Notice to Investment Advisers Regarding PPP Loans

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The Colorado Division of Securities (the “Division”) within the Department of Regulatory Agencies (DORA) is providing guidance to State-licensed Investment Advisers (Advisers) who received or are considering applying for a forgivable loan under the Paycheck Protection Program (PPP).

Issue:  Advisers have contacted the Division asking whether they need to disclose the PPP loans in their Form ADV filing.

Response: Pursuant to the terms of the PPP loan program, anyone receiving funds must certify that the loan is necessary to support the ongoing operations of the loan applicant. If you are certifying that you are experiencing conditions that are reasonably likely to impair your ability to meet contractual commitments to clients, it is the Division’s view that you would need to make a disclosure.  

Where to Disclose: If disclosure is warranted, Advisers must update Item 2 (Material Changes) of the Part 2A of Form ADV as a material change and disclose the PPP loan at Item 18 (Financial Condition). The PPP loan assistance must be disclosed until the loan is repaid or forgiven and the underlying condition that impaired the Adviser’s financial stability has been resolved.  Further, the Adviser must report the loan as a liability on firm financial statements and ensure the firm still meets all applicable net worth requirements. 

The PPP loan does not need to be reported on the Form U4 because forgiveness of the loan is contemplated in the original loan terms and does not involve a new agreement by the creditor.

For additional guidance, please contact the Colorado Department of Regulatory Agencies (DORA) / Division of Securities at (303) 894-2320 or email us (Email: | Secure/Encrypted Email: Secure Email).  For additional information, please see SEC and FINRA FAQ documents on COVID-19: Click here for SEC information and here for FINRA information. 

For Coloradans, the State of Colorado has COVID-19 resources click here

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