Criticism of large RIAs that took PPP loans centered on the fact that, unlike small retailers, restaurants and even private-pay physicians’ offices, which are dependent on daily cash flows that completely dried up when they were shuttered during the pandemic’s height, RIA assets and the fees they charge clients remained relatively steady. That's easy to say in hindsight, but in late March when PPP loans became available, many expected the bear market in equities to continue.
Some have argued that as financial professionals, big RIAs should be sophisticated enough to prepare for inevitable bear markets. With global markets well off the lows they touched in March—a dip that prompted many advisory firms to seek PPP loans in the first place—more RIAs may now be in a position where they could repay their loan or apply to the SBA for forgiveness.
The Paycheck Protection Flexibility Act tripled the duration during which RIAs that received PPP loans can use to spend the funds and still qualify for loan forgiveness. The PPP allows loan forgiveness for payroll costs—including salary, wages, and tips—for up to $100,000 annualized per employee for 24 weeks, or $15,385 per individual over the eight-week period.
The new interim final rule establishes the 24-week maximum for full loan forgiveness at $46,154 per individual.
In a recent Citywire column, advisor Daniel Wiener criticized RIAs who took PPP loans: "If you’re not going to simply return that PPP loan today (which would be the right thing to do) then revise your ADV one more time, tell your clients just how much money you took and what your plans are for repayment, rather than forgiveness."