News | 06.01.20
Battle Lines Drawn Over RIAs Taking PPP Loans
Divisions are emerging within the financial services industry over the morality of advisory companies taking forgivable stimulus loans that may be more helpful to other businesses. Rick Dennen, president and chief executive of Oak Street Funding, said some banks may consider the fact that a business took a Paycheck Protection Plan loan as a sign of distress and refuse to give them credit. Other industry professionals noted that acceptance of a loan could ultimately damage business. Dave Barton, vice chairman of Mercer Advisors, said, "With regard to the consideration of having to need that capital to survive, that’s quite a statement you’re making. You’re essentially telling your own clients you’re in distress and need to take a loan to keep the doors open. And if you take it, you gotta disclose it.” There are also questions about fee-based advisory firms using a source of limited funds when their business model is designed for the continual collection of fees.
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