First, it is important to note that affiliate analysis is fundamentally a qualitative “control” analysis. The advice appropriate for you will be dependent upon the particular facts and circumstances of your situation. Placing an encumbrance or lien on all or substantially all of the company’s assets. two or three investors with a close relationship that together hold more than 50% of voting equity. Under the SBA’s affiliation rules, your employee headcount is required to be combined with the headcount of all of your company’s affiliates. To explain the key relief for 501(c)(3)s and small businesses in the recently enacted $2 Trillion CARES Act (complete text), we published our CARES Act Alert #1 (Help for Small Businesses & 501(c)(3)s via the PPP); CARES Act Alert #2 (Get Ready to Apply); CARES Act Alert #3 (PPP vs EIDL), CARES Act Alert #4 (initial Guidance from Treasury), and CARES Act Alert #5 (SBA Issues Interim Final Rule). Applicants should take care that the application and certification are made in good faith after a careful examination of the facts and circumstances specific to the applicant and its investment structure. Furthermore, the SBA has reiterated in recent guidance that it uses a “totality of the circumstances” approach when determining whether affiliation exists.99 jQuery("#footnote_plugin_tooltip_8685_9").tooltip({ tip: "#footnote_plugin_tooltip_text_8685_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });  In fact, the SBA maintains that it may find affiliation based on the totality of the circumstances even though no single factor alone may be sufficient to constitute affiliation. See O’Melveny’s March 26, 2020 Client Alert for a summary of the Paycheck Protection Program and other lending programs for US businesses. On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Meanwhile, you agree: we have no duty to advise you or provide you with legal assistance; you will not divulge any confidences or send any confidential or sensitive information to our attorneys (we are not in a position to keep it confidential and might be required to convey it to our clients); and, you may not use this contact to attempt to disqualify O’Melveny from representing other clients adverse to you or your business. By: David M. Lay & Xiang "Cathy" Zhang Under the Coronavirus Aid, Relief, and the Economic Security Act (CARES Act), two loan programs are available to eligible businesses severely impacted by the Coronavirus (COVID-19) … The CARES Act modifies the employee threshold, to indicate that the applicant (together with its affiliates, as determined under the SBA rules) must have no more than the greater of: 500 employees, and the number of employees designated in the applicable NAICS code size standard. The NVCA has also provided a summary of such rights, which have been found not to create affiliation on at least one occasion: In summary, control over day-to-day operations is likely to lead to a finding of affiliation. Yesterday, Speaker Pelosi’s office sent a letter to the Treasury Department urging them to do exactly that in implementing the Paycheck Protection Program.11 jQuery("#footnote_plugin_tooltip_8685_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8685_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Nonetheless we’ve received numerous inquiries from our private equity, independent sponsor and venture capital-backed clients concerning the application of existing affiliation rules and how they may or may not prohibit the portfolio companies of those clients from accessing Paycheck Protection Program funds. Lenders to develop practical strategies for determining affiliate group in any action that would it... Cares Act states that the CARES Act, moreover, did not repeal the existing exceptions to the affiliate under. 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