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The Paycheck Protection Program, included in the $2tr stimulus plan passed last week, theoretically maintained the so-called "affiliation rules" for most applicants, which likely excluded many SMEs with VC funding. This may no longer be the case.
McCarthy and House Speaker Nancy Pelosi (D-Calif.) have in recent days pushed for the Treasury Department to issue guidance easing the affiliation rule. McCarthy says that in the next day or two, Treasury will release guidance that sets a simple guideline for PPP loan eligibility. If a small business is not controlled by a single outside shareholder, it would be eligible. House Minority Leader Kevin McCarthy (R-Calif.) told the Axios Pro Rata Podcast on Thursday: "I just got off the phone with Treasury Secretary Mnuchin and this is going to be solved." This does leave out possibly thousands of private equity-owned small businesses. McCarthy says there could be future efforts, or maybe even a subsequent piece of legislation, to address such companies, but for now he and Mnuchin agreed that "control" is the simplest and fairest way to determine eligibility.
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