Almost one year on from the depths of the Covid crash, with markets at all-time highs, RIAs are beginning to repay the government-backed Paycheck Protection Program (PPP) loans they took out at the outset of the pandemic.
Boulevard Family Wealth, a Dynasty Financial Partners network firm with roughly $617.6m in assets under management, is among the firms beginning to return its government assistance.
‘It wasn’t that much money. I think it was like $100k or something like that, a couple hundred thousand, tops,’ said Matthew Celenza, managing partner of the Beverly Hills, Calif.-based firm. ‘We haven’t paid it back yet, but we are going to pay it. We got kind of a payment plan.’
Celenza previously told Citywire in May of 2020 that he had not yet made a decision as to whether he would repay the loan or seek forgiveness.
The loans, issued under the auspices of the Small Business Administration (SBA), are potentially forgivable so long as the recipient spends at least 60% of the funds on employee salaries and spends it within 24 weeks.
In his latest interview, Celenza explained that he applied for the loan to cover salaries for several of his 13 employees at the RIA and an associated insurance firm. The SBA approved his application in the first round of PPP funding and dispensed the loan through a bank in St. Petersburg, Fla., that had a relationship with Dynasty.
Citywire previously reported that Dynasty helped its affiliates take out PPP loans.
‘That was in the beginning of Covid,’ Celenza said. ‘We really didn’t know what the hell was going to happen. We saw [our] asset base go down with the market, so we didn’t know if that was going to be a long, sustained environment. We were just looking at the fact that we have huge bills to run the business – payroll and rent, that kind of stuff – so we kind of used it as a safety net.’
Steward Partners Global Advisory, a Cynosure Group-backed hybrid RIA associated with Raymond James, has also arranged a payment plan. The firm took out a loan of roughly $5m in April of 2020, according to SBA data.
‘In February, Steward Partners’ board unanimously voted to repay the loan in full. Steward believes it was the right decision to take the loan during the early stages of the pandemic considering all the uncertainties in the market throughout the first few months of the crisis,’ a spokesman for the company said. ‘Correspondingly, Steward Partners believes that with markets and the economy and the business outlook now stabilized, it is appropriate to pay it back.’
Ritholtz Wealth Management, a New York City RIA with roughly $2bn in assets under management, was one of the industry’s first movers in disclosing plans to pay back its PPP loan. The firm said in June of 2020 that it had repaid its loan and ultimately replaced it with a line of credit.
‘We were transparent; we disclosed it (even though we didn’t have to); we paid it back in two months when it was clear the worst case scenario was not happening, and in 2021 added a line of credit in case a similar situation arose again,’ Ritholtz Wealth Management chairman Barry Ritholtz told Citywire earlier this month.
Ritholtz’s comments came after his chief financial officer, Bill Sweet, publicly said on Twitter that he regretted that the firm applied for government assistance.
More than 1,400 investment advisory businesses took out PPP loans of more than $150k, according to SBA data. Those advisory businesses that did access the funds came under fire from some of their peers, who publicly argued that the money advisors took came at the expense of restaurants and shops whose businesses faced government-mandated closures.
Other advisors have argued that it was difficult to forecast the direction of equity markets after their precipitous March decline and that an extended drop could have been an existential risk for many advisory business.
Industry experts previously told Citywire that RIAs are not obligated to disclose whether they repay their PPP loans or ask for forgiveness.
‘I think they’d be reluctant to disclose it because of the perceived stigma that might be attached,’ Stradley Ronon Stevens & Young LLP attorney Larry Stadulis previously said.
Several prominent RIAs - including $13.9bn Aspiriant, $16bn Carson Group and $15bn Sanctuary Wealth - which took PPP loans were contacted by Citywire to see if they had repaid the money. They had not responded to requests for comment at the time of publication.
