Relief Under the CARES Act for Fund Managers
–An Investment Management Advisory from Alston & Bird
Fund managers are also being hit hard by stay-at-home and other government orders during the coronavirus pandemic. Our Investment Management Team explores how fund managers stand to benefit from the Paycheck Protection Program through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- Which fund managers are eligible?
- How much can they borrow and how can the funds be used?
- What portion of the loans can be forgiven?
In response to the coronavirus (COVID-19) pandemic, on March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This is a $2 trillion stimulus package intended to provide financial relief to businesses affected by the coronavirus pandemic, including managers of hedge, private equity, real estate, and venture funds.
Fund managers may benefit from the CARES Act under the Paycheck Protection Program (PPP). Through the PPP, the Small Business Administration (SBA) has the authority to provide 100% federally backed loans through December 31, 2020 to help eligible fund managers pay operational costs such as payroll, rent, and utilities. If a fund manager satisfies certain conditions, portions (and in some cases all) of the loan are forgivable, making the loan a grant.
Borrowers must complete and submit a loan application with the required documentation to an approved lender[1] that can process their application by June 30, 2020. Borrowers are advised to apply as soon as possible because the SBA has indicated that PPP loans will be provided on a first-come, first-served basis, there is a funding cap, and it will take lenders time to process the high volume of applications that are expected. A copy of the application form for loans through the PPP is available here and must be submitted to the lender along with payroll documentation.[2]