According to a report on CNBC, startups may not get government money from the coronavirus relief bill if they have already taken venture capital or private equity money.
“So-called affiliation rules from the Small Business Administration could prevent startups from getting loans as part of that stimulus package,” says CNBC report Kate Rooney. “According to SBA rules, a startup should be affiliated with their investors. For example, if a VC backed company has 30 employees, it is grouped in with thousands of other employees at fellow portfolio companies.
“The head of the National Venture Capital Association tells me that startups don’t have access to emergency capital in the meantime and there could be waves of job losses for the countries 2.2 million startup employees,” says Rooney.