The following is an excerpt from Citywire USA.
The past few weeks have yielded dozens of disclosures by RIAs large and small who applied for and received government-backed coronavirus relief loans.
The Small Business Administration (SBA) can forgive up to 100% of the loan proceeds used for payroll, rent, mortgages and utilities if the borrower does not lay off any full-time employees over the course of eight weeks after the loan is funded and at least 75% of the forgiven amount is used to cover payroll.
Meanwhile, Jay Healy, president of Century Wealth Management, a $350m Memphis RIA, applied for the PPP loan, got approved and got the money without a hitch. The money then sat in the bank account for a week before he sent it back.
‘Early- to mid-March was super stressful, from a business perspective and a client perspective,’ Healy said. ‘When the PPP opportunity came up, I looked at it, at first, as something that could benefit my clients who are also business owners.’
Since he didn’t know how the quarter was going to end or what revenue was going to be, and he had already committed to his team that nobody’s job was at risk, he soon felt like Century was falling within the parameters to receive the loan.
Healy called a couple bankers and, before he knew it, he was filling out the two-page application and submitting it. At the time, it seemed like it would be a good safety net for what could be the worst-case scenario.
‘By the time the quarter ended and we knew what billing was going to be like, and the market started to recover, that worst-case scenario was not playing out,’ Healy said. ‘When I started doing the math on my yearly budget and I saw that if I took full advantage of this my profit margins would go up, it just made me think that it was not as essential as it originally seemed.’
Read more, via Citywire USA.