The Big Story: Treasury Department reportedly clarifying rules for VC-backed startups. House Minority Leader Kevin McCarthy (R-Calif.) told Axios yesterday that Treasury Secretary Steven Mnuchin is preparing to release guidance in the next few days easing the rules around venture capital-backed startups and eligibility for small business loans included in the mammoth Coronavirus Aid, Relief, and Economic Security (CARES) Act. Applicants can start applying for those loans today, but there were concerns that existing Small Business Administration rules would have precluded many startups from applying.
The announcement comes after congressional leaders from both sides of the aisle called on the Treasury Department to clarify that VC-backed startups are eligible to receive Paycheck Protection Program Loans included in the $2 trillion CARES Act signed into law last week. House Speaker Nancy Pelosi (D-Calif.) and Minority Leader McCarthy both expressed concern that the U.S. Small Business Administration’s “affiliation rules,” which require companies to count all of the employees of their affiliates, would exclude many VC-backed firms from receiving critically needed funding.
Earlier this week, Engine joined a letter signed by 126 startup organizations from 39 states urging the Trump administration to clarify that VC-backed companies are eligible to receive loans from the SBA’s Paycheck Protection Program. While it appears that significant progress is being made on this issue, federal officials need to be clear with any guidance that they issue regarding the affiliation rules and VC-backed firms. Rep. Ro Khanna (D-Calif.) told Fox News yesterday that any proposal would likely waive the rules for “startups with a VC investor with under 50 percent ownership” and companies “not controlled by a single shareholder.”
Policy Roundup:
COVID-19 Resources for Startups. Engine has compiled a list of resources to help startups navigate the uncertainty caused by the ongoing coronavirus outbreak. Whether it’s guidance for protecting the health and safety of employees, or information about accessing federal economic relief, we want to provide entrepreneurs across the country with easy access to the available resources, guides, and tools.
FCC plans to open up 6GHz band for unlicensed use. Federal Communications Commission Chairman Ajit Pai announced that the agency will vote at its April 24 commission meeting on a proposal to open up 1,200 MHz in the 6 GHz band for unlicensed use, saying in a statement that the move would “effectively increase the amount of spectrum available for Wi-Fi almost by a factor of five.” As Kate Tummarello, Engine’s Policy Director, noted in a Morning Consult op-ed earlier this year, unlicensed spectrum “is an invaluable asset for the thriving startup ecosystem in the United States, and the 6 GHz band will be the band that launches the next generation of technology.”
Global uncertainty forcing startups to lay off employees. A CNBC analysis found that startups laid off almost 4,000 people across the world in March as a result of the economic downturn caused by the pandemic, with job cuts occurring across a wide variety of sectors. A similar review conducted by The New York Times found that over 50 startups laid off or furloughed approximately 6,000 employees over the past few weeks, with early-stage companies also holding off on initial public offerings amidst the economic decline.
Startups, Internet companies joining coronavirus fight. Startups are mobilizing to provide states and healthcare professionals with needed medical supplies—including masks, hand sanitizer, and other types of personal protective equipment—to help combat the spread of the coronavirus. Whether it’s producing ventilators or developing more precise and rapid viral testing kits, private companies of all sizes are shifting their business models in order to meet the growing medical and societal needs caused by the COVID-19 pandemic.
Democrats see broadband funding as part of fourth stimulus package. House Speaker Nancy Pelosi (D-Calif.) and other Democratic leaders are called for Congress to move forward with a $760 billion infrastructure plan introduced earlier this year as part of a fourth coronavirus stimulus package. The Democrats’ current legislation would set aside approximately $86 billion to expand the nation’s high-speed broadband infrastructure. President Donald Trump called earlier this week for a $2 trillion infrastructure package to help the country recover from the COVID-19 pandemic, although White House officials said there are currently no plans to pursue another stimulus package at this time.
Startup Roundup:
#StartupsEverywhere: San Francisco, California. Founded in San Francisco in 2015, mobility startup Scoop Technologies has grown into the nation’s largest carpooling provider. We recently spoke with Charles Knuth, Scoop’s head of strategic research initiatives, and Lizzie Ryan, Scoop’s communications manager, to learn more about the company’s carpooling efforts, the San Francisco startup ecosystem, and their mobility-related policy concerns.
