Food Venture Financing News - Weekly Issue No. 21
In This Issue:
- Payment Protection Program Expires
- SBA's "Forgiveness Portal" Opens
- PPP "EZ" Forgiveness
- Main Street Lending Program Criticized
- Food Venture Financing Trends
- CPG Corporate Venture Funds
- Links to Relevant Content and Events
Payment Protection Program Expires
- The Paycheck Protection Program ("PPP"), which provided loans to small businesses on the condition that they keep their workers on payroll, expired on Saturday.
- The PPP infused $523 billion into the economy, but almost $138 billion of available funding from that program remains untapped.
SBA's "Forgiveness Portal" Opens
- Lenders of PPP loans can now submit borrower forgiveness applications to the SBA for review.
- Many lenders have been unwilling to even accept forgiveness applications until the SBA's system was opened.
- Lenders have 60 days to process a forgiveness application.
- Assuming the lender approves the requested forgiveness amount in whole or in part, it will submit that decision to the SBA, which then has 90 days to review.
PPP "EZ" Forgiveness
- The SBA has released updated Forgiveness FAQs, which can be found here.
- The standard borrower forgiveness application can be found here, with instructions here.
- The SBA has also provided an "EZ" forgiveness application that requires fewer calculations and less documentation for eligible borrowers that (i) are self-employed and have no employees; or (ii) did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; or (iii) experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%. The EZ application can be found here, with instructions here.
Main Street Lending Program Criticized
- Since it came fully online about a month ago, the Main Street Lending Program ("MSLP") has issued less than $200 million in loans, a tiny fraction of its $600 billion in lending capacity.
- Under current market conditions, the MSLP is attractive only to a narrow set of companies. It is designed for companies that are too big to qualify for PPP loans but may be too small to raise capital by issuing bonds or stocks.
- The Federal Reserve Bank of Boston, which manages the MSLP, said Friday that more than $600 million in new loans were in the application pipeline.
- Members of Congress have recommended reducing the MSLP minimum loan size and increasing the debt-to-earnings ratio allowed for Borrowers to generate more interest in the MSLP program.
Food Venture Financing Trends
- The investment community believes that retail grocery stores will continue to embrace new technology post-pandemic. Specifically, grocers will increase reliance on data to automate and optimize inventory planning mechanisms to prevent food wastage and ensure popular items are in stock.
- The effects of social distancing have prompted grocery retailers to adopt contactless payment programs. Kroger recently launched a contactless payments system to allow customers to pay with groceries by mobile phone.
- Tech companies, including Microsoft, are working on solutions to increase connectivity for US farmers.
- Hostess Brands recently opened a new Innovation Lab to develop new and innovative snack products to meet consumer demand.
- Black-owned businesses in the food tech industry are attracting more attention at seed capital and VC investment stages.
CPG Corporate Venture Funds
Our featured CPG corporate venture investment fund this week is Mondelēz International's SnackFutures.
- SnackFutures, which was formed in 2018, has three mandates: invent", "reinvent" and "venture".
- One of these mandates focuses on "venturing with start-up entrepreneurs to seed new businesses."
- Key investments include:
- U.S. prebiotic functional foods business Uplift Food (2019)
- U.S. snacks maker Hu Master Holdings (2019)
Links to Relevant Content and Events
Naturally Bay Area QUICK BITES Wednesday Lunchtime Series
Buying or Selling a Business
- Ian Malone: Director, Aspect Consumer Partners
- Don Buder: Host, Naturally Bay Area & Partner, Davis Wright Tremaine
Wednesday, August 12 - 12:00 - 12:30 p.m. PT
Please check out DWT's newly re-launched Startup Law Blog
At Davis Wright Tremaine LLP (DWT), we are proud to have one of the largest Food & Beverage legal practices in the country, with over 40 attorneys representing food innovators, entrepreneurs, and investors at every level of the food chain, from Farm to Label.
Please contact our Food and Beverage team if we can assist you in any way in these unprecedented times.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.