Good morning, MBA readers,
The Small Business Administration’s newest $349 billion loan program was meant to safeguard workers and employers from the paralyzing effects of the COVID-19 pandemic. But now, that tap is close to running out, a top White House official said, with around 1.1 million applications approved thus far. While Congress has stalled over additional funding for more loans, some small businesses in Missouri are hesitant to spend due to lack of clarity over forgiveness terms for federal loans. Among the small businesses facing mounting losses during the slowdown are local hotels, whose operators are working to help employees and their families as the facilities have seen occupancy crater.
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Top official says small business loans are running out
Larry Kudlow, the chief White House economic adviser, said Tuesday the country’s $349 billion small business loan program is on pace to run out of money by Thursday with around 1.1 million applications approved so far. An effort to add another $250 billion to the Paycheck Protection Program has stalled in Congress. (Bloomberg)
Concerned about federal loan terms, small businesses wait to spend
Some small business owners who don’t know what cash flow will look like over the next few months are wary of spending the forgivable loans they are entitled to through the Paycheck Protection Program, which hasn’t spelled out forgiveness terms yet. (St. Louis Post-Dispatch)
Bullard calls for universal testing to end coronavirus shutdown
In a conference call organized by the St. Louis Regional Chamber, St. Louis Federal Reserve Bank President James Bullard argued that closing the economy “is appropriate for now but it’s a crazy inefficient policy.” He said once infection numbers begin to drop, the U.S. should reopen the economy and make widespread testing available for all workers in lieu of a vaccine. (St. Louis Post-Dispatch)
Missouri adds $120 million in federal funds for education, child care
U.S. Sen. Roy Blunt announced Tuesday that Missouri will get an extra $54.6 million in K-12 and higher education funding and $66.5 million in child care subsidies through the CARES Act. The funding is intended to bolster schools’ responses to the pandemic and ensure essential workers have access to child care. (Jefferson City News Tribune)
UM System announces budget cuts
The University of Missouri System could see overall budget cuts of around 15%, according to officials, which could lead to layoffs, unpaid leave and restructuring. UM System leadership will take 10% salary cuts from May 1 until at least July 31. (Columbia Missourian)
Small colleges brace for enrollment decline
As many families rethink their financial situations, small colleges are grappling with how to handle what they see as an almost inevitable decline in enrollment. Experts expect students will opt to stay closer to home this fall, causing a decline in out-of-state money, which could hurt some St. Louis-area colleges already struggling with declining enrollment. (St. Louis Business Journal)
Experts predict a slowdown in St. Louis VC investment
Despite nearly $113 million in local deals in the first quarter, a new report by PitchBook and the National Venture Capital Association expects social distancing rules will effectively dry up the flow of new VC funds in St. Louis over the next few months. (St. Louis Business Journal)
KC energy firm’s stock plummets
As of market close Tuesday, CorEnergy Infrastructure Trust’s stock was down 44% from Monday’s closing price to $13.60 per share. The fall came after a tenant representing nearly half of 2019 revenue for the energy infrastructure real estate investment trust announced it had suspended pipeline rent payments. (Kansas City Business Journal)
Casino regulator calls for state gaming commission audit
Missouri Gaming Commission member Dan Finney asked Auditor Nicole Galloway to investigate the commission less than two weeks after the commission’s executive director, who he helped hire, announced his retirement. (St. Louis Post-Dispatch)
Wells Fargo Advisors sells part of St. Louis campus
The financial services company has sold two of its Midtown campus buildings to Clayton-based Green Street, known for its urban renewal projects. The buildings have stood vacant for a few years. (St. Louis Business Journal)
Frontenac Hilton furloughs 128
The Hilton St. Louis Frontenac has not announced how long the furloughs will last. (St. Louis Post-Dispatch)
Say that again
“If occupancy gets to 8% or 9%, we get excited. Before we were averaging almost 80%. But I’m too obstinate to shut the place down.”
That’s Amrit Gill, president and chairman of Restoration St. Louis, which owns Hotel Saint Louis. Gill said he has had to furlough all but 35 of his 160 employees, keeping the boutique establishment open with a skeleton crew through the pandemic, the St. Louis Business Journal reports. Gill added that the hotel’s kitchens are feeding 300 people, including employees who were either furloughed or laid off, as well as their families, for free. Another local boutique hotel, The Last Hotel, also ranges between just 1% and 5% occupancy these days, but the hotel has not yet laid off a single worker. Instead, about 118 employees have been kept on, some of them taking pay cuts of up to 20%. The hotel also set up a pantry offering food items for sale to workers and plans to open it up for business in the community.
That’s roughly how much net U.S. farm income is projected to shrink this year due to the COVID-19 crisis, according to a study released Monday by the University of Missouri Food and Agricultural Policy Research Institute. The report expects the pandemic to drive crop prices down 5% to 10% and livestock prices down 8% to 12%, reversing previously predicted growth in net farm income. Corn prices are poised to drop more than 9% from the baseline price for the 2020-’21 marketing year, while cattle and milk prices are expected to fall almost 12% and 9%, respectively, for the calendar year. The widespread restriction on travel has also reduced the demand for ethanol, potentially driving production down by 1.4 billion gallons this year. The report forecasts farm income to rebound to baseline levels next year, but warns that food processors and distributors may have to sharply adjust the way they do business, especially their supply chains. “Even if it proves temporary, shifting from a world where a significant share of food is consumed in restaurants to one where far more food is consumed at home may require changes in food processing and distribution that may come with additional costs,” the report said.
Hello, my name is
The IT services provider announced Tuesday that it has closed on $320 million in a new funding round, the St. Louis Business Journal reports. First announced last month, the funding round targeted a mid-April closing and was led by a trio of new investors. TierPoint, which provides IT infrastructure services such as data center and cloud services, plans to use the funding to bolster its growth and pay off loans. TierPoint has more than 800 employees, including nearly 150 in St. Louis, and more than 40 data centers around the country. In 2018, it reported revenue of nearly $380 million.
Word to the wise
This term refers to the act of a delivery service customer enticing a shopper or driver to accept an order by promising a big tip, only to reduce or delete the tip once the delivery is made, Marketplace reports. With stay-at-home orders becoming the new norm, demand for food and grocery delivery is skyrocketing, and some consumers are having to compete for delivery drivers. Some of these drivers report customers placing orders with tips as high as $50 or more through apps like Instacart, CNN reports. But because the app allows customers to change a tip for up to three days, it leaves room for abuse. For full-time delivery drivers — some of whom earn half of their income from tips — tip-baiting can be demoralizing and devastating. Late last month, Instacart workers staged a strike demanding hazard pay of an additional $5 per order, an automatic 10% tip and safety equipment like face masks and hand sanitizers. Instacart contends that tip baiting is an anomalous occurrence, and the company pledged to hire 300,000 more workers to keep up with demand.
It’s been a pleasure doing business with you this morning.