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For more than one-third of small U.S. business owners, keeping their ventures alive during the coronavirus pandemic is coming at a high personal cost, Bloomberg News reported. Seven in 10 small business owners say they’ve used some form of support for their business since March, according to a new CreditCards.com survey. The most common option was PPP loans, with 30 percent of respondents saying that they received one, followed by 24 percent saying they turned to personal credit cards and business savings accounts. In total, 35 percent of owners used either personal credit cards or savings accounts, with 10 percent using both, to support their business. Now, small business owners are looking to customers to help them out: Some 32 percent of respondents said they need sales to increase for them to stay afloat this year. About one-in-five said they would need government assistance — a $669 billion federal relief program has doled out funds, and more money is being considered. More than half of respondents say they won’t survive long past the new year without additional support. Read more. 

In related news, U.S. states hit hardest by COVID-19 had some of the biggest jumps in small business loan defaults since the onset of the pandemic, and some of the highest rates of default overall, according to data provided to Reuters on Friday by PayNet, a division of credit tracking company Equifax Inc. From February, before the scourge, to June, the most recent data available, defaults among small businesses rose fastest in New York, where the disease has killed more people than in any other state. Louisiana, the state with the highest per-capita case count as of the end of July, had the fourth-highest default rate among small businesses, the PayNet data shows. Florida, with the fourth-highest per-capita COVID-19 case count, had the highest default rate of any state, at 4.29 percent. Read more. 

As the coronavirus pandemic began shutting down the U.S. economy in March, Sen. Marco Rubio (R-Fla.) spearheaded legislation creating the $670 billion Paycheck Protection Program, one of the most expensive business-rescue frameworks in history. Rubio, who is chairman of the Senate’s Committee on Small Business and Entrepreneurship, now faces the challenge of steering more resources to millions of already ravaged companies so they can survive the next few months. Rubio in an interview with the Wall Street Journal discussed the small-business relief package that he and Sen. Susan Collins (R-Maine) proposed July 27 that is now being negotiated with Senate Democrats. The proposal includes $190 billion for a revamped PPP and creating a $100 billion program to provide long-term, low-cost loans to certain struggling businesses including those located in low-income areas. "We have to build a bridge between where we are today and over the next few months," Rubio said. "Part of it is helping these viable small businesses survive so they can be in a position to reinvent themselves when things begin to go back to a new normal."

Top Trump administration officials and lawmakers cautioned yesterday that a deal over a new relief package to help people and businesses weather the coronavirus crisis remained elusive even as the debate over the details of the aid was set to take center stage in the coming week, the New York Times reported. A meeting on Saturday in the Capitol Hill suite of Speaker Nancy Pelosi had been the most productive discussion in recent days, officials said, but they remain divided on a number of issues, including how to revive lapsed unemployment benefits for tens of millions of Americans and how broad any deal should be. “We still have a long ways to go,” Mark Meadows, the White House chief of staff, who is negotiating on behalf of the administration, said on CBS’s “Face the Nation.” “I’m not optimistic that there will be a solution in the very near term.” He continued to push for Democrats to agree to a stand-alone measure that would restore the weekly federal jobless benefits, which expired on Friday, as a way to continue providing relief. But Ms. Pelosi, who is expected to again meet with administration officials on Monday, reiterated that she would reject a so-called skinny bill in favor of a sweeping package that includes a national health strategy to counter the spread of the virus and extend the full $600-a-week unemployment benefit. Lawmakers have already approved spending nearly $3 trillion to address the public health crisis and economic collapse caused by the pandemic, but the two parties remain bitterly divided over the scope and cost of another relief package. Democrats, who remain publicly united behind the $3 trillion stimulus measure the House approved in May, contend that another significant infusion of cash is necessary. But at least 20 Senate Republicans are unlikely to support any additional spending, party leaders have acknowledged, in part because of concerns over the level of spending and its effect on the national debt. Under a $1 trillion plan Republicans unveiled on Monday — a narrower proposal than the Democrats’ plan — a number of provisions, including the $600 weekly federal unemployment benefit, would be severely curtailed. “We have to balance — there’s obviously a need to support workers, to support the economy, people who through no fault of their own are shut down because of this terrible disease,” Mnuchin said on ABC’s “This Week,” responding to criticism that Republicans took too long to introduce a proposal. “On the other hand, we have to be careful about not piling on enormous amounts of debt for future generations.” Read more. 

In related news, the Trump administration is looking at options for unilateral actions it can take to try to address some of the economic fallout caused by the novel coronavirus pandemic if no relief deal is reached with Congress, the Washington Post reported. The discussions are a reflection of officials’ increasingly pessimistic outlook for the talks on Capitol Hill. The White House remains in close contact with Democratic leaders, but a wide gulf remains and deadlines have already been missed. It’s not clear what steps the administration could take without the help of Congress on issues such as lapsed enhanced unemployment benefits or the expired moratorium on evictions — the two matters President Trump has recently identified as his highest priorities in the ongoing talks. Both of those programs were authorized by Congress earlier this year but were designed to be temporary. The White House’s strategy in the negotiations has shifted multiple times in the past few weeks. Democrats passed a $3 trillion package in May that included an extension of unemployment benefits, new stimulus checks, aid for states and localities, and various other programs. The White House expressed opposition to that bill but did not begin negotiations with Democrats until recently. It also took the White House much longer than expected to broker a unified Republican proposal with the Senate GOP after blowback on several of the White House’s ideas. Read more. 

Denbury Resources Inc. plans to hand ownership over to creditors as part of a bankruptcy strategy that would eliminate $2.1 billion in bond debt, WSJ Pro Bankruptcy reported. The oil-and-gas company filed for chapter 11 protection on Thursday in U.S. Bankruptcy Court in Houston. The proposed restructuring includes giving second-lien bondholders and convertible noteholders nearly all of the equity in the reorganized business. Denbury had warned this week that a bankruptcy filing was likely. Under the plan, GoldenTree Asset Management LP would get a seat on the company’s new board of directors. The board also would include two directors selected by Fidelity Management & Research Co., as well as others picked by a second-lien creditor committee. The Plano, Texas-based company, the latest in a series of energy businesses to file for bankruptcy, said it suffered a one-two punch earlier this year due to the coronavirus pandemic and the disagreement between Russia and the Organization of the Petroleum Exporting Countries. Oil prices plunged. Although crude prices have recovered somewhat, they continue to hover in the low-$40s, Denbury Chief Executive Christian Kendall said in a declaration filed in bankruptcy court. Denbury’s production and development activities are in the Gulf Coast and Rocky Mountains regions. The company entered bankruptcy with a restructuring agreement backed by all lenders under a revolving credit facility and by creditors holding 67 percent of its second-lien bonds and 73 percent of its convertible notes.

Noble Corp., the offshore drilling contractor, filed for bankruptcy with a plan to cut more than $3.4 billion of debt after a crash in crude prices made undersea oil wells too expensive, Bloomberg News reported. The chapter 11 filing in Texas would eliminate all of the company’s bond borrowings by swapping debt for equity, the company said in a statement. Noteholders agreed to invest $200 million of new capital through second-lien notes, and Noble has lined up a $675 million secured revolving credit facility backed by current lenders including JPMorgan Chase & Co. London-based Noble, one of the biggest owners of offshore rigs, failed to cope with a glut of floating drilling capacity that was a decade in the making, as exploration companies shifted focus to cheaper inland shale. The plunge in crude prices made any near-term recovery in offshore drilling even less probable. Noble reported both assets and liabilities of $1 billion to $10 billion, according to the bankruptcy petition. It expects to emerge from chapter 11 before the end of the year, and will continue operating while in bankruptcy, according to the statement. Its filing adds to the more than 200 bankruptcies by oilfield service companies dating from 2015, according to the law firm, Haynes and Boone LLP. Noble follows competitor Valaris Plc announcing on Thursday that it may file for chapter 11, while Diamond Offshore Drilling Inc. filed for bankruptcy in April.

So far, the impact of the COVID-19 shutdown during the past six months hasn’t led to an increase in activity in bankruptcy courts, the Fort Worth Star-Telegram/em> reported. There have been a handful of high-profile cases involving insolvent retailers such as JCPenney, Neiman Marcus and Fort Worth-based Pier 1 Imports, but overall the number of filings is significantly down. Personal bankruptcy cases filed January through June are down 16 percent in Texas, and 23 percent nationwide, compared to the same time last year, according to the American Bankruptcy Institute. Among personal bankruptcies, Texans filed 8,060 chapter 7 cases and 5,752 chapter 13 cases so far this year, according to ABI. Chapter 7 allows residents to clear most of their debts (with some exceptions, including student loans), while keeping their home and retirement plan. “The chickens are going to come home to roost, and it’s going to hit hard unless there’s another huge stimulus and people go back to work quickly,” said Reed Allmand, a lawyer who specializes in bankruptcies with offices in Hurst and Dallas. “It’s good news that bankruptcies are down, but I think most people are delaying filing bankruptcy even when they need it. A lot of this is kicking the can down the road.”

Millions of dollars of American taxpayer money have flowed to China from the $660 billion Paycheck Protection Program that was created in March to be a lifeline for struggling small businesses in the United States. But because the economic relief legislation allowed American subsidiaries of foreign firms to receive the loans, a new analysis shows that a substantial chunk of the money went to China, the New York Times reported. According to a review of publicly available loan data by the strategy consulting firm Horizon Advisory, $192 million to $419 million has gone to more than 125 companies that Chinese entities own or invest in. Many of the loans were quite sizable; at least 32 Chinese companies received loans worth more than $1 million, with those totaling as much as $180 million. “The extent and nature of P.R.C.-owned, -invested and -connected entities among the P.P.P. loan recipients indicate that without appropriate policy guardrails, U.S. tax dollars intended for relief, recovery and growth of the U.S. economy — and small businesses in particular — risk supporting foreign competitors, namely China,” wrote Emily de La Bruyère and Nathan Picarsic, the co-founders of Horizon Advisory, referring to the People’s Republic of China. The report acknowledges that the participation of these companies in the lending program most likely saved an unspecified number of jobs based in the United States, but it also suggests that many of the businesses probably had access to other forms of capital from public or private markets to support their American operations. The Treasury Department has estimated that the overall program has kept 50 million workers employed in the U.S.

Mood Media Corp. — a provider of background music for stores, restaurants and hotels — has filed a prepackaged chapter 11 bankruptcy, intending to cut roughly $400 million in debt from its balance sheet and to hand control to lenders, WSJ Pro Bankruptcy reported. The filing marks the second time Mood has filed for bankruptcy in the past three years and the third time its subsidiary — the pioneering background-sound business Muzak — has been through bankruptcy since 2009. Mood acquired Muzak in 2011. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston approved the company’s restructuring plan on Friday, less than 24 hours after it filed for chapter 11 protection. Mood started soliciting creditors’ support for the restructuring in late June and received no objections to the transaction, which includes a debt-for-equity swap. Christopher Greco, a lawyer at Kirkland & Ellis LLP representing Mood, said during a telephone hearing that the case might be the fastest on record between when a company filed for bankruptcy and won court approval on its chapter 11 plan. Mood expects to leave chapter 11 by Aug. 3. The company’s last financial restructuring was backed by affiliates of Apollo Global Management LLC and funds advised by Blackstone ’s GSO Capital Partners LP, which at the time agreed to forgive some debt in exchange for equity while issuing new debt to fund operations.

The U.S. economy could benefit if the nation were to “lock down really hard” for four to six weeks, a top Federal Reserve official said yesterday, adding that Congress can well afford large sums for coronavirus relief efforts, Reuters reported. The economy, which in the second quarter suffered its biggest blow since the Great Depression, would be able to mount a robust recovery, but only if the virus were brought under control, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, told CBS’ “Face the Nation.” “If we don’t do that and we just have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we’re going to see many, many more business bankruptcies,” Kashkari said. “That’s going to be a much slower recovery for all of us.” He said that Congress is positioned to spend big on coronavirus relief efforts because the nation’s budget gap can be financed without relying on foreign borrowing, given how much Americans are saving. “Those of us who are fortunate enough to still have our jobs, we’re saving a lot more money because we’re not going to restaurants or movie theaters or vacations,” Kashkari said. “That actually means that we have a lot more resources as a country to support those who have been laid off,” he said.