The Big Story: Small business loan program hits funding limit. The U.S. Small Business Administration announced that it hit the $350 billion limit in funds Congress allocated for the Paycheck Protection Program (PPP) to help small businesses as part of last month’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. At this time, SBA says it is unable to accept any more applications for PPP loans. While the program was designed to support companies with under 500 employees, many venture capital-backed firms were ineligible for the loans because the SBA’s “affiliation rules” require companies to count the employees of their “affiliates”—broadly defined in the law—as their own employees.
The Trump administration asked lawmakers last week to allocate an additional $250 billion for PPP loans, but the measure stalled in the Senate after Democrats and Republicans disagreed over the scope of additional provisions. The Senate did not advance further funding for the loans during a pro forma session yesterday, and further relief legislation may not pass before Congress returns on May 4.
Despite the SBA reaching its funding cap for the PPP loan program, demand for emergency small business financing remains high. Congress still has the opportunity to further fund the program, and at the same time address issues with the SBA’s affiliation rules that preclude VC-backed startups from accessing the program. Engine released a survey of startups in our network earlier this week and found that a majority of respondents plan on applying for the SBA’s COVID-19 related emergency loans if they qualify. Fifty-seven percent of the startups that said they plan on applying for available loans are portfolio companies of venture capital firms, complicating their eligibility for loans under the current affiliation rules. There is strong bipartisan support for allocating additional funding for PPP loans, and lawmakers from across the political spectrum have spoken out in support of the SBA clarifying and easing its affiliation rules. In order to truly benefit the startups seeking emergency financial support, lawmakers should quickly move to clarify the affiliation rules in the next PPP loan package.
Policy Roundup:
Retooling mobile apps to fight the coronavirus. As federal officials increasingly rely on tech companies to help combat the spread of COVID-19, entrepreneurs across the country are retooling their existing digital applications to aid in coronavirus detection and prevention efforts. In the latest post in our continuing series on the ways in which startups and entrepreneurs are responding to the COVID-19 pandemic, Engine spoke with two app-focused startups that are pivoting their services to help identify and treat infected Americans.
Anonymized location data critical resource in global coronavirus fight. Internet companies across the world are being tasked by health officials with using users’ location data to help combat the spread of the coronavirus. U.S. startups are working to use anonymized and aggregated data to analyze stay-at-home orders for health officials, while the European Commission said part of its plan for lifting coronavirus restrictions includes the use of digital tools for “reporting and contact tracing.”
Facebook rolls out revised cryptocurrency project. Facebook unveiled a scaled back version of its cryptocurrency initiative, Libra, after facing congressional pushback over its digital currency proposal. The new Libra project will tie digital coins with local currencies and will operate as a closed system—meaning that infrastructure build-outs for the digital currency can only move forward with the approval of organizations that are a part of the Libra Association.
Supreme Court delays Oracle case. The U.S. Supreme Court announced that it would only hear a few cases from its current docket via teleconference, with Oracle v. Google among the cases deferred until a later date. The long-running copyright dispute between Oracle and Google over the permissible use of application programming interfaces (known as APIs) will have serious implications for startups, many of which rely on APIs for essential interoperability.
Social media companies continue crackdown on coronavirus misinformation. Internet firms have upped their efforts to remove dangerous coronavirus misinformation from their platforms as health officials continue to express concerns about the global spread of conspiracy theories and unproven treatments. Social media companies, such as Facebook and YouTube, are continuing to remove content spreading false information and are notifying users if they have engaged with misleading coronavirus information on their sites.
Startup Roundup:
#StartupsEverywhere: New York City, New York. JustFix.nyc is a nonprofit startup that is harnessing technology and data to promote housing justice across New York City. Amidst the COVID-19 pandemic, JustFix.nyc has partnered with the city’s housing court system to adapt their existing tools in order to streamline the emergency filing process for tenants.
