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Illustration: Sarah Grillo/Axios

The Senate late last night passed a $2.2 trillion safety net for the American people and American businesses. But not all businesses were included. The package left out thousands of small companies owned by private equity firms.

Details: The legislation includes $350 billion in small-business loans for companies with fewer than 500 employees. That's a liberalization of typical SBA rules, which are more industry-specific in terms of employee number and revenue.

Yes, but: One rule that still applies is that private equity-owned companies are considered "affiliated" with all of the private equity firm's other portfolio companies.

  • That means if you have 300 employees but are owned by a private equity firm whose portfolio companies employ a total of 1,000 people, you don't qualify.

The same goes if a VC firm controls over 50% of a startup's voting stock, or if two or more VC firms combined "are large compared to other stock holdings."

  • Also left out are all cannabis-related companies, as they've historically been blocked from participating in SBA programs.
  • It's possible that there will be more lenient guidance added to deal with these exemptions, but it wasn't in the 800-plus pages voted on last night.

The new bill does have exemptions for small businesses in the restaurant, restaurant supply chain and hospitality sectors — plus some carve-outs for SBIC-backed companies.

How it works: The bill asks Treasury to establish a middle-market lending program for companies with between 500 and 10,000 employees, which potentially could help larger PE-backed companies. This is part of the broader $454 billion direct lending pool.

  • All direct loans would include several conditions while the loan is outstanding, including employment retention requirements, no dividends or stock buybacks, and no forgiveness.
  • The bill language says Treasury will "endeavor" to create the middle-market program, which seems a bit wishy-washy.
  • We still do not know how companies would apply for such loans, or any specific qualifying requirements besides employee number (kind of like the Fed's still-amorphous Main Street lending program, announced earlier in the week).

The bottom line: Most American businesses, small and big, were helped last night. But a wide swath of smaller, private equity-backed companies — everything from manufacturers to services companies to software providers — were forgotten.

Go deeper

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Why it matters: Wednesday marked the first time that Biden has hosted Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) at the White House.

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House Minority Leader Kevin McCarthy (R-Calif.) was asked Wednesday whether he was concerned about elevating Rep. Elise Stefanik (R-N.Y.) to GOP leadership after she has promoted baseless claims about the election. He responded: "I don't think anybody is questioning the legitimacy of the presidential election."

Why it matters: Rep. Liz Cheney (R-Wyo.) was ousted as House GOP conference chair earlier Wednesday — in a vote that McCarthy supported — over her continued criticisms of former President Trump and his lies about election fraud.

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Gaza crisis: Casualties pile up with no signs of ceasefire from Israel, Hamas

Palestinians in the Gaza Strip leave their neighborhood on Wednesday following an explosion. Photo: li Jadallah/Anadolu Agency via Getty Images

Tel Aviv — With Israel and Hamas now engaged in their most destructive fight in seven years, the Biden administration is dispatching a State Department official to join the de-escalation efforts.

The latest: The Israeli air force attacked a meeting of senior Hamas military leaders on Wednesday in Gaza and reported it had killed the Gaza City Brigade commander and the heads of Hamas’ cyber arm and weapons research and development department, along with at least three other senior officials.