Private Equity Stymied on Stimulus Loans for Portfolio Firms

Private-equity firms have been stymied for now in getting clarity that their portfolio companies can access the billions of dollars in small business loans made available through the U.S.’s coronavirus rescue package.

The Treasury Department and Small Business Administration issued guidance on the loans Tuesday that failed to give the industry the assurance it was seeking.

Read More: Private Equity Frets That It’s a Loser in $2 Trillion Virus Bill

Private-equity firms have been concerned that the sweeping $2 trillion bill that Congress approved last week made companies they own largely ineligible for the SBA loans because of how it defined small businesses. Under the law, companies with more than 500 employees can’t participate. That number counts affiliates, meaning it potentially rolls in workers at all the businesses that a private-equity firm controls.

In a statement, the American Investment Council, which lobbies in Washington for private equity, said it would keep working with the Trump administration and federal agencies to ensure that companies in need can get government financing.

“We’ll continue to work with the administration, the Federal Reserve and Congress to request that federal programs support all businesses, regardless of ownership structure, and their workers,” the trade group said.

The rescue legislation, signed by President Donald Trump March 27, did make an exemption for private equity-controlled hospitality and travel companies to obtain loans. Those industries have been among the hardest hit from the virus-fueled economic slowdown.

--With assistance from Robert Schmidt.

To contact the reporter on this story:
Heather Perlberg in Washington at hperlberg@bloomberg.net

To contact the editors responsible for this story:
Jesse Westbrook at jwestbrook1@bloomberg.net;
Sam Mamudi at smamudi@bloomberg.net

David Scheer

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