Are Startups Eligible for the SBA’s New Paycheck Protection Program (PPP) Loans?

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136), among other provisions, created the Paycheck Protection Program (PPP). Under the PPP, a lender may provide “covered loans” to assist small businesses (defined as either businesses that have 500 or fewer employees or that meet the general size standards under the Small Business Act), small 501(c)(3) nonprofit organizations, and small 501(c)(19) veterans organizations that have been adversely affected by COVID-19. Some startups (and other small businesses) might be ineligible for PPP loans because of the SBA’s “affiliation rules.”