Rep. Khanna says Mnuchin will allow venture-capital-backed startups to access SBA coronavirus stimulus loans

Treasury Secretary Steven Mnuchin is considering waiving a rule that would bar certain small businesses from receiving much-needed bailout money through the government's coronavirus stimulus plan after a bipartisan push by lawmakers to fold in sinking startups as recipients under the program.

Rep. Ro Khanna, D-Calif., told Fox News on Thursday that lawmakers are in talks to waive the Small Business Association's (SBA's) affiliation rule, which stipulates that startups backed by venture capitalists or equity investors must count those company's employees as their own -- often making startups exceed the 500 employee threshold.

PELOSI, KHANNA EXPRESSES CONCERNS OVER STARTUPS POTENTIALLY EXCLUDED FROM SBA LOANS

The rule has excluded startups from the Paycheck Protection Program (PPP) under the federal government's $2 trillion COVID-19 stimulus package.

“Under discussion is a proposal to waive the affiliation rules for startups not controlled by a single shareholder," Khanna said. "Startups with a VC investor with under 50 percent ownership may be able to apply for PPP loans. It’s important to see the details of how this guidance is written but potentially most startups could be eligible for PPP loans under this proposal.”

On Wednesday, House Minority Leader Kevin McCarthy, R-Calif., said he spoke to Mnuchin and the two concluded "this is going to be solved," allowing startups to dip into the $350 billion in federal aid.

McCarthy did not respond to Fox News' request for comment on further details of the conversation, but Khanna applauded his efforts in trying to secure the much-needed funding.

"Great to see @GOPLeader follow on Speaker Pelosi and my letter. I look forward to continuing to work with Leadership, SBA and Treasury to keep the future of the American economy afloat," Khanna wrote on Twitter.

Khanna told Fox News that the Trump administration has not "made a firm commitment" as to when the rules surrounding SBA loans for startups would go into effect, but added: "We could have clarifying guidance on the issue as early as tomorrow.”

"I am glad that the Administration is listening to the start-up community and allowing them to participate in the Small Business Administration stimulus program," Khanna said, just days after he and House Speaker Nancy Pelosi, D-Calif. wrote a letter urging Mnuchin and the SBA to consider the major gap in the federal loan program.

"This is a no brainer as it will save hundreds of thousands of jobs and also allow for our nation’s innovators to continue their work," he added.

Khanna also said he hopes the potential flexibility for startups due to the coronavirus pandemic -- which has crippled businesses across the country -- will turn into a more long-term change.

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"I hope this could pave the way for a permanent fix to ensure startups will be eligible for all SBA programs going forward, just as small businesses in other sectors are,” he said.

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