Financial Focus: So, The Government PPP program help Republican friends, huh? 

Financial Focus: So, The Government PPP program help Republican friends, huh? 

By Professor Anthony Rivieccio MBA PFA

 

When the pandamic first hit in March and Congress was trying to find ways to help " Small Business", they created the Paycheck Protection Program, or as we know it, The PPP.

It was designed to give small business assistance by keeping their employees on payroll.

Many in the media quickly denounced it as a " gift" to their Republican Friends.

Generally speaking, it was designed as a 3 month loan, but if they used 70% for payroll, then the loan, would turn into a grant. In simple terms, FREE Government money .

Now I don't know, maybe it's me. When I think of a small business, being an economist for over 30 years , I think one a one person owner, small staff, providing goods and services. According to our US Business Structure, " small business" not partnerships nor corporations, bring in over 60% of US economic health. Yes, your bodega, grocery store, your diner , many neighborhood owned help bring in tremendous US Growth. 

So, are World renowned,  non for profits "Arts & Cultural " institutions,  Small Business? Are places like Yankee Stadium eligible? The Bronx Zoo? The Museum of Art? 

The New York Botanical Garden , has been closed since March. They applied and was appoved for a $5- $10Million dollar loan in April of 2020. 

On their application they indicated it was for 55 employees. On their application their total payroll expenses were about $24-48 million a year. 

So let's do some simple math:

If we assume that the " loan" was for $8 million for 3 months, based on 55 employees, it comes out , equally, to $11,189 a week. If they used 70% for payroll, that comes out to $7,832, per employee, per week. 

Presuming this was applied on an annual basis the average employee would presumed to have made $407,273. 

But even strange things are happening.

For example, On The NYBG LinkedIn page the NYBG has over 200 staff members. 

According to their 2015 Tax Filing their salaries were $46 million , going up approx 8% a year. 

If we applied the same " 3 month cycle", their salaries would have totaled $12 million in expenses.

So, did 55 employees get paid or 200? 

Let's assume all 200 staff received equal compensation, then , based on the $8 million dollar loan, then it would have been $2,154 a week. Assuming that would have been a year,  then the average staff would have made $112,000 annually. 

But it gets now even stranger

On the NYBG profile in Zippia, an online review site, The NYBG says...

"The average employee at New York Botanical Garden makes $38,865 per year, which is competitive for its industry and location. New York Botanical Garden is a medium media organization with 450 employees and an annual revenue of $75.0M that is headquartered in New York".

A simple Google search shows even more confusing data:

The New York Botanical Garden Salaries

 

Job Title                                                                                       Salary

Visitor Services Associate salaries - 2 salaries reported             $12/hr

Research Assistant salaries - 2 salaries reported                       $36,336/yr

Visitor Services salaries - 2 salaries reported                             $11/hr

Manager salaries - 2 salaries reported                                        $64,835/yr

 

The New York Botanical Garden Director Salaries.

The typical The New York Botanical Garden Director salary is $93,058. Director salaries at The New York Botanical Garden can range from $87,844 - $100,648.Oct 22, 2019

I guess the math is not that simple. I guess it's pretty complicated with all these confusing numbers. 

What we do know is what's on their PPP application: A $5-10 million loan for 3 months with 55 employees. And don't forget- if the loan is used for payroll- then it is not a loan- it is a Grant, or FREE money. 

Or maybe to ask a simpler question: As it states above,why,  is a " non for profit " cultural organization making $75 million in revenue- received a definition of a small business? Were they like the stores on Fordham Road, that were looted? Or your diner or grocery store on the corner?.Or many other " business districts" that are now struggling"? Many the bigger question : weren't they closed during this time?

If we presume a " business district block" has 10 stores. Then a business district ( 10 blocks) would have 75-100 stores.

An $8 million dollar loan, for 3 months at 40 of those stores on the above " business district" would have covered up to $15,340, per week . Too much? Not enough? It surly would have helped to keep people employed.

Figure each small business would have had 5 employees? Then by equal sharing, that would have been $2,148 per employee per month , counting the 70% mandatory requirement. On an annual basis that would have been close to $26,000 on assistance. Up to 200 jobs could have been saved.

Do you notice: The numbers for the business district are VERY CLOSE to maintaining The NYBG 200 member staff. But the PPP application says 55 employees?. 

Nevertheless, if you had to make a choice, which would it be. Would you have preferred to save the 200 ( or 55) member staff at the NYBG or 200 business jobs or 40-50% of a business district?. 

Well , two ways made that decision for us. The way of access and the influence of Government. 

The PPP program is still open. The Government will reinstitute stringent rules on its next rollout very soon. 

If you are or know of a " mom & pop" store that needs assistance to stay alive please refer them to their financial institution or an advisory firm ( including ours) NOW! This is one situation where I would strongly encourage, the faster the better. 

But maybe, tell your collaborator, to put " a Rose" on top of the PPP application. After all The Rose Garden in August ( now that they're open) is Marvelous! 

I'm a big fan of both, business districts and botanical gardens. No one wants to lose their job during a pandamic. But this are, just two examples of how the PPP program works --- or in our opinion, should work- or more importantly, should not work. .

 

 

 

 

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info, The Parkchester Times and The Bronx Chronicle. Mr.  Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. You can reach Anthony at 347.575.5045.