Many entrepreneurs are heads down analyzing and proactively pivoting their businesses during this extraordinarily challenging time. You may not have the bandwidth to do all the research on how the newly passed $2.2T CARES Act could provide relief and when it will kick in. FoodBytes! teamed up with long time mentor and partner Chuck Cotter of Holland & Hart and alum Robbie Vitrano of Good Spread to unpack the CARES Act, SBA Loans and Payroll Protection Program (PPP) for startups.

We had over 140 participants tune in, almost 50% of which were startups, 13% corporate attendance and 9% investors. For those of you who missed it: you can watch the webinar below, listen to it here, and read on for the main takeaways.


Chuck Cotter, Holland & Hart:

Chuck Cotter advises companies at all stages of growth, from start-ups to ready-to-exit, helping them successfully raise capital, complete acquisitions and divestitures, and comply with regulatory requirements. Chuck also regularly advises consumer products investment funds in investment rounds.

He is a leader of Holland & Hart’s Food, Beverage, and Consumer Products industry group, and has sophisticated experience working with entrepreneurs and nascent companies in the food, beverage, and consumer products spaces.



-Eligibility: If you’re eligible, you should absolutely apply as quickly as you can. Banks and the program have limited amounts of money they can lend. Companies with 500 or less employees are eligible, but beyond counting direct employees you must also count employees of any affiliated companies, which could include investors and their portfolio companies. 

-Affiliation Rules: A general group of rights may not equal “bad rights”, that is, rights that count toward your employee number. Just having an investor doesn’t make them affiliated, per se. Affiliated companies that hold veto rights are counted toward your 500 employee cap, though. Also good to note: the Treasury specifically exempted hospitality and food service from the affiliation rules.

-Contractors: If you employ full-time contractors, the amount you pay them doesn’t count against the amount of payroll you would submit to be eligible for the loan.

-Loan amount: The amount you can borrow is your payroll cost + 2.5%. What the money can be used for includes payroll, mortgage interest, rent and utilities. So what you can apply for is more specific and what you use it for is a bit broader.

-Funding speed: Unfortunately there’s no clarity in terms of wiring, but with loan document timing, it sits with the lender, not the SBA.

-Appetite for investment: Many investors are looking at this time as an opportunity to deploy a lot of capital, but as a startup if you’re clinging to valuations from 6-12 months ago, you won’t get the money; you need to be looking ahead and adjusting.

-Emerging a winner: There are a lot of companies that emerge from recessions as diamonds; right now focus on being scrappy; creating products that have good unit economics; a business that could be profitable. This is not the time to have your payroll equal your entire annual revenue and assume you can raise another $10 million.


Robbie Vitrano, Good Spread:

Robbie Vitrano has developed several food brands built to engage customers to help improve the food system, address malnutrition, and support supply chains that respect farmers, communities, and the environment.

He co-founded Good Spread, a nationally distributed food brand partnered with non-profit MANA Nutrition to provide lifesaving therapeutic food to children suffering from severe acute malnutrition (the leading cause of death among young children globally).

Prior to Good Spread, he founded Naked Pizza, a global healthy fast-casual unicorn using ancient and heirloom grains, named to Fast Company’s “10 Most Innovative Food Companies” and sold to Mark Cuban in 2012.


-PPP: The program is designed to protect jobs; it’s for employees. The program looks at historic performance and behavior, so you need to look at what’s upcoming. Record keeping is also vital for the reconciliation portion of the loan forgiveness program. Focus on the parts of your business that are generating income. Debt may not be a good thing for you in 8 weeks+ if your company is not profitable.

PPP Eligibility: The program doesn’t qualify for those who are not salaried but are working for equity, as it’s designed for employees. If you’ve got a working W2 you should be utilizing the formula of an average of 12 months x 2.5% plus benefits associated with leave, retirement or health benefits.

-Exclusivity: Any approved SBA lender in your market is fair game for your application; you don’t need to have a business account with that lender. Having a preferred lender status doesn’t have an effect on PPP eligibility; the onus is on the borrower.

-3rd party options: Look into founder-friendly investment funds that have a streamlined application process. If you’ve got the relationship with lenders, use them vs. a 3rd party company.

-Forgiveness process: Calculation is 8 weeks after loan was issued. If it doesn’t equal the amount lent, the remainder converts into a 2 year loan payment currently at 1% interest rate. Interest only accumulates if it’s converted into a loan, so you’ll need to submit backup documentation to prove this. 

If you have additional questions, you can drop us a line in the comments or reach out directly. Want more? Register for our next webinar, immediate and long term outcomes of Coronavirus on food and ag companies, happening Wednesday, April 15.

The views and opinions expressed during this webinar are those of the speakers and do not necessarily reflect the official policy or position of Rabobank or its affiliates. The information provided herein is for informational purposes only and is not intended to, and does not, constitute legal, tax, investment, accounting, or other professional advice. 


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