Individuals and small companies across the country have had the opportunity to get some economic stimulus help from the government. Now it is time for bigger companies to get help. The U.S. Federal Reserve has announced that it will make some loans available to help larger companies and non-profits. The loans are going to be offered in two stages, starting out providing business loans for companies that have up to 10,000 employees. Each company may be able to get up to $2 billion. This program will be expanded later to include companies that have up to 15,000 employees and they will be eligible for loans up to $5 billion.
When making these loans, banks will be required to hold between 5% and 15% of the loan. They can make loans to the larger companies if the bank agrees to provide 15% of it. Some restrictions do apply, such as the company must be able to sustain paying their bills for 90 days and they cannot be looking to go bankrupt. The companies also need to maintain reasonable efforts to support their employees.
Boeing Cancels Embraer Purchase
The troubled aircraft manufacturing company has canceled an agreement to buy Brazil’s aircraft company Embraer. The $4.2 billion buyout agreement had conditions in it that stated that it cannot be canceled even in the event of a pandemic. Boeing stated that it backed out because the Brazilian company failed to meet certain conditions, which Embraer denies. To help with its reduced finances, Boeing has announced that it will release 16,000 employees.
Opening for Business
Many more states are relaxing their stay-at-home orders allowing people to go to a limited number of places for basic services and recreation. Some states are opening restaurants but limiting customers. A couple of other states may be opening the door for religious services – but limiting it to 10 people. Some states, such as Kentucky, are restricting larger gathering places such as youth sports, summer camps, daycares, theaters, and more to a June opening. Several states are not releasing the stay-at-home orders until May 15th.
A Decrease in Personal Spending
Americans are holding on to their money more and spending has been reduced since the stay-at-home orders have been introduced. It has dropped the most in the first quarter since 1980. This is likely due to the uncertainty of the future. Spending is also impacted by the lack of income in many homes because of job loss. Last week saw another 3.8 million people applying for unemployment. This brings the total number of people that have applied since the shutdown began up to 30 million.
The Oil Deal
When President Trump was working with the Saudis to work out a production cut recently, the matter of a possible loss of military cooperation was threatened. The threat involved passing the possibility of passing legislation that would mean U.S. troops might be removed from the country. Although production cuts were finally agreed upon, the U.S. oil industry has been deeply hurt and many smaller oil companies are likely to start declaring bankruptcy soon.
The Saudi’s have sent 28 oil tankers to the United States loaded with oil. Some of them will arrive for delivery on May 24th. The new delivery is carrying about 43 million barrels. There already are 76 tankers waiting to be emptied now at U.S. ports.
The U.S. has announced that new oil storage facilities are being built to hold the oil deliveries. President Trump has said recently that he will be looking to provide some form of relief for the oil industry workers but nothing has happened yet.
Editor’s Note: I think someone has already reported this, but there is serious thought to buying oil to replenish national reserves. It would be a good time for it.