Private equity and venture capital firms are set to continue being shut out of US government financial aid for portfolio businesses suffering in the midst of the coronavirus pandemic.
Buyout houses and VC firms have been pushing for their portfolio companies to be eligible for Small Business Administration loans created as part of the $2tn US stimulus bill which passed congress last month.
But the next economic stimulus bill due to come before the US Senate does not give the industry the relief it is seeking according to Bloomberg, which cited two people it said were familiar with the matter.
It said Senate Majority Leader Mitch McConnell will try to unanimously pass a bill today that adds up to $350bn of extra funding, without changing the rules of the stimulus programme.
Under those rules, companies with more than 500 staff are not eligible for loans – and that includes affiliates, which could include workers at all the companies a buyout firm or VC house invests in, Bloomberg said.
It added that Democrats have outlined several demands for the pending legislation, but so far have not sought the private equity changes.
Another, wider stimulus package is expected to be debated after April 20, which would likely be another target for PE and VC firms to have support for their portfolio businesses written in.
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