Paycheck Protection Program Flexibility Act

The Paycheck Protection Program (PPP) has come under some scrutiny over the last few months. Many business owners felt that the program didn’t give them enough flexibility to use the funds productively while maintaining their right to have the loans forgiven.

The government listened and the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020. It contains some much-needed changes to the original program.

Only 60% of the funds need to be used for payroll

The original PPP loans required businesses to use 75% of the funds for payroll. Most businesses found that to be way too restrictive. The issue was that PPP assumed that most businesses had payroll costs that were about four times their rent and other costs. However, that is not true for businesses in expensive areas. And many businesses had laid off their workers due to the closing. PPP required that they be rehired before June 30, 2020, but in the meantime, many businesses had very low payroll costs. Therefore, businesses were concerned that they wouldn’t hit that 75% requirement.

Business advocate groups were asking for 50% to be spent on payroll (article), but reducing the required percentage to 60% should give most businesses the breathing room they need. Frankly, the funds were meant to protect paychecks (hence the name), not keep businesses open, so requiring that a portion be spent on payroll makes sense.

The funds must be spent in 24 weeks

The PPP required all funds be spent in eight weeks. Businesses complained that they would prefer to use the funds when the economy reopened rather than use them on idle workers. This extension gives everyone until the end of 2020 to use the funds, which is hopefully enough time for the economy to reopen.

Though, even if the economy does not reopen entirely by the end of 24 weeks, these loans were not huge so most businesses should have no trouble using the funds on approved sources (like payroll) given that timeframe.

Businesses must rehire employee by December 31, 2020

Originally, businesses that took PPP funds had to rehire any lost full-time staff by June 30, 2020. I had some issues with this requirement because it ignored whether there was any demand for products or services. Meaning, a business would have to staff back up without any demand. Why would that make sense? My concern was that businesses would just shed those employees by the end of July. There would be no reason to keep them.

Now businesses have till December 31, 2020, to rehire employees. That seems like plenty of time to me. It also addresses the other problem: workers don’t want to return. This is partly due to the fact that workers on unemployment are making more money than if they were working. That additional unemployment incentive is fading away in August, but I’ve heard talk that there may be an additional payment of $450/week being offered to help phase people back to work.

The time frame allowed by PPPFA should be long enough to get past these incentives to stay home.

There have also been changes to the requirements to rehire the same number of full-time employees. Under PPP, a business had to return to the number of full-time employees that it had as of February 15, 2020. There were essentially no exceptions, other than the employees didn’t have to be the same employees you had previously.

Now PPPFA states that if you can’t get back to your previous number of employees, your loan can still be forgiven if you can show one of three things:

  1. You were unable to rehire an employee that worked for you before February 15, 2020;
  2. You are able to demonstrate an inability to hire a similarly qualified employee(s); or
  3. You are able to demonstrate an inability to return to the same level of business activity as before February 15, 2020.

It’s not clear how one would demonstrate that any of the above requirements have been met. The first could be shown pretty easily, but the other two will be challenging for some businesses. A restaurant will have little trouble showing that they haven’t been open, but what if they’ve been open for outdoor service? That could get tricky.

The loans are extended to a five-year term

The original loans were to be repaid over two years. The term has now been extended to five years. The first payment is also deferred until six months after a determination of forgiveness is made.

To be honest, I don’t know if they are even considering forgiveness applications, yet. The first payments will likely not be due for a long time.

PPP was only designed to cover 4-8 weeks

The main issue with PPP was that it was designed to be a stop-gap measure. Politicians at the time did not know how long this pandemic would stretch. I remember the good ol’ days when we debated whether the closures would last four weeks or six weeks. At more than double that time, the closures have taken a much bigger toll on small businesses. PPP just didn’t (and couldn’t) foresee the depth of this problem. It’s great to see some changes are being made to ease the strain on small businesses.

One other thought, businesses who got funding in the first round of the PPP loans have probably spent their money, or at least most of it. How does this benefit them? Well, the rehiring rules are relaxed, for sure, but these changes would have been better had we seen them earlier.

Artificial Intelligence Pushes the Boundaries of Microprocessors

Lately, I have been writing extensively about the pandemic and changes that are coming in response to it. But my true interest lies in future technology. I’m am fascinated with advances in artificial intelligence, blockchain, and the internet of things. This blog takes me back to those important topics.

I want to discuss how microprocessors work and how advances in AI will require them to work differently. In a way, our advances in chip technology have allowed machine learning and AI to exist, and now that same technology will have to change in order to allow these disciplines to flourish.

What is a microprocessor?

A microprocessor is essentially the primary computation engine of your computer. It’s also known as the central processing unit (CPU). They were originally designed as a collection of chips with transistors wired individually. This will matter in a second, just bear with me.

Nowadays the components are all integrated on a single chip. They can have multiple cores and millions of transistors. Generally, this means higher computing speeds. These chips have been getting smaller and smaller over the years, as well as the components on them.

If you’re interested in how this actually works check out this article. I’ve gone about as far as my brain will allow. I’m a lawyer, not a computer engineer.

Moore’s Law

Why mention transistors? Because of Moore’s Law. Moore’s Law states that the number of transistors on a microchip will double about every two years. Over time, this was translated to mean that computing power would double about every two years.

In fact, Moore’s Law has come true and those gains were realized over the last 50 years. In some ways, this was a self-fulfilling prophecy because the semiconductor industry pushed for these gains. Regardless of its cause, technology has benefited greatly from this trend.

But some are concerned that the trend will end soon because of shrinking microchips. We simply cannot continue wedging more and more transistors onto smaller and smaller chips. It becomes physically impossible. Again, I’m not going to go into crazy detail about this, but there is an interesting article from MIT Technology Review here. If Moore’s Law comes to an end and we don’t see the gains in computer speed, will advanced computing like AI and machine learning continue to move forward?

Artificial intelligence (and other technological advances) continue to require more and more computing power, which has generally been doable thanks to advances in the size of the transistors and the chips they reside on. With those incremental improvements potentially coming to an end, what will take their place? Can we develop new technology that allows computing speed to continue on its upward trend?

The Transition to New Chip Technology

It’s not just raw computing power that needs to change. It’s also the way that computers ‘think’. Machine learning and AI researchers are moving to systems based on neural networks that rely heavily on parallel computations. This is more like how our brains work and may lead to real developments in the field. Traditional CPUs process computations sequentially, which makes them inefficient to train for neural networks. (see an article from Forbes, here)

So what does this all mean?

It means that we need a new microchip. We need a chip that is not restricted in speed by the number of transistors we can jam on it, and we need a chip that can allow for parallel processing to meet the demand of machine learning experts.

Along comes Cerebras, a company that has built the largest chip ever. It’s large but offers ridiculous computing power. Because everything is located on one chip, they are able to move data more efficiently. That, in turn, allows for incredible parallelization.

Another company, Groq, has a unique view of chip performance. Their goal is to move data in very small batches (specifically a batch size of one), but to do it at ludicrous speeds. In fact, they recorded speeds of one quadrillion operations per second. To put that into context, the computer I’m working on currently can do roughly three billion operations per second. The Groq chip is about 333,333 times faster than my computer or 23 million times faster than the computer that took us to the moon. (I am not an expert on these figures, they could be wrong. But the chip is ridiculously fast)

There are a number of other companies in this space. The Forbes article lists a handful more, but the point is that there is a concerted effort to reimagine the microchip so that computers can keep up with the demands of AI and machine learning.

In a lot of ways, my reference to the moon landing was appropriate. The space race led to many technological breakthroughs beyond merely putting a man on the moon. It’s interesting to see how our push for more powerful AI capabilities might lead to similar breakthroughs.

There isn’t a clear frontrunner, yet. At some point, I expect that we will settle on a unified way to generate the speed and parallelization we need. Until then, these companies will continue to test their capabilities against one another. It should be an interesting time.

How Will Schools Reopen in the Fall?

There is a lot of uncertainty surrounding whether our schools will reopen come fall and what that reopening will look like. My wife is a teacher, and not a day goes by without some guessing and discussion about whether there will be e-learning or changes to classrooms.

Make no mistake, there will be changes. No one knows for sure what those changes are, yet, but there is already work being done to maximize the learning available to students during the pandemic.

What do we need to reopen?

In Illinois, Governor Pritzker’s plan allows the reopening of schools in Phase 4 (we are entering Phase 3 as of May 29, 2020). But that Phase still includes masks, social distancing, and a limit on gatherings of greater than 50 people.

In order to get to Phase 4, there has to be a continued decline in the rate of infection. Testing will need to commonplace, and contact tracing will be a must. You can see more details on Phase 4 here.

But entering Phase 4 is not the only hurdle. There are also teachers’ unions to contend with. The Chicago Teachers’ Union is already planning on how they will bargain over the reopening procedures (article here). Their emphasis is on the safety of their members, with a focus on smaller class sizes and the addition of hand-washing stations.

What changes will students see?

There are no definitive answers about how schools will change. Many solutions have been offered to avoid the large class sizes and close contact between students and teachers.

Some things are given: masks, daily cleaning regimens, and distance between students.

Children may not change classrooms, which reduces the interaction between them. Lunch, recess, and PE probably won’t exist. My guess is that most, if not all, after school programs will be canceled including sports and band.

Los Angeles County just released parts of its plans for reopening schools (article here). Their focus was on reduced socialization among students. There will be no sports, no gathering for lunch, and one-way hallways.

There is even the talk of AM/PM schedules where some students go to school for the morning and some for the afternoon. That would remove the need to have lunch at school and reduce the overall number of students in the building at one time.

The article painted a pretty grim picture of what school should be. But that’s the world we’re living in. With experts suggesting that we could see a resurgence of COVID in the fall, I think the most likely scenario is more e-learning from home.

The other reason we could see e-learning this fall is the reduced safety precautions we’re seeing in other states can bleed into Illinois. Meaning, if Wisconsin opens up too soon or without proper safeguards, it could mean more cases here necessitating closures in the next few months.

What does this mean for parents?

E-learning has certainly been challenging for most parents. Working from home, juggling our own responsibilities while helping our children with school has been our lives for the last 10 weeks. There is very real concern that we will see more of it come fall.

Whether schools are entirely e-learning come fall or they are on a split schedule with e-learning days mixed with in-person learning, this will continue to be a problem for parents. In fact, I suspect the problem will be worse.

Why? Because we won’t be working from home anymore.

Don’t get me wrong, some companies are going entirely to work-from-home solutions, but that is not a viable option for all businesses. Even the practice of law requires some things to be handled face-to-face. How will we handle the strange schedule that could be forced upon us by our school system?

We close schools during pandemics to protect children, for sure. But there is another reason for the closing of schools: it keeps parents home. But now we are trying to revitalize our economy and keeping schools closed may have the added impact of keeping parents home and out of work.

How will businesses reopen to original capacity? How will wages be earned (wages that we need pumped back into the economy)? And how will we make stuff? At some point do schools become an anchor for our economy, holding us back when we so desperately need to move forward?

Daycare is, unfortunately, not a solution. Most daycare facilities are under the same restrictions as schools. We can’t limit the number of students in school only to have them crammed into a daycare facility. That would defeat the purpose.

Of course, our safety and the safety of our children are top priorities, but we need to find solutions to these potential problems. Luckily, we have three months to figure it out. I think the movement in Phase 3 will bring some much-needed data about the growth of the virus once we lift restrictions.