Pelosi asks Trump administration to protect start-ups suffering from the coronavirus crisis
House Speaker Nancy Pelosi and Rep. Ro Khanna, who represents a large part of Silicon Valley, are asking the Trump administration to protect start-ups as it carries out relief payments for small businesses under the CARES Act.
The California Democrats wrote to Treasury Secretary Steven Mnuchin and Small Business Administrator Jovita Carranza on Tuesday to warn that a narrow interpretation of the relief recipients could hurt Silicon Valley companies. They wrote that “an overly strict application” of an SBA rule could exclude many businesses from eligibility for the relief bill’s Paycheck Protection Program, which is meant to help cover costs for small businesses through the crisis.
Khanna explained on Twitter on Saturday that even though most start-ups have fewer than 500 employees, the SBA may not view them as small businesses if they are backed by venture capital. The SBA considers all start-ups backed by a venture capital firm as being part of the same business. This criteria would bar many emerging and early-stage businesses from aid.
2/ Most start-ups have <500 employees, but in many cases the SBA counts all the start-ups backed by one venture capital firm as one business.
Each start-up with <500 employees should be counted as their own small business, just like small businesses in other sectors.
3/ During COVID-19, just like other small businesses, startups may go under.
If we want to stay the global tech + economic leader, we need to get venture-backed start-ups SBA loans.
If not, thousands of workers could lose their jobs.
Pelosi and Khanna wrote that Silicon Valley start-ups make vital contributions to the economy and should have access to relief provided in the bill.
“Startups are the engine of America’s innovation economy and our districts in California’s Bay Area and Silicon Valley are home to thousands of these companies,” they wrote. “Other high-tech hubs around the country with a strong startup ecosystem will also be in need of PPP financing to preserve jobs and survive.”
Representatives for the Treasury Department and the SBA did not immediately respond to a request for comment.