Private Equity: No Bailout Coming for Portfolio Companies in Private Equity Industry?
The private equity industry is losing the fight to gain access to bailout funds provided under the stimulus package passed to help businesses recover from the economic impact of the coronavirus.
The funds are only available to companies with less than 500 employees.
While private equity firms own lots of businesses that would qualify for the funds, the legislation bundles all their affiliated companies and counts them as just one company making them ineligible for loans from the Small Business Administration.
The Private Equity Industry Gots Hat in Hand
It doesn’t look like any help is on the way in future legislation. Mitch McConnel, the GOP Senate Leader, is asking Congress just to pass adding funds to the plan with no changes.
While the Democrats are holding that up because they want to add to include $100 billion for hospitals, $150 billion for state and local governments and expansion of food assistance as well as small business funding, there is zero chance any legislation generated by the Democrats will provide any relief for an industry that their leadership has vilified during the Presidential debates.
Rep. Mark Pocan (D-Wis.), the co-chair of the Congressional Progressive Caucus, pretty much summed up this parties position saying on social media “I think the private equity industry can pull itself up from its trillion-dollar bootstraps, alluding to the fact that the industry started 2020 with $1.5 trillion in unspent capital. I’m going to focus on helping working families.”
Drew Maloney, director of the American Investment Council, the industry’s trade group, appealed to legislators to not discriminate based on ownership structure. Still, I doubt the lobbying will find traction in the current Congress.
By: Tim Melvin
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