Most registered investment advisors, if not all, are very aware that the federal government, through the U.S. Small Business Administration, implemented a $659 billion relief package that provides small businesses with fewer than 500 employees, sole proprietors, independent contractors and self-employed individuals with funds in the form of forgivable loans during the COVID-19 crisis (the Paycheck Protection Program or “PPP”).
In order for the loan to be forgiven, the proceeds need to be used to cover payroll costs, rent, mortgage interest and utility costs for an eight-week period and all full-time employees must be retained by the advisor. The SBA has capped loans at $10 million. More details on the PPP can be found here.
Perhaps unsurprisingly, many advisors quickly applied and received PPP funds because they met the small business qualifications under the PPP to do so. For the reasons set forth below, advisors who accepted PPP funds should carefully consider whether to return said funds to the federal government.
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