Hedge funds and other trading firms reportedly are eyeing up money from the coronavirus relief package that is meant to help small businesses weather the pandemic, according to Bloomberg.
The Paycheck Protection Program, a $349 billion loan program administered by the Small Business Administration, “provides loans to cover payroll, rent and utilities for up to eight weeks. The loans can convert to grants if recipients retain or rehire their workers,” the report noted.
And hedge funds have already begun applying for their piece of the pie, filling out forms indicating they have fewer than 500 employees and certifying that they need the financial help to stay in business.
Not all hedge fund firms are on board with the notion of accepting federal help, Bloomberg reported.
Some traders have called it morally corrupt, while others insist they are small businesses -- just like hair salons, restaurants and dry cleaners -- that could use a helping hand after global markets tumbled and cost them money. Given that the program is first come, first served, some managers were quick to submit their paperwork, according to market participants, even if eligibility remains unclear.
“While we recognize that every manager must make their own decision about the viability of their firm, we have provided guidance to our members that we do not believe the money in this program was intended for managers general partnership interests,” Bryan Corbett, president and chief executive of the Managed Funds Association, the hedge fund industry group, said in a statement.
However, Anthony Scaramucci, who owns SkyBridge, disagreed that hedge funds should not partake of the handout.
Just because the business has a name, private equity or hedge fund manager, doesn’t necessarily mean that they’re loaded with rich people,” he told MSNBC earlier this month, adding that some are young people who are scared.
It remains unclear whether the Treasury and the Small Business Administration will issue clarity on the issue, and Bloomberg reported that neither department had an immediate comment on the matter.