How StartUps Could Be Ineligible for Coronavirus Relief Aid

If you have been fortunate enough as a StartUp founder to have secured Venture Capital funding for your company, that success could mean you are ineligible to receive any of the Coronavirus Relief Stimulus Funding just approved by Congress, and signed by the President.

The US Small Business Administration which will be in charge of administering relief funding to small businesses has a rule that could prevent StartUps from being eligible for some of the Relief Bill if the StartUp has already taken venture capital or investor money.

The SBA’s “affiliation” rules state that even if the StartUp itself has less than 30 employees, it could be lumped in and considered belonging to a private equity firm that has several portfolio companies, which when combined, means it technically has over 500 employees, and would not be considered a small business.

The reason: The federal government doesn’t want to be seen as bailing out wealthy investors. The agency could make an exception, CNBC reports, but there is little appetite in DC because of the ultimate appearance.