Important Action CARES Act to Affect Affiliated Companies


A Letter from the CEO

Good morning, 

I'm writing today to inform you that we responded to your collective concerns about lower middle market companies that could be excluded from relief provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Martin Okner and I sent a letter to Secretary Mnuchin and Administrator Carranza late last evening. Please share it via social media to amplify our concerns. 

  • Yesterday, ACG joined a conference call with about dozen trade associations and hosted by the SBIA. We are acting collectively. Here are the key takeaways: 
  • Encourage the Department of the Treasury and the SBA to interpret affiliate language broadly, and act quickly.
  • Keep the application simple (2-page form) so the banks can respond quickly. 
  • Make remarks ASAP to Treasury and SBA.  
  • Expect guidance as soon as COB Tuesday or early Wednesday. 
  • The SBA interpretation of the "affiliation" rule – will likely be an emergency rule that will be immediately effectively, will not have a 15-day comment period and will be temporary during this crisis.

Also of note the group consensus: Congress passed CARES and with it the Paycheck Protection Program – aimed at getting money in the hands of small businesses to pay workers. The SBA is the channel to pump $350 billion PPP funds in relief over the next six weeks (SBA typically processes $30 billion annually).  There is an emergency lens and political lens that the agency is operating under, and there are general concerns about the risk of fraud because of the expediency with which the agency needs to operate. However, now is not the time to be bureaucratic. 

No one reported push-back from Treasury or SBA. Generally, everyone appreciates Congress intention to get money in the hands of workers. SBA admittedly has no understanding of VC or PE and the NVCA is educating the SBA on different types of investment and is using its model legal documents to help them understand.

And there was concern expressed about investors in sport franchises lobbying for relief is poor form. It's simply not the right time.

Locally, you should advocate this position with your own SBA region. You can find your local SBA leader here

Thank you for your time, attention and action.


Tom Bohn, CAE, MBA 
President & CEO 
ACG Global