Venture-backed Startups Need Access to PPP

There has been noise and confusion around the Paycheck Protection Program (PPP), and whether venture capital-backed startups should have access or not. Here's my view.

There can be a misconception that because a company has accessed venture capital in the past, that somehow, they have deep enough pockets to get through this pandemic and the current economic disaster, which is heading in a direction worse than the Great Recession of 2008.

A number of small companies in our portfolio have applied for and accessed PPP, an SBA loan that helps businesses keep their workforce employed during the COVID-19 crisis. These young companies, typically with less than 50 employees, need the funds to pay their employees and to extend the company's runway through this crisis.

Our guidance has been, treat PPP like a loan, which in fact it is. The SBA will make the final determination as to whether the loan is repayable or not. Like most any federal program, there may be companies that have received access to PPP that shouldn't have. The SBA has governing authority and the ability to deal with those situations, too.

We know from the past that startups that are created in or survive recessions can become really important, sizable companies that help change economies. These are potentially the very companies that will create jobs, wealth, and become cornerstones of America's competitiveness.