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 higher-profile Paycheck Protection Program — a more narrowly focused effort 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 her 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.
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.
At the end of March the coronavirus pandemic 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.
But while that may have been the immediate cause of Neiman’s filing, 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, 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, the company’s co-founder Joey Zwillinger 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 access other sources of capital. To date, at least 44 public and private companies have returned their loans.
The latest evidence of the economic devastation from the coronavirus pandemic came Thursday as the U.S. government reported that an additional 3.2 million jobless claims were filed last week.
The weekly tallies have declined since reaching a peak of 6.9 million claims in late March, but the numbers are still stupefying: Over 33 million people have joined the unemployment rolls in seven weeks. Officials in some states say more than a quarter of the work force is jobless.
Economists expect the monthly jobs report from the Labor Department, due Friday, to show that the unemployment rate in April was 15 percent or higher — a Depression-era level. The figure will almost certainly understate the damage.
Workers in the restaurant, travel, hospitality and retail industries were among the first to lose their jobs when the outbreak forced business shutdowns. But in recent weeks, scores of layoffs were announced for engineers at Uber, advertising account executives at Omnicom, designers at Airbnb and other office employees.
“We’re still seeing a massive wave of layoffs taking over the U.S. economy,” said Gregory Daco, chief U.S. economist at Oxford Economics. He described the latest job losses as a “secondary wave of the coronavirus recession.”
In the weeks before states around the country issued lockdown orders this spring, Americans were already spending less, traveling less, dining out less. Small businesses were already cutting employment, or even closing shop.
In some states that have already begun that process, the same daily economic data shows only meager signs so far that businesses, workers and consumers have returned to their old routines.
Such data, combined with recent opinion polling, suggests that Americans who were turning off the economy on their own may not readily reopen it soon — even if officials say it’s OK to.
Oil prices aren’t so low anymore. Here’s why.
After taking a brutal pounding in mid-April, oil prices have been on the rise in recent days.
The psychology of the market has changed, at least temporarily, since West Texas Intermediate, the U.S. standard, fell deep into negative territory on April 20. The lockdowns intended to combat the coronavirus pandemic are beginning to unwind in parts of the United States, China and in some European countries, notably Germany. The relaxing of some restrictions suggests to traders that demand for oil, which was estimated to have plummeted by nearly a third in April, may now begin to recover as more people hop into cars and go to work.
Even after a falling slightly on Thursday, W.T.I. stood at about $23 a barrel — well above the single digit levels it was trading at last month. Brent, the international standard, is above $29 a barrel.
The gusher of oil that deluged markets last month may also be slowing. The 9.7 million in daily output cuts agreed by the Organization of the Petroleum Exporting Countries and other producers like Russia were scheduled to kick in on May 1, potentially taking about 10 percent of production in normal times off the market. Norway, Western Europe’s largest oil producer, also recently said it would trim by a quarter of a million barrels in June. Operators in the United States are likely to close down more than 600,000 barrels a day in output, according to Rystad Energy, a consulting firm.
Saudi Arabia, the world’s largest oil exporter, gave positive sentiments a boost by raising the prices it will charge customers in June.
Still some analysts say the optimism may be overdone and that the glut will continue to swell if not as fast.
“I can’t help thinking the strengthening is a little bit premature,” said David Fyfe, chief economist at Argus Media, a commodities pricing firm, speaking of oil prices. “Demand is not going to spring back to normal anytime soon.”
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.
An Amazon spokeswoman said: “These individuals were not terminated for talking publicly about working conditions or safety, but rather, for violating — often repeatedly — policies.”
Cases of the coronavirus have been reported in more than 100 Amazon warehouses and several workers have died. State and local officials in Kentucky and New Jersey have asked Amazon to close facilities where workers have fallen sick.
The letter adds to pressure on Amazon and its chief executive, Jeff Bezos, who has been called to testify before Congress in an antitrust investigation and has been a frequent target for criticism from President Trump. A number of senators and representatives have already written to Mr. Bezos expressing concern about warehouse safety.
Catch up: Here’s what else is happening.
The Bank of England, Britain’s central bank, 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 saw a 50 percent bump in subscribers to 13.5 million. The ad-supported, free service, Pluto, saw an uptick in viewers to 24 million.
Kohl’s said Thursday it would reopen stores in 10 more states on Monday, after opening in four states this week. Among the safety steps the department store will take: a special shopping period for seniors, pregnant women and people with underlying health conditions every Monday, Wednesday and Friday from 11 a.m. to noon.
PayPal added an average of 250,000 new active accounts every day in April, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal. And at Square, the number of new people using its Square Cash service as a bank account was four times higher in April than in March.
Reporting was contributed by 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.