The Small Business Administration, the United States government agency that provides support to entrepreneurs and small businesses, said that no, hedge funds and private equity firms are not entitled to access grants under the Paycheck Protection Program (PPP, the historian economic stimulus package, set up by the Trump administration for small businesses in difficulty due to the coronavirus).
In recent weeks, some asset management companies had applied for access to the first round of 350 billion lire.
The package offers loans to cover payroll, rent and utilities for up to eight weeks. Some hedge funds have applied, stating that they have fewer than 500 employees: in order to avoid dividing commissions, many hedge funds have few employees despite the large volumes managed.
The issue has split public opinion among those (especially traders) who call investment companies ‘morally incorrect’, and those who argue that as small businesses these companies also face the same difficulties as small businesses such as hairdressers, restaurants and laundries. .
Some argue that in fact, not the big of managed savings, but small companies that are just born and still in the process of raising capital, may have the right to liquidity – just because a company handles money, in fact, it is said that inside it wealthy people work there, and someone may be in need.The Managed Funds Association, the American industrial group of hedge funds, has opposed the use of loans, albeit in a less rigorous way: “Although we recognize that every manager must make their own decisions regarding the feasibility of their company, the lines guidance that we have given to our associates say that the PPP money is not intended for the general interests of the partnership of the managers “.
The legislation is in fact unclear: while the rules make it clear that banks and insurance companies are unable to access loans provided for small businesses, the regulatory framework is more obscure about hedge funds and private equity firms. Now the position taken by the SBA should silence the controversy – at least until the next round.
