Please see the attached letter that ILPA sent to the U.S. Department of Treasury and Federal Reserve System on Thursday, April 2nd. This letter is similar to the letter we sent to Treasury and the SBA on Tuesday, March 31st on the facility for small business (Paycheck Protection Program) and applies to the large (corporate) and mid-size company (Main Street facility) being implemented by the Federal Reserve and the US Treasury Department.
On the evening of April 2nd, Congresswoman Maxine Waters (Chair of the House Financial Services Committee) sent the following letter highlighting that if private funds do access this capital, they cannot use it for management or consulting fees, or to pay down debt, and should only be able to use it for payroll and other requirements. This could complicate a potential legislative fix down the road, and it’s unclear what restrictions should be imposed to allow access.
This second letter encourages the Treasury Department and Federal Reserve to ensure private equity and venture capital backed businesses can access new economic stimulus programs under the recently passed CARES Act, that are intended to assist both large companies and mid-size companies. In particular, we are encouraging Treasury and the Fed to ensure that companies that are not investment grade can access these facilities (80% of PE owned companies are below investment grade). These restrictions could indirectly impact LP portfolios by constraining access to capital during the current crisis.