James Kaplan featured in "BDCs Weigh U.S. Rescue They Want Yet May Not Be Able to Accept"
Today, business development companies are trying to figure out how they can take full advantage of the loans regulators are offering due to the coronavirus impacts on businesses. However, some loans may be out of reach for companies that have exceeded their debt levels or borrowers that are owned by private equity firms.
Below is an excerpt:
But even if the loans are within reach, there’s doubts about whether borrowers will want to sign up for them. The four-year loans, which have attractive interest rates of between 2.5% to 4% above the Secured Overnight Financing Rate, also come with hefty restrictions, said James Kaplan, a partner at law firm Quarles & Brady.
“It’s a trade-off,” Kaplan said. “You want the loan but it does limit your business activity, including restrictions on worker compensation, stock repurchases and dividends.”