On April 3, 2020, the Small Business Administration (SBA) released its second Interim Final Rule in as many days addressing the affiliation rules that apply to the Paycheck Protection Program (PPP). A copy of the second Interim Final Rule can be found here. Those in the Venture Capital and Private Equity industries are hoping that additional guidance will be issued to ease the applicability of the affiliation rules to their portfolio companies under the PPP. That did not happen with the second Interim Final Rule and accompanying guidance issued on April 3, which accompanying guidance can be found here. No new exclusions were added and the exclusions still apply only to:
- Any business concern with not more than 500 employees that, as of the date on which the loan is disbursed, has been assigned a NAICS code beginning with 72;
- Any business concern operating as a franchise that is assigned a franchise identifier code by the SBA; and
- Any business concern that receives financial assistance from an SBIC.
This is an evolving area, and it is possible that additional guidance will be released in the coming week on the PPP. As of April 4, 2020, here is what potential applicants need to know. Continue Reading SBA Releases New Guidance on Affiliation