Money for Startups in the Wake of COVID

The following is a summary of how the CARES (Coronavirus Aid, Relief, and Economic Security) Act - AKA the $2.2 trillion economic stimulus - applies to scalable, early-stage companies.  We'll continue to update here as appropriate (most recent update 4/2/2020 at 11:00 am).

  1. Paycheck Protection Program (Generally assumed to be the bigger opportunity)
    1. Broadly in place to provide 8 weeks of payroll as a forgivable loan, assuming you are retaining your staff, or have already made cuts and want to work toward restoring positions
    2. Loans calculated at 2.5x your monthly payroll expense, up to a maximum of $10M
    3. You apply for this program through your bank (not the SBA directly) using this application as soon as April 3, 2020.
    4. In theory the SBA is supposed to have a process in place by the end of this week to make same day disbursements
    5. Good FAQ:
    6. Good overview (with data):
    7. More background:
  2. SBA Economic Injury Disaster Loans (EIDL) & $10,000 Forgivable Advance
    1. Separate from the Paycheck Protection Program
    2. You can apply to both programs; if you ultimately end up in both, your EIDL would be subtracted from your total PPP benefit eligibility
    3. Available to companies in disaster areas (all of NYS) experiencing a temporary loss of revenue
    4. Loans are capped at $2M, and you can request an advance in the first $10k, which appears to be deployable within three days and forgivable
    5. Apply directly through the SBA (thanks to Marilyn Roach at the Buff State SBDC for your expertise here):
      1. The application cannot save so applicants should be prepared with the following:
        • Form of business, date formed and EIN
        • 12 month revenue and cost of goods for the 12 months preceding 1/31/2020 – you can use your 2019 year end numbers
        • Bank account and routing number
        • Please make sure to check the last box for the $10k loan advance and certify that the information is true
        • Record your application confirmation number
      2. The advance will be direct deposited in the bank account provided and applicant should be contacted via email or by phone regarding eligibility for the EIDL loan (beyond the $10k advance) in 3 – 4 weeks. All prior documents that have been completed may be used by SBA at a later date.

  3. If you have existing SBA Loans
    1. I am writing this with the assumption most of the companies I support do not currently have SBA loans.
    2. There are now provisions in place to enhance those existing loans, make their terms more favorable, etc.
    3. Contact your banker for more info.
  4. This is a good, broad FAQ doc covering all of the above.
  5. Are VC-backed startups eligible?  
    1. Currently it appears VC backing will not be an issue as long as the VC does not own more than 50% of the company.  It appears this standard MAY be loosened further in the coming days and weeks.
  6. Standard advice about working with the SBA you’ll hear in any briefing: 
    1. “If you’re on the fence, apply so that you can get everything moving (you can always decide to decline the money down the road)”
    2. “The single biggest cause of delays is incomplete information on applications”
    3. Use your SBDC as a resource

Beyond the Stimulus: