When you think of small businesses in desperate need of federal loans, you probably picture mom-and-pop restaurants and retail operations.
However, Bloomberg reports that some hedge funds are filing for emergency low-interest loans by claiming to be small businesses in a bid to score cash authorized by Congress as part of its $2 trillion economic relief package.
"Since early April, law firms have hosted Webinars and sent out alerts, and accounting firms have reached out to clients, all with the goal of explaining how they might be able to tap into the Paycheck Protection Program," Bloomberg reports. "Some hedge funds already have applied, filling out forms to show they have fewer than 500 employees and certifying the 'current economic uncertainty makes this loan request necessary to support the ongoing operations.'"
Of course, just because hedge funds employ few people does not make them small from an economic standpoint.
Donald Motschwiller, head of trading firm First New York, tells Bloomberg that he's considering requesting bailout funds to pay his workers' salaries, even though his company runs nearly $3 billion in assets.
But Nate Koppikar, a partner at San Francisco-based money manager Orso Partners, said that no hedge fund should be taking advantage of a program designed to help Main Street businesses, not Wall Street fat cats.
"It’s a complete abomination," he said of hedge funds applying for the loans.
