[k3oni]

Came here to say this but you put it better. It's laughable that with all the changes that went in and voting on that bill they left the loophole open for big players to get access to this funding which was directed at small businesses/mom-and-pops shops. But business and shitty politics as usual.

[jlmorton]

To be clear, this was not a loophole, it was a carve out. They specifically and intentionally excepted restaurants and hotels from the affiliation rule. It wasn't a drafting error, it was a clear and purposeful choice.

Personally, I don't have any huge problem with that, I think it makes sense to protect workers at both Ruth's Chris Steak House and a local family-run steak shop, and we should fund the program at the levels necessary to do that.

But I keep hearing the word loophole, including from Congress members. It is not that. This was by design, and it wasn't buried in some dense text. It was an unambiguous exemption in a two page rule. [1]

[1] It may not be perfectly clear to the average reader, but it certainly was clear for the rulemakers at Treasury.

"Waiver. The affiliation rules described above are waived for (1) any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;"

Businesses with an industry classification code beginning with 72 include all restaurants and hotels.

https://www.sba.gov/document/support--affiliation-rules-payc...

[crispyambulance]

A loophole is a loophole whether it's expressed in obfuscated language or not.

There's a reason why the administration fired Glenn Fine on 4/7 who was the inspector that was supposed to oversee the 2T rescue plan. The administration and their cronies are doing a classical "shock doctrine" move to even further concentrate wealth while the opportunity is hot.

[abnry]

What most people don't understand about hotels, chain restaurants, or any business that runs on the franchise model is that the majority of such outlets are run by small businesses.

McDonalds isn't a burger and fries company, it is a real estate company. This is because they buy the properties each restaurant is located on and rent them out to small business owners who front the capital and run the operation (with stipulations). You may think there are flaws in this setup (which you could argue, though the exchange is a tested business model and logistics network in exchange for franchise fees) but the point is that small business owners are HEAVILY involved in these chain businesses.

It's the same with something like Dunkin Donuts. Here in MA, the profits from the coffee you buy at one location will go into the pockets of one small business owner while down the street it will go into another.

[dd36]

I think it’s because many (most?) people would prefer Ruth’s Chris failing over their local mom and pop. I think I’m in that boat and I like Ruth’s Chris, except the one in SF - was not impressed.

[js2]

It was reported at the time before the bill was signed:

> Many of these special-interest provisions would be impossible for a casual reader of the legislation to identify. For example, on Page 15 of the bill, there is a section with the title “Business Concerns With More Than 1 Physical Location.” It says this change in federal law will apply to companies that fit “a North American Industry Classification System code beginning with 72” — a reference that turns out to mean the hotel and restaurant industry.

https://www.nytimes.com/2020/03/25/us/politics/virus-finepri...

Edit: This NYT article is the only one I've found in a cursory search that mentions it.

[IG_Semmelweiss]

You are correct in your assertion. However your conclusion is wrong.

First, the waiver got in due to major lobbying by corporations with cash.

Second, it is not correct to state that is is appropriate for larger employers to take PPP. Here is why: although at first glance it would make sense to support workers via PPP, the sad reality is that these workers have already been laid off. As such, PPP will turn into a loan. A cheap loan at that, which is basically a cheaper source of capital funds that any public co has.

Public co.s can tap the capital market or existing banking relationships to survive.

Small biz cannot tap capital markets and banks are not extending credit at this time.

For larger orgs, cheap PPP subsidized loans are literally taking precedence over life and death funds for small biz.

So institutional investors, PEs, and banks are being bailed out, while mom and pops and their staff are getting destroyed.

Laeger orgs already laid off staff. Mom and pops were hoping for PPP.... to keep staff.

[Exmoor]

Not really shocking, actually. The total turnaround time on the bailout bill was, what, a week and a half? Writing laws is complicated. I doubt anyone would be shocked if a large company cobbled together a hugely fairly complicated piece of software in two weeks and it turned out to have some major bugs. Writing a law like this is a bit like that, except with the additional downside that you can't really do any testing before release and you have people being paid to leverage the program for their own interests.

I actually heard and interesting interview [0] with one of the people in charge of the 2008 bailouts. He said the lessons learned were essentially don't worry about being too aggressive and don't worry about spending time trying to engineer a law that will target exactly who you feel like you should target. The most important thing is speed.

[0]: https://www.npr.org/transcripts/818583204

[Leherenn]

In line with your comment, I would say the biggest issue here is not that some companies that probably shouldn't have received the funds did. It's that a lot that should have didn't.

Of course though, given limited resources the 2 are correlated.

[goatherders]

I think it's laughable that the American public (of which I am a part) expected anything but this result. OF COURSE the little guy was going to get screwed. OF COURSE politicians were going to overlook loopholes that would allow the money to go to more established businesses. OF COURSE the machinations of the whole thing were going to be a campfire thrown into a dumpster fire packed in bonfire.