as a whole only what the executives at Collector's Universe are getting, and a couple in my area have to operate at limited to no hours because of it.

[Republicaninmass]

Guess that CLCT stock would probably be a buy.

They had a small staff working, and they still need to keep the lights on.


I'd wager a guess their backlog only has increased. I'm not sure people would be calling and cancelling their orders.

[55koufax]

That in itself is/was the cutoff and I am guessing they are close to that #, although, I believe several "remote" and off-site employees may be independent contractors.

If anyone knows these facts, please chime in.

[55koufax]

My incredibly brilliant Country Club (in CA) has "only" 80 employees and somehow someway they just rec'd their check......$518,000.

Our incredibly inept GM-COO getting paid full salary and will the entire duration of closure.

I think most of us believe the little guys with 10 or less people and at the very least 50 or less should get $$$$ ahead of Big $$$ Co.'s like CU and even smaller entities like 80 employee Golf Clubs.

Do you think CU is gonna follow Ruth Chris' lead or not?

[ejharrington]

Originally Posted by MULLINS5

So Joe Orlando, and others who make $100k/ year at Collector's Universe, will receive a FREE $16,666 + benefits. Even if it is that, vs $100k, that's money taken right of the hands of small business owners who are struggling to pay employees, rent, and utilities during this pandemic. Most small businesses are only asking for $15 to $30,000 to help keep them afloat.

Honestly, this is shameful of Collector's Universe who CLEARLY did not NEED the $4.4 MILLION they received (about $3.4 MILLION GRANT). I know small businesses who can't receive as a whole only what the executives at Collector's Universe are getting, and a couple in my area have to operate at limited to no hours because of it.

It's not shameful for a company to take the money that they rightfully qualify for, it was shameful the most expensive bill in the history of the country was passed without a recorded vote.

[MULLINS5]

Originally Posted by ejharrington

It's not shameful for a company to take the money that they rightfully qualify for, it was shameful the most expensive bill in the history of the country was passed without a recorded vote.

The funds do not even appear to be being used for PPP purposes. Their NJ site is closed and should either be open or their employees should be getting paid to stay at home without filing for unemployment. And just because they "rightfully qualify" for it does not mean it's not shameful for them to "take" funds that are not needed. No way that company, with their stock numbers and a NJ office closed needs 4.4 million dollars, most of that a free grant.

[ejharrington]

Originally Posted by MULLINS5

The funds do not even appear to be being used for PPP purposes. Their NJ site is closed and should either be open or their employees should be getting paid to stay at home without filing for unemployment. And just because they "rightfully qualify" for it does not mean it's not shameful for them to "take" funds that are not needed. No way that company, with their stock numbers and a NJ office closed needs 4.4 million dollars, most of that a free grant.

The loans can be used for interest, rents, and utilities as well as payroll. Some of the money would not be forgiven based on the percentage of people laid off compared to the payroll as a whole.

"Need" is a relative term. If a company is eligible to take the money, either as a loan or a forgivable grant, they should do it. They didn't write the law, the politicians did. The same is true for the $1,200 amounts given to individuals. A lot of them have not lost their jobs so it's not logical for them to receive grants. However, they would be fools to not accept it.

[swarmee]

Originally Posted by ejharrington

The same is true for the $1,200 amounts given to individuals. A lot of them have not lost their jobs so it's not logical for them to receive grants. However, they would be fools to not accept it.

Not really; the economic stimulus payments are completely separate from the unemployment benefit expansion. The goal of the $1200 is to mail it to people with the hope they spend it. Has nothing to do with being a replacement for lost income.

[ejharrington]

Originally Posted by swarmee

Not really; the economic stimulus payments are completely separate from the unemployment benefit expansion. The goal of the $1200 is to mail it to people with the hope they spend it. Has nothing to do with being a replacement for lost income.

I agree but the point is that not accepting it because someone else might “need” it more doesn’t make a lot of sense and that’s why I doubt many people will reject receipt.

[Rich Klein]

Originally Posted by swarmee

Not really; the economic stimulus payments are completely separate from the unemployment benefit expansion. The goal of the $1200 is to mail it to people with the hope they spend it. Has nothing to do with being a replacement for lost income.

Here is an article on the unemployment boost:

https://www.cnn.com/2020/04/07/polit...mic/index.html

[MULLINS5]

Originally Posted by ejharrington

The loans can be used for interest, rents, and utilities as well as payroll. Some of the money would not be forgiven based on the percentage of people laid off compared to the payroll as a whole.

"Need" is a relative term. If a company is eligible to take the money, either as a loan or a forgivable grant, they should do it. They didn't write the law, the politicians did. The same is true for the $1,200 amounts given to individuals. A lot of them have not lost their jobs so it's not logical for them to receive grants. However, they would be fools to not accept it.

About 3.5 of 4.4 million is a grant, not a loan. So don't you dare spin it as "some" of the money. The calculations for PPP by CU likely include employee wages and rent from NJ which CU is required to use those funds to reopen business but have remained closed for COVID concerns (which is fine just leave it out of the application). I swear, no moral compass with you. I guess only if it's illegal it's off limits. Wonder how your sick mind thinks - we just got a glimpse.

[MULLINS5]

Originally Posted by ejharrington

The loans can be used for interest, rents, and utilities as well as payroll. Some of the money would not be forgiven based on the percentage of people laid off compared to the payroll as a whole.

"Need" is a relative term. If a company is eligible to take the money, either as a loan or a forgivable grant, they should do it. They didn't write the law, the politicians did. The same is true for the $1,200 amounts given to individuals. A lot of them have not lost their jobs so it's not logical for them to receive grants. However, they would be fools to not accept it.

About 3.5 of 4.4 million is a grant, not a loan. So don't you dare spin it as "some" of the money. The calculations for PPP by CU likely include employee wages and rent from NJ which CU is required to use those funds to reopen business but have remained closed for COVID concerns (which is fine just leave it out of the application). I swear, no moral compass with you. I guess only if it's illegal it's off limits. Wonder how your sick mind thinks - we just got a glimpse.

[ejharrington]

Originally Posted by MULLINS5

About 3.5 of 4.4 million is a grant, not a loan. So don't you dare spin it as "some" of the money. The calculations for PPP by CU likely include employee wages and rent from NJ which CU is required to use those funds to reopen business but have remained closed for COVID concerns (which is fine just leave it out of the application). I swear, no moral compass with you. I guess only if it's illegal it's off limits. Wonder how your sick mind thinks - we just got a glimpse.

Once again, the biggest immorality of it is the Congress not doing a proper vote on the biggest spending bill in history. I oppose printing money to pay current bills which the government has been doing for decades. As for who the bill was intended to help, it was broadly defined as under 500 employees with relaxed rules for certain restaurants and other franchises which normally would not qualify for an SBA loan with the understanding they were hurt very badly by forced government shutdowns. So clearly PSA was intended to be helped by the bill. As for the morality of accepting government grants and loans, it is only moral to accept it if you oppose it and consider it restitution since other people (in this case, future generations) are being forced to pay for it.