Some startup founders hesitated to apply for the SBA’s PPP loans because they feared Main Street businesses may need them more. Now, the pot of money has run out.
In the past few weeks, Silicon Valley startups have grappled with a confusing, ethical quandary: whether to take money from the government to weather the economic downturn brought on by coronavirus.
Congress passed the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, which included $349 billion in forgivable loans for small businesses to help avoid laying off employees. The Paycheck Protection Program, as it’s called, is run through the Small Business Administration, and the loan applications are processed by banks like Bank of America or Silicon Valley Bank. The SBA will forgive the loans if the recipient uses the money to help keep all its employees on the payroll for eight weeks.