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Accessing Coronavirus Disaster Aid to Sustain Your Biotech Company Through this Crisis

Written by on Thursday, April 9th, 2020

If your biotech company is like most U.S. businesses, it has been severely impacted by the ongoing coronavirus crisis and the stay-at-home orders that have been mandated across the country. Legislation was recently passed by Congress and signed into law that may make available disaster relief to your biotech company: the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act).

The CARES Act established a new business loan program, the Paycheck Protection Loan Program (“PPP”), which will enable a U.S. biotech company qualifying as a small business to receive a loan in the amount of 2.5 times the company’s monthly payroll costs. As part of the PPP, biotech companies (and other small businesses) may be eligible for loan forgiveness on any loan proceeds applied during the eight week period immediately following receipt of the loan towards payroll, rent, utilities, and interest on mortgage and debt obligations incurred prior to February 15, 2020, provided that all employees are kept on the payroll for the eight week period and the documentation verifying the use is submitted to the lender. Any loan proceeds that are not forgiven will have a maturity of 2 years and an interest rate of 1%. The program is described in more detail on this weblink The interim regulations describing how the program will work are linked here and the FAQ addressing questions and answers is linked here.

To participate in this loan program, your company should submit an application through your primary bank. Alternatively, many online and non-bank business lenders are also participating in the loan program, so working through such a lender may be an available option.

In addition, your biotech company may be eligible for an economic injury disaster loan advance of up to $10,000. Originally these advances were supposed to be available within 3 days of submitting an application; however, this now been revised to remove the previously defined deadline. Advances should be requested directly through the SBA website at this link: https://covid19relief.sba.gov/#/. The loan advance will not have to be repaid but the amount may be deducted from a subsequently obtained PPP loan.

It is anticipated that the funds allocated to this program are going to run out before all the applications are processed, so companies are being encouraged to submit applications as soon as possible. It is unfortunately not clear how long businesses will have to wait to receive the aid. To date, the California Biotech Law Blog is only aware of one approved business via a third party report, and has heard of no business actually receiving any aid through these programs.


Category: Small Business Legislation  |  Comments Off on Accessing Coronavirus Disaster Aid to Sustain Your Biotech Company Through this Crisis

Congress Reaches Compromise to Extend SBIR

Written by on Monday, March 16th, 2009

The House and Senate have reached a compromise to extend SBIR through July 31, 2009, according to a report that broke late this evening by the SBIR Insider.

The SBIR Insider reports that the House will originate the bill and that the legislation will amend PL 110-235 (the current CR), which expires on March 20, 2009.

The compromise was announced on the same day that President Obama announced his new plan to assist small businesses.  The President’s plan is intended to unfreeze the credit markets for small businesses by providing additional liquidity and guarantees of small business loans, and to also reduce lending fees and provide tax breaks for small businesses.

As the California Biotech Law Blog previously reported, support for SBIR reauthorization has been waning in Congress and there were genuine concerns that Congress would let the SBIR expire without taking action to save it before the March 20th deadline.  Apparently there was a last minute change of heart, however, with the President’s announcement today of his plans to help small businesses.

Of course, this bill has not yet been signed, so it is not yet a done deal.  The California Biotech Law Blog will keep you posted as any news breaks on this effort.


Category: Biotech Legislative Developments  |  Comments Off on Congress Reaches Compromise to Extend SBIR

SBIR/STTR Program Set to Expire Later This Month; Support for Reauthorization Waning

Written by on Wednesday, March 4th, 2009

As we reported previously, he SBIR/STTR program is set to expire on March 20th of this month, unless Congress takes last minute emergency action to save it.

Unfortunately,  SBIR Insider author Rick Shindell reports that there is growing opposition in Congress to saving the SBIR/STTR program.

In fact, the idea of even providing funding for the SBIR/STTR program was rejected with the passage of the Stimulus Bill in Congress, where according to The SBIR Coach’s Blog, a provision that would have provided the SBIR/STTR programs $250 million was struck at the last minute from the bill and language was inserted which explicitly precluded the NIH from using the stimulus money for the SBIR/STTR programs.

Does this really make sense?  Regardless of how you feel about the Stimulus Bill that was passed, does it make sense to exclude funding for small businesses from a bill that is supposed to stimulate the economy and create jobs?

The SBIR Coach’s Blog voices its opinion on this issue as follows:

What were they thinking? As Ann said in her alert, “Such an exclusion is underhanded and entirely inappropriate.” There’s the understatement of the year (so far)!

Entirely inappropriate for sure. Does it make sense for the NIH to not seek additional innovative solutions from our small businesses — a sector hailed by President Obama himself as being the most likely one to create the jobs that we so desperately need? 2.5% +0.3% of $7.4B is $207.2M that’s been inappropriately withheld from our small businesses. That could be used to create a whole bunch of jobs!

And underhanded to boot! They snuck the wording into the fine print in “code” so we wouldn’t spot it. A search for “SBIR” or “STTR” won’t turn anything up.

While I agree that the SBIR/STTR program is far from perfect, and I have been critical of the whole SBA program in the past based on my personal experiences with the SBA in trying to secure loans for my business, it is my personal opinion that, at a time like this when the economy seems to many of us to be in freefall, reauthorizing SBIR/STTR should be a no-brainer.  Why wouldn’t Congress want to maintain support for small businesses, which, in my opinion, are the lifeblood of our economy?  Moreover, why in the world wouldn’t Congress want to include funding for small business programs like the SBIR/STTR in a huge spending bill intended to stimulate the economy?

I can tell you personally that it is nothing short of impossible right now to secure funding for a small business, period.  The help seems to be going to Detroit, the banking system, and AIG, as well as to all kinds of random programs in various states across the country (which to be honest, have made me scratch my head a little bit and wonder why we are funding many of them with taxpayer dollars),  but there is little or nothing that small businesses can do right now  to get access to additional funding.  Supposedly there is some provision that did make it into the Stimulus Bill which will free up some funding fo help small businesses refinance debt, but this funding is not yet in effect and most small businesses have yet to get much in the way of details on this particular program.

So, back to the topic of the SBIR/STTR program, which will shortly expire: in this economic climate,  why in the world  isn’t Congress acting to ensure that this doesn’t happen?

Your guess is as good as mine.  However, the bottom line is that the expiration of SBIR/STTR is all but a done deal now.  If this is a concern to you, you have 16 days left to take action and get your voice heard by Congress.  Perhaps there is still time to save this program from extinction.

Rick Shindell has provided a list of instructions for how to get your voice heard on this issue:

Develop a brief message urging an SBIR extension for a year, stating its importance to you, your business and community. Stress that a collapse of SBIR could be catastrophic not just for you, but the entire high tech small business community. Stress that SBIR community is a pillar of America’s innovation and economic stimulus . Do it in your own words because boilerplate language is far less effective.

  1. Call your Senators, both their local and DC offices. http://www.senate.gov/general/contact_information/senators_cfm.cfm
  2. Call your Representative, both their local and DC offices. http://www.house.gov/house/MemberWWW.shtml
  3. Go to their web sites and use the email or webmail links to send them your message.
  4. Contact the Senate Committee on Small Business and Entrepreneurship info@small-bus.senate.gov – 202-224-5175
  5. Contact the House Small Business Committee (202) 225-4038 www.house.gov/smbiz/
  6. Contact the House Committee on Science (202) 225-6375 – http://science.house.gov/contact/contact_generalform.shtml
  7. Go to the President’s web site at http://www.whitehouse.gov/contact/
  8. Write to your local newspapers, TV and radio stations.
  9. Work with other small business groups to form a united effort.

The California Biotech Law Blog will continue to keep you posted on any new developments on this issue, and will let you know if there seems to be any movement towards saving the program.


SBA Seeking Comments on Plans to Raise SBIR Award

Written by on Thursday, August 21st, 2008

The SBIR Reauthorization Insider has announced that the Small Business Administration ("SBA") is currently seeking comments on its plans to raise the SBIR award amounts from One Hundred Thousand ($100,000) in Phase One and Seven Hundred Fifty Thousand ($750,000) in Phase Two to One Hundred Fifty Thousand ($150,000) in Phase One and One Million Dollars ($1,000,000) in Phase Two.  The Federal Register states that comments must be received on or before September 15, 2008.

To submit a comment on this issue, the Federal Register instructs you to do the following:

You may submit comments, identified by RIN 3245-AF61 by any
of the following methods: (1) Federal Rulemaking Portal: http://
www.regulations.gov
, follow the instructions for submitting comments;
(2) Mail: Office of Technology, 409 Third Street, SW., Washington, DC
20416; or (3) Hand Delivery/Courier: Edsel Brown, Assistant Director,
Office of Technology, 409 Third Street, SW., Washington, DC 20416.


Category: Biotech Legislative Developments  |  Comments Off on SBA Seeking Comments on Plans to Raise SBIR Award

Debating the Future of the SBIR Program

Written by on Monday, February 4th, 2008

Given the impending expiration of the SBIR Program this October, 2008, the future of the SBIR Program is once again being re-visited.

As The California Biotech Law Blog reported last October, the biotech industry has been actively lobbying for the Small Business Administration ("SBA") to reverse its decision of January, 2001 to make venture-backed companies ineligible for SBIR grants.  This issue, by far, has received the most press in recent years, and of course, is the issue receiving the most attention as the expiration date nears.  The rule excludes many if not most biotech companies from being able to take advantage of SBIR funding, which of course is a serious concern to the industry as a whole. 

Interestingly enough, even the more established pharmaceutical industry has been very vocal on this issue.  While at first glance, this concern seems a bit misplaced, on further consideration, it makes perfect sense that pharma would support biotech’s efforts to change the SBA’s policy.  It is a well-known fact that pharma is looking to biotech companies to supply new products to fill its drug pipeline, which is increasingly becoming depleted.  The more money these companies can access at the early stages, the more likely it will be that enough biotech companies will survive to fill that pharma need.

So, while the issue of excluding venture-backed companies from SBIR grants is taking center stage to the renewal debate, I would argue that Congress should look beyond that stage at some more fundamental problems with the program as it debates SBIR’s future.

What are those problems?

First and foremost, there has never been a good clarification of the SBIR Program’s priorities. 

The SBIR Program falls under the umbrella of the SBA, which according to its website, has a mission based on the following principles:

Creativity  Our people inspire creativity in the American economy by developing and supporting entrepreneurs through a vast network of resource partners.

Advocate  We advocate for all small businesses by taking leadership in building a productive partnership between the American people and its government.

Results  Our team focuses on delivering results for small business, being accountable, accessible and responsive.

Empower  We empower the spirit of entrepreneurship within every community to promote and realize the American dream.

Success
We facilitate the environment necessary for America’s small businesses to succeed, measuring our performance by small business success.

Based on the principles listed on the SBA’s website, it is clear that its chief mission is to support entrepreneurism and thereby help the economy.  A second mission is to help promote. women, minorities, and socio-disadvantaged businesses.

In contrast, the SBIR’s mission is a little less clear.  The SBIR’s website describes the mission of the SBIR and its companion program, the STTR ("Small Business Technology Transfer"), as follows:

Through these two competitive programs, SBA ensures that the nation’s small, high-tech, innovative businesses are a significant part of the federal government’s research and development efforts. . . .

Contrary to the mission of the SBA, the stated mission of the SBIR seems to focus on supporting research and development rather than entrepreneurism.  Yet, the SBIR falls under the umbrella of the SBA.  

This dual and somewhat conflicting dichotomy of SBA and SBIR missions is played out in practical ways through the program as well. 

For example, Phase I awards are made at the complete discretion of the participating government agencies on research and development grounds and Phase II awards are made on the basis of the scientific and technical merit of an idea.  In contrast, Phase III awards are made on commercial viability grounds and require the use of private funds.

Additionally, there is evidence to suggest that university spin-offs may  be one of the primary recipients of SBIR grants rather than other types of businesses, which may have more of a commercial and less of an academic or research and development emphasis. 

In fact, even the debate as to whether accepting venture funds should exclude companies from being able to accept SBIR awards reflects this issue, since if the focus of the program was on successfully commercializing small businesses, then presumably the notion of supplementing private funds with public funds would be preferred rather than prohibited.

A second problem with the program is that there is inadequate data to measure the SBIR Program’s success.  The Government Accountability Office ("GAO") published a report in October, 2006 outlining the SBIR Program’s failures in collecting data from each of the agencies participating in the Program.  One of the conclusions of the GAO was that the "SBA is Five Years Behind Schedule in Meeting its Obligation to Implement a Government-Use SBIR Database."  How do you judge the success of anything without adequate data to draw any significant conclusions?

A third problem with the SBIR Program is that there is evidence to suggest that certain organizations are repeatedly winning many of the awards and that those organizations may have succeeded in achieving the status of becoming SBIR award mills by learning how to successfully work the system.  Is this really what was intended by Congress and the SBA?

All in all, it is safe to say that SBIR is riddled with some fundamental problems that Congress would be wise to address as it evaluates the Program’s future.  While there is no doubt that the SBIR Program plays a valuable role in early -stage biotech start-ups, the industry should perhaps consider redirecting its efforts toward clarifying the goals of the Program and generating useful data over focusing on the more narrow issue of overturning the prohibition on making awards to venture-backed companies. 

 

 

 

 

 


Category: Biotech Legislative Developments  |  Comments Off on Debating the Future of the SBIR Program

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