California Lawmakers Back Small Business Aid for Private-Funded Businesses • OpenSecrets
As Democrats and Republicans dead end on how to allocate new stimulus money, key lawmakers on both sides of the aisle seem to agree on one thing: Small businesses backed by private equity and venture capital firms should be able to benefit from the aid.
Congressional leaders continue to negotiate another round of $ 250 billion in aid to combat the economic impact of the coronavirus.
Small businesses and startups with fewer than 500 employees but controlled by large parent companies, including private equity firms, are not currently eligible for loans under the program. House tenant Nancy Pelosi (D-California) and House Minority Leader Kevin mccarthy (R-Calif.) – from California and speaking to voters in Silicon Valley – wants to change the rules to extend support to them.
They are among California lawmakers supporting change and also benefiting from campaign donations from the private equity industry.
representing Ro Khanna (D-Calif.), Who supports their inclusion, received the most campaign money venture capitalists with nearly $ 303,000. Pelosi is 15th on the list with almost $ 68,000. Former Democratic presidential candidate Sen. Kamala harris (D-California) also supports including venture capital funded startups in the loan program. She received the second largest amount of campaign money in the industry with over $ 281,000.
Pelosi and Khanna wrote a letter to Treasury Secretary Steve Mnunchin in March, asking that the rules of the program be changed to allow startups.
“Many small businesses in our districts that employ less than 500 employees, especially start-ups with equity investors, have expressed concern that the Small Business Administration rule will exclude them from eligibility,” the report says. letter from Pelosi and Khanna. “Our California Bay Area and Silicon Valley districts are home to thousands of these businesses. We urge you to post advice as quickly as possible and allow startups in our country to access a critical source of credit. “
However, progressives like Sen. Elizabeth warren (D-Mass.) And Rep. Alexandria Ocasio-Cortez (DN.Y.) oppose the inclusion of private equity and venture capital firms. “We are generally against asking the public to bail out EP-backed companies whose business practices can be irresponsible, risky, burdened with debt and ultimately lead to bankruptcy,” said the spokesperson for Ocasio- Cortez, Lauren Hitt. RollCall. “We shouldn’t be subsidizing vulture funds.
Meanwhile, some of Wall Street’s wealthiest titans are also pushing for a part of the bailout, Politics reported.
These include the American Investment Council which represents giants like Blackstone Group, Global management of Apollo and Carlyle Group and the Institutional Limited Partners Association lobby group. Private equity and investment firms spent almost $ 14.8 million on lobbying in 2019 and individuals from these companies have contributed millions to lawmakers. These prominent groups also have close ties to the White House.
Blackstone Group, which lobbies for eligibility for small business loans, has made more than $ 17 million in contributions. Their CEO, megadonator Stephen schwarzmann donated $ 10 million to Senate Leadership Fund and $ 2.5 million in Congress Leadership Fund in the 2020 electoral cycle. Schwarzmann is a trusted advisor to the president Donald trump and donated $ 3 million at Trump’s super PAC in January.
The Carlyle Group paid contestants nearly $ 1.6 million, giving contestants on both sides of the aisle, including McCarthy and Pelosi. And Apollo Global Management reportedly loaned out the real estate company of Trump’s son-in-law and senior advisor Jared Kushner $ 184 million.
“It doesn’t matter whether these companies are backed by investments from companies, pension funds or whatever,” said Drew Maloney, chairman of the American Investment Council. Politics. “We will continue to work with the administration and Congress to demand that federal programs support all businesses, regardless of ownership structure, and their workers.”
The Association for Corporate Growth, a professional group for mid-sized private equity firms, is also pressure for relief. Five million employees risk losing their jobs if they do not receive government assistance, according to a study conducted by the group.
The industry is asking for help as it invests in a wide variety of businesses ranging from mom and pop stores to public pension plans. This is why, in a letter to Mnuchin, the Institutional Limited Partners Association wrote there could be “significant harm not only to employees, but also reduced returns to institutions providing retirement security through pensions, insurance policies and other investments.”
While more than a dozen interest groups, including the American Federation of Teachers, wrote in Congress urging private equity firms not to participate in the program, 10 conservative groups, including Club for Growth, requested that they be included.
GOP wants to add $ 250 billion to the stimulus package for small businesses, leaving other issues for future negotiations, but Democratic leaders want to include more aid to state government and local hospitals in talks In progress.
The Senate adjourned Monday without a breakthrough as Senate Majority Leader Mitch mcconnell (R-Ky.) And McCarthy released a statement over the weekend saying they were going no compromise by fixing the quick $ 250 billion addition to the small business loan program.
Since the initially allocated $ 349 billion turned out to be insufficient, both sides of the aisle agreed that an additional $ 250 billion, if not more, needed to be pumped into the program. But the deadlock on where the money goes continues as the funds run out quickly.
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