Stimulus could leave out startups

Startups may be in a precarious position with the $2 trillion stimulus package, designed to help small businesses survive the coronavirus pandemic. 

The package offers payroll tax relief and loans to businesses with 500 or fewer employees, but startups may be ineligible due to rules governing how businesses calculate employees, according to Business Insider.

The stimulus loans will be administered by the Small Business Administration (SBA) and the SBA’s rules require companies to include workers they employ directly and also those employed by any affiliated companies. The SBA states that a company is affiliated with a second company if the second company owns a controlling stake, 20% or more, in the first company or if an investor owns a controlling stake in both. 

Since many Silicon Valley startups have investors, these small businesses are hoping for some kind of waiver.

“Many startups with under 500 employees but who have equity investors will not qualify for emergency relief to deal with payroll, paid sick leave, and other operational challenges due to the coronavirus,” said Natalie McLaughlin, a spokeswoman for TechNet, per Business Insider.