PPP Loans for VC-Backed Companies

The CARES Act (Coronavirus Aid, Relief, and Economic Security Act – see here) includes a provision called the PPP, administered by the SBA.  The Paycheck Protection Program (PPP – see here & here) has been designed to provide forgivable loans to small businesses to help keep employees employed and to help finance payroll.

Many have asked whether VC-backed companies are eligible for the PPP loans (for example, here).  In addition, there are questions concerning the affiliation rules regarding venture ownership and negative covenants.  Mark Suster of Upfront Ventures has posted a summary of the PPA Program here. Based on his firm’s guidance to their portfolio companies.  This post is not legal advice, but provides a useful structure for considering applicability to a venture back company.

Innovate Insurance – Innovation & Entrepreneurship in Insurance

 

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