Small rocket start-ups disqualified by SBA for Wuhan flu relief loans
Capitalism in space: Because of its arcane rules for defining what makes a small company, the Small Business Administration (SBA) has disqualified hundreds of small rocket start-ups from relief loans being issued to help companies whose business has been suspended due to the government-imposed shut downs due to Wuhan flu.
[Space industry groups] claim that hundreds of U.S. startups have been disqualified from loan programs — created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program — because of the way the SBA defines “small business.”
Many startups are funded by venture capital firms that typically invest in a portfolio of companies. To be eligible for the SBA loan program a business has to have fewer than 500 employees. When defining a small business, the SBA applies an “affiliation rule,” requiring companies to include in their worker count all the employees of companies with which they are “affiliated.” That rule requires venture-backed startups to aggregate the employees of all the unrelated companies in which their investors have equity positions, pushing many beyond the 500-employee threshold.
According to the industry groups, 98 percent of U.S. startups have fewer than 100 employees.
In other words, the SBA counts the employees of the venture capital firms as part of the company, when all they are essentially are investors. The start-up itself generally has far less than 100 people employed.
What really has to happen is to shut down the government shut downs. The government has got to get out of the way, and allow freedom to function again. Sadly, I do not see that ever happening, which means that many of these companies will fail, not because they couldn’t get it done but because our fascist new government rulers killed them.
Capitalism in space: Because of its arcane rules for defining what makes a small company, the Small Business Administration (SBA) has disqualified hundreds of small rocket start-ups from relief loans being issued to help companies whose business has been suspended due to the government-imposed shut downs due to Wuhan flu.
[Space industry groups] claim that hundreds of U.S. startups have been disqualified from loan programs — created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program — because of the way the SBA defines “small business.”
Many startups are funded by venture capital firms that typically invest in a portfolio of companies. To be eligible for the SBA loan program a business has to have fewer than 500 employees. When defining a small business, the SBA applies an “affiliation rule,” requiring companies to include in their worker count all the employees of companies with which they are “affiliated.” That rule requires venture-backed startups to aggregate the employees of all the unrelated companies in which their investors have equity positions, pushing many beyond the 500-employee threshold.
According to the industry groups, 98 percent of U.S. startups have fewer than 100 employees.
In other words, the SBA counts the employees of the venture capital firms as part of the company, when all they are essentially are investors. The start-up itself generally has far less than 100 people employed.
What really has to happen is to shut down the government shut downs. The government has got to get out of the way, and allow freedom to function again. Sadly, I do not see that ever happening, which means that many of these companies will fail, not because they couldn’t get it done but because our fascist new government rulers killed them.