As of now, the affiliation rules are in force, which means venture-backed companies will need to consider them when determining their eligibility for a PPP loan. As part of the application process, we will ask you to make additional representations set forth below. We will not require you to provide a legal opinion in connection with your application.
In order to ensure that you take the SBA's affiliation rules into account and to help you consider some of the scenarios that might trigger affiliation under these rules, we will ask you to make these additional certifications when you complete your application. Please consult your legal counsel as you review them:
No business which, when combined with the Applicant, would have more than 500 employees (or any higher number provided in SBA standards for the relevant industry): (a) owns or controls more than 50% of the Applicant's equity, or (b) has, pursuant to the Applicant's charter, bylaws or shareholder agreements, the ability to prevent a quorum or otherwise block action by the Applicant board of directors or shareholders, or (c) has the ability to control day-to-day activities of the Applicant through its Board or Shareholders (including for example, setting employee compensation, hiring and firing of executives, and purchasing or selling equipment);
The Applicant is not one of the types of businesses ineligible for SBA business loans (see 13 CFR 120.110), nor is any owner of 20% or more of the business;
The Applicant has considered the SBA's affiliation rules and included the employees of its affiliates (at any level) when determining its eligibility for this program; and
The Applicant has considered existing options, convertible securities, and agreements to merge when determining its eligibility for this program.