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About five million small companies across the country rushed to get government-backed loans this spring amid fears the coronavirus pandemic would destroy their business, the Wall Street Journal reported. Now, many are returning the money with interest — including government contractors that could face the loss of new business, or be forced to take a rate cut on future work, if it is determined they didn’t need the money. “There are risks of running afoul that have very serious consequences,” said Aaron Raddock, a partner with the government contracting division of accounting firm BDO USA LLP. About $30 billion in Paycheck Protection Program loans had been returned as of mid-July, Treasury Secretary Steven Mnuchin said during congressional testimony. There remains a total of about $520 billion in PPP loans outstanding. Some money was returned after warnings by the Treasury Department that public companies and others with access to capital shouldn’t be seeking PPP loans, which can be forgiven if borrowers retain workers and meet other requirements. Others, including retailers and restaurants, didn’t use the money because they weren’t able to resume operations. And for some, the worst-case scenario didn’t come to fruition as they successfully transitioned to a work-from-home environment or obtained relief through other government-funded programs.

A new attempt to restart economic relief negotiations between the White House and Democrats ended just minutes after it began yesterday, with President Trump appearing to cast doubt on the whole process by announcing a deal is “not going to happen,” the Washington Post reported. Just a few days earlier, he had suggested the he was open to a new round of talks. In declaring the whole process over, Trump used a news conference to criticize Democrats’ proposals for funding election preparations and the Postal Service as part of a broader spending measure. Those were among multiple issues that divided the parties during two weeks of negotiations that initially collapsed Friday before a failed attempt to revive them Wednesday. His comments came hours after House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin spoke for the first time since the talks fell apart last week. But their conversation did not break the impasse, instead leading to another round of finger-pointing. Pelosi and Senate Minority Leader Charles E. Schumer (D-N.Y.) issued a statement after Pelosi’s conversation with Mnuchin, accusing the administration of “refusing to budge.” That was followed by a statement from Mnuchin, accusing Pelosi of mischaracterizing their conversation and proclaiming that Democrats “have no interest in negotiating.” At the center of the relief negotiations was an effort to renew key parts of the $2 trillion Cares Act, which Congress passed in March. That law offered enhanced unemployment benefits to 30 million Americans, extended eviction protections, and included other provisions meant to soften the economic impact of the coronavirus pandemic. The jobless aid and eviction protections expired at the end of July. During his news conference, Trump touted executive actions he took over the weekend, which he claimed would limit evictions, extend a new form of jobless aid and defer payroll taxes, among other things. Because these measures were done by executive action and without the approval of Congress, it’s unclear how they will work. Congress passed four bipartisan coronavirus relief bills in March and April, pumping around $3 trillion into the economy, but Democrats and many Republicans believed additional stimulus was necessary given the fragile economy. But as they launched serious negotiations last month, the parties were far apart. Democrats backed a $3.4 trillion bill the House passed in May, while Senate Republicans eventually put forward a $1 trillion bill that even some in their own ranks opposed. A substantial group of Senate Republicans do not want to any more money.

A top Federal Reserve official said Wednesday that the inability of the U.S. to control the coronavirus pandemic limited the benefit of trillions in fiscal stimulus approved by President Trump and Congress earlier this year, The Hill reported. Eric Rosengren, president of the Federal Reserve Bank of Boston, said yesterday that the abrupt peel-back of restrictions imposed to slow the pandemic in the U.S. prevented record-breaking economic rescue efforts from fostering a quick recovery. “Normally with the kind of stimulus that we've seen with both fiscal policy and monetary policy, you'd actually expect a V-shaped recovery,” Rosengren said, referring to an immediate economic recovery from a downturn of similar speed and scale. “The reason we're not seeing a V-shaped recovery and that we're seeing a pause right now is that it's very hard for fiscal or monetary policy to offset a public health concern," he continued. Rosengren is the latest in a series of top Fed officials — including Fed Chairman Jerome Powell — to stress the importance of vigorous coronavirus control measures to a full recovery from the pandemic-driven recession. The onset of the pandemic prompted the quickest and deepest economic collapse in U.S. history. While the unemployment rate has since fallen from a post-Great Depression high of 14.7 percent in April to 10.2 percent in July, the second wave of coronavirus cases drastically slowed the pace of the recovery that began in May.

Stein Mart Inc. has filed for bankruptcy with plans to permanently close all or most stores, becoming the latest distressed retailer to succumb to the economic fallout caused by restrictions due to the coronavirus pandemic, WSJ Pro Bankruptcy reported. The discount department-store chain, which has locations nationwide, filed for chapter 11 protection on Wednesday in U.S. Bankruptcy Court in Jacksonville, Fla. Stein Mart said it is evaluating strategic alternatives, including the potential sale of its e-commerce business and related intellectual property. The decision to file for bankruptcy comes after the publicly traded company raised substantial doubt in June about its ability to stay in business over the next 12 months due to the pandemic’s adverse effects on revenue, operations and cash flow. Stein Mart’s sales had been under pressure since 2016, but COVID-19 further hurt the company’s business due to lower in-store traffic that strained its credit facilities, as it borrowed seasonally higher amounts to cover cash shortfalls from lower sales.

Two of J.C. Penney Co.’s largest landlords have emerged as the leading contenders to acquire the department-store chain’s retail business out of bankruptcy, the Wall Street Journal reported. Simon Property Group Inc., the biggest mall owner in the U.S. by number of malls, and Brookfield Property Partners LP, another big shopping center owner, have joined together and are in advanced talks to purchase Penney’s retail operations, people familiar with the matter said. In recent days, the pair have eclipsed other interested bidders. Penney reviewed a competing offer from private-equity firm Sycamore Partners that carried a slightly higher price tag. But Simon and Brookfield offered certain concessions over lease agreements that Penney and its lenders viewed as delivering better value. Penney is one of Simon’s top anchor tenants, second only to Macy’s Inc. If a deal comes together, it would save Penney from a possible liquidation and mark another acquisition by Simon of a bankrupt tenant. The company was part of a group that bought Forever 21 Inc. out of chapter 11 in February and Aéropostale Inc. in 2016. Simon also has agreed to buy Brooks Brothers out of bankruptcy for $325 million in a joint bid with apparel-licensing firm Authentic Brands Group LLC.

U.S. consumer prices rose more than expected in July, with a measure of underlying inflation increasing by the most in 29-1/2 years amid broad gains in the costs of goods and services, Reuters reported. The report released yesterday from the Labor Department, however, probably does not mark the start of worrisome inflation, and the Federal Reserve is likely to continue pumping money into the economy to aid the recovery from the COVID-19 recession. The jump in prices is likely an unwinding of sharp declines experienced when nonessential businesses were shuttered in mid-March to slow the spread of the coronavirus. The higher prices further dispel fears of deflation, a decline in the general price level that is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices. “This should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto. “But this is not a sign that the U.S. is instead about to experience a bout of much high inflation because of supply restrictions.” The consumer price index rose 0.6 percent last month, with gasoline accounting for a quarter of the gain. The CPI increased by the same margin in June. In the 12 months through July, the CPI accelerated 1.0 percent after climbing 0.6 percent in June. Excluding the volatile food and energy components, the CPI jumped 0.6 percent last month as the cost of motor vehicle insurance surged a record 9.3 percent. That was the largest gain in the so-called core CPI since January 1991 and followed a 0.2 percent rise in June. In the 12 months through July, the core CPI advanced 1.6 percent after increasing 1.2 percent in June.

Five months into the pandemic, hotel rooms remain largely unreserved, office space sits empty and hardly anyone is venturing into malls, the New York Times reported. Commercial tenants are struggling to pay their rents, and property owners are struggling to make payments on the loans they took out to finance the buildings. Some real estate investors, including the hedge funds and private equity firms that hold those loans, have had enough. Unwilling to risk any more missed interest payments, they are taking property owners and developers to court, hoping to foreclose on their interests in the properties and minimize their financial losses. Already, there are a few high-profile battles, including one involving a retail complex in Times Square that is owned by the family of Jared Kushner, President Trump’s son-in-law. The operators of the Mark Hotel, one of Manhattan’s most luxurious hotels, with Art Deco-inspired rooms and a suite that can cost $10,000 a night, recently beat back a foreclosure attempt in court. These cases have been initiated by a type of lender that is driven largely by narrow financial interests, but real estate lawyers and lenders expect foreclosure proceedings to become more widespread the longer commercial tenants fail to keep up with the monthly rent checks. Given that a full economic recovery from the pandemic is probably years in the making, things could get much uglier in the commercial real estate market before they improve. “When this all started in March, the first reaction was this was temporary and let’s just see how this plays out,” said H. Scott Miller, a real estate lawyer with Carlton Fields. “But we’re getting to the point where people are saying, ‘How much longer can this continue?’ This just can’t be open-ended.” The delinquency rate on large commercial loans tied to real estate in the U.S. has surged to just under 5.78 percent — nearly doubling in just one month, according to Moody’s Investors Service, a credit-rating agency. During the financial crisis that began in 2008, that rate peaked at just over 10 percent, but not until four years into the crisis. The hospitality and retail industries, which have been hit especially hard by the pandemic, account for 82 percent of the most seriously delinquent commercial loans, Moody’s said.

At least 202 aviation companies double-dipped into federal programs designed to prop up struggling businesses during the coronavirus pandemic — to the tune of about $1 billion, according to a Washington Post review of federal data. The companies include a Chicago catering firm under investigation by Democrats in Congress for laying off almost 900 workers this spring; an Ohio aircraft maintenance business that closed an office and put 52 people out of work just days after securing a loan of at least $5 million under one of the programs; and a Wisconsin airline that has warned of hundreds of temporary layoffs come fall. Earlier this month, the Office of the Special Inspector General for Pandemic Recovery, a new government watchdog, questioned the practice of letting companies benefit from both programs, saying that it “was not obvious” why airlines in particular would need help twice over and that it planned to monitor the issue. “Creating multiple programs resulting in multiple forms of financial support to a single individual or entity may well be sound policy,” the inspector general’s office wrote. “But in such circumstances, the risk of fraud and abuse increases and questions arise.” In March, Congress created the Paycheck Protection Program, which provided forgivable loans to small businesses of all kinds. But lawmakers also singled out the aviation industry for special help through grants known as the Payroll Support Program. All told, companies are in line for $700 million under the aviation program, receiving grants based on their payroll for a six-month period last year. The loans in the small-business program are worth at least $186 million.

Hermitage Offshore Services Ltd. filed for bankruptcy protection, its business of providing support for oil-drilling operations battered by the coronavirus pandemic, WSJ Pro Bankruptcy reported. The Tuesday filing in a U.S. Bankruptcy Court in New York automatically staved off creditors of Hermitage, which operates mostly in the North Sea and off the West Coast of Africa. Bankruptcy followed forbearance agreements that bought Hermitage time with lenders DNB Bank ASA of Norway and Skandinaviska Enskilda Banken AB of Sweden, which are owed nearly $133 million. Hermitage pledged 10 platform supply vessels and 11 crew boats to the banks in January as security to refinance the loans. Hermitage has been issuing public warnings about its financial troubles and losses for months. The Bermuda-based company last month reported “a significant and abrupt deterioration in the financial condition,” raising substantial doubt that it could stay in business. Behind the distress was the one-two punch of pandemic distress and diving crude oil prices that have felled dozens of other energy companies.