Still, buyout firms argue there are restrictions on how much they can pump into troubled deals and privately lament that their business model is misunderstood.
Dental Relief
Some firms were able to get indirect taxpayer support because of the way they happened to structure investments in highly regulated industries. Take dentistry, for example.
Laws in most states prevent investors from owning dental practices outright, so buyout funds own a separate entity that provides related services. Ares Management and Leonard Green & Partners own Aspen Dental Management Inc., a provider of business and administrative support to dentists.
As the pandemic shut down dentistry, almost every practice affiliated with Aspen qualified for SBA financing, Chief Executive Officer Bob Fontana told staff in a message April 19. “Two weeks ago, we worked with practice owners to submit PPP loan applications,” he said at the time. “We’re thrilled to report that every loan request we submitted has been accepted.”
The funding helped reopen practices and return staff to work, a spokeswoman for Aspen said in an emailed statement. Aspen Dental itself didn’t seek SBA funding, she said. Aspen “provided certain payroll and operations data, as required in the loan applications, for those independent practices who chose to apply for the PPP loans.”
Back in Washington, lawmakers are taking a tough look at how the SBA money was deployed. They successfully pressed the Trump administration to reverse its position on withholding all data about companies that received PPP financing and agree to disclose company names and data for loans of more than $150,000, as well as details about smaller loans without personally identifiable information they consider to be proprietary.
“At a minimum, we owe the American people that information,” the leaders of three House committees wrote to Mnuchin and SBA Administrator Jovita Carranza last month, pressing for loan data. “As the pandemic continues to cause financial hardship for countless small businesses, we must understand whether this program is functioning as intended.”
This article was provided by Bloomberg News.