Financial PR firms have taken PPP money. Do they need it?
For the most part, hedge funds were not among the small businesses announced this week that qualified for the 4.9 million low-interest government loans granted so far under the Bank’s Check Protection Program. pay. But several of the PR firms they employ to spruce up their brands and refine negative headlines were.
Among the recipients are Prosek Partners, which has been approved for a loan of $ 2-5 million, according to data from the Small Business Administration; Gasthalter & Co., which was approved for between $ 150,000 and $ 350,000; Dukas Linden Public Relations, which was approved for between $ 350,000 and $ 1 million; and Peppercomm, which received between $ 350,000 and $ 1 million, according to the data.
Prosek’s clients include Bridgewater Associates – the world’s largest hedge fund company, managing around $ 160 billion – while Gasthalter & Co. represents several other bold hedge fund names. Asset managers outperformed other industries amid the pandemic, thanks to strong profit margins and strong performance in some strategies.
But executives at the public relations firms that represent them say their advisers and lawyers advised them to apply for the loans, given they qualified for small businesses – and the help kept them going. serve their customers without interruption.
These executives added that their fortunes fluctuated with those of their clients – and many of these companies, not all successful asset managers, have slashed budgets amid their own struggles.
In a statement to Institutional investor, Prosek pointed out that as an independent company of 200 people directly affected by the Covid-19 pandemic, it applied for a PPP loan “under the strict guidance of our legal and financial advisers”, and that it joined the disclosures and certifications required to be eligible for a loan forgiveness. Prosek added that the loan helped the company save jobs. “We are grateful to the government for this assistance, which has enabled Prosek to retain its workforce so far during the crisis. “
Peppercomm founder and CEO Steve Cody said in a statement to II that some of his customers, especially in the hard-hit food and beverage industries, have been negatively affected by the pandemic, forcing them to put his business on ‘time off’.
“As a small business quite vulnerable to the uncertainty caused by the pandemic, we applied for and received a PPP loan,” Cody said in the statement. “The cash injection not only provided us with a safety net to avoid layoffs despite the economic downturn, but also allowed us to continue to bring new service offerings to the market. He added that the company is using the money to cover operational expenses and salaries in accordance with program guidelines. “We are confident that these measures will ensure the long-term success of our business. “
Dukas and Gasthalter & Co. declined to comment.
[II Deep Dive: The Asset Managers Approved for PPP Money]
The Paycheque Protection Program was launched as part of the Coronavirus Aid, Relief and Economic Security Act passed in late March, aimed at helping small businesses keep workers on their payrolls during the Covid crisis -19. The loans carry an interest rate of 1%, with no collateral required, and payments are deferred for six months. Borrowers also cannot be charged fees by lenders or the government.
Additionally, loans will be canceled by the SBA as long as businesses meet certain employee retention criteria and funds are used for qualifying expenses. The program resumed acceptance of applications this week and will do so until August 8.
Since the government data dump on Monday, controversy has emerged over some of the beneficiaries of the loans – which include white-collar law firms, lobbying firms and investment firms run by wealthy former hedge fund managers. . Critics argue that some of these companies were not in as much need of financial assistance as other more consumer-focused companies struggling to stay afloat amid the coronavirus pandemic.
At the end of April, the Small Business Administration published a new rule prevent hedge funds and private equity funds from receiving the loans after reports revealed that some hedge funds and private equity firms had requested or intended to request them. But some investment firms seem asked for and received help independently, despite the rule, show data from the SBA.
Some of the investment firms listed as beneficiaries of PPP loans claimed that they were listed in error and had never requested or received such a loan.