A New York investment firm pitched wealthy investors in recent days on a way to make returns of 22% to 175% using U.S. government programs designed to help Americans keep their jobs and boost the coronavirus-stricken economy, according to a marketing document seen by Reuters.
FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri
The firm had sent the pitch as recently as this weekend to “a limited number of sophisticated investors,” according to the marketing materials, which are dated April 4 and marked confidential. In an email sent Sunday, and seen by Reuters, Loeb wrote it was a “highly time sensitive opportunity” and had offered to discuss it with investors that day or early in the week.
Arcadia proposed to juice profits by borrowing 90% to 95% of the money from funding markets that were backstopped in recent weeks by the U.S. Federal Reserve.The small business lending program has had a chaotic start, with banks and companies saying more crucial details need to be worked out. Under Arcadia’s plan, the actual loans would have been made by online lending platforms. Some such lenders said they are yet to be approved by the government to make the loans.
A spokeswoman for the Fed declined to comment, while a representative for the U.S. Treasury Department did not respond to a request for comment. If the small business borrowers use the money for employee payroll and other approved expenses, the U.S. Small Business Administration would forgive the 24-month loans in as little as three months, Arcadia wrote in the document. The loans carry a fixed interest rate of 1%. The remaining loans will be repurchased within 24 months, according to the Arcadia materials.
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