The Big Story: Congress extends small business loan program, but startups still need relief. Congress this week extended the deadline for startups and small businesses to apply for emergency funding from the Paycheck Protection Program (PPP), just hours before the loan program was set to expire. Under the measure, the U.S. Small Business Administration can continue to approve and offer PPP loans until August 8th to startups and small businesses that have been financially harmed by the coronavirus pandemic. Although PPP loans have been popular for some small businesses and independent contractors—and lawmakers have moved to loosen existing loan requirements—there have been ongoing concerns about the accessibility of this funding, for example, to venture capital-backed startups. More than $130 billion remains available for PPP loans, potentially due to questions about the program’s eligibility, loan forgiveness standards, and other requirements for borrowers.
Policymakers are reportedly planning to pursue another coronavirus stimulus package when they return from the upcoming July 4th recess. But Democrats and Republicans remain at odds over what to include in this so-called “Phase Four” proposal, after the three prior COVID-relief related packages. In May, House Democrats passed a $3 trillion relief bill—known as the HEROES Act—that would have, in part, drastically expanded pandemic-related broadband funding and financial assistance to state and local governments, although Republicans have considered the bill a non-starter in the Senate. Treasury Secretary Steven Mnuchin told lawmakers last month that the Trump administration is open to including more targeted PPP funding for affected small businesses in a Phase Four package.
When Congress returns from the upcoming July 4th recess, policymakers should carefully consider additional relief measures, beyond PPP loans, that can support the U.S. startup community as part of the Phase Four package. Earlier this week, Engine joined 24 other organizations in a letter calling on congressional leaders to pursue a new phase of relief to better support startups and small businesses struggling to weather the economic downturn caused by the pandemic. Federal officials and policymakers should pursue other policy proposals—such as equity investments, tax credits, forgivable loans, and grants—that can help drive the nation’s long-term economic recovery.
Policy Roundup:
Senate Judiciary Committee advances EARN IT Act. Policymakers continued to examine proposals this week that would amend Section 230 of the Communications Decency Act, the 1996 law that has allowed startups and other Internet companies that host user-generated content to grow. The Senate Judiciary Committee voted this morning to approve an amended version of the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act. The bill as amended would allow companies to be held liable for the content posted by their users under a patchwork of state laws and might even disincentivize platforms from adopting content detection tools. Small startups in particular lack the financial resources and manpower to review every piece of user-generated content, and these firms rely on Section 230 to defend themselves against potentially crippling lawsuits resulting from their content moderation practices.
Congress looks to address gaps in broadband access. The House passed a $1.5 trillion infrastructure bill—the Invest in America Act—that would in part allocate approximately $100 billion to help improve broadband access and connectivity for underserved communities. Meanwhile, Sen. Ron Wyden (R-Ore.) introduced legislation—the Emergency Broadband Connections Act—to provide families struggling as a result of the COVID-19 outbreak with access to free or low-cost broadband services. As Evan Engstrom, Engine’s Executive Director, noted in a statement, this bill will help “keep Americans connected to the Internet during these unprecedented times.”
California begins enforcement of CCPA. California officially began enforcement of the California Consumer Privacy Act yesterday, the sweeping law aimed at boosting consumer privacy for the state’s residents. While CCPA tries to give consumers greater control over how their data is used and shared, the law’s vague obligations and broad definitions—as well contradictory language—will harm startups trying to navigate the law’s many requirements. Despite the fact that the final CCPA regulations have still not even been officially finalized, the authors of the 2018 ballot initiative that led to the passage of CCPA submitted 900,000 signatures for a second ballot initiative to expand out the law’s privacy requirements.
USMCA takes effect. The United States-Mexico-Canada Agreement (USMCA) officially went into effect yesterday, providing a new trade framework for the three North American countries. While many of the deal’s requirements will be phased in over the coming months and years, USMCA is a welcome step for startups hoping to innovate and grow across the world. As Engine noted in a statement when USMCA was signed earlier this year, the deal includes critical provisions—such as a digital trade framework—that “provides U.S. startups with greater certainty as they expand their business operations in a globally competitive online marketplace.”
FTC, DOJ issue new vertical merger guidelines. The Justice Department and the Federal Trade Commission jointly issued new vertical merger guidelines outlining how federal agencies plan to review proposed vertical mergers for antitrust violations.
Startup Roundup:
#StartupsEverywhere: Omaha, Nebraska. In the Midwest, some local entrepreneurs—such as Nebraska’s Tom Chapman, the Founder and Managing Principal at Chapman & Company—are advocating for a fundamental shift in the way the U.S. approaches startup ecosystems. We recently spoke with Tom to learn more about his company’s work supporting the creation of high-growth startups, the unique needs and challenges for entrepreneurs in the Midwest, his latest startup venture, and how the Midwest’s unique startup system makes it well-suited to address the problems that have vexed more traditional U.S. tech hubs.
