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Utah Life Sciences News & Events

House Bill Introduced to Provide COVID-19 Economic Relief to Startups

August 7, 2020

Bipartisan legislation to help entrepreneurs and startups navigate the economic perils of COVID-19, has been introduced in the U.S. House of Representatives. The bill, the IGNITE American Innovation Act (H.R. 7917), introduced by Reps. Dean Phillips (D-MN) and Jackie Walorski (R-IN), will allow many small companies that have not benefited from CARES Act relief to accelerate access to accrued net operating losses (NOLs) and research and development (R&D) tax credits. BioUtah supports the measure.

Specifically, the bill will allow pre-profit companies to monetize NOLs and R&D tax credits up to a combined total of $25 million in one-time refundable tax credits, providing much needed liquidity to these businesses in the midst of the pandemic. In addition, the bill will provide a bonus in tax assets generated by research and production of products that will prevent, diagnose, and treat COVID-19.

This is very welcome news, said Kelvyn Cullimore, president and CEO of BioUtah. “It’s critical that we find ways to bolster these pre-revenue companies and keep our innovation ecosystem strong. It’s hard enough to build a company in the best of times, let alone in the midst of a pandemic. This legislation is particularly important at a time when the nation is relying on our industry to deliver the ground-breaking technologies, treatments, and vaccines to fight COVID-19.”

Highlights of the bill follow:

  • Allows qualifying companies, with less than 1,500 employees, to monetize up to $100 million worth of accumulated NOLs which were generated within the previous five years at the 21 percent corporate rate
  • Doubles the value for NOLs generated by products to prevent, diagnose, or treat COVID-19
  • Allows qualifying companies to monetize R&D credits
  • Doubles the value of R&D credits generated by research into products to prevent, diagnose, or treat COVID-19
  • Caps the total benefit of the credits at $25 million

A coalition of advocates have expressed their strong support for the bill in a letter to Phillips and Walorski. The coalition organizations include: The National Venture Capital Association, Biotechnology Innovation Organization (BIO), TechNet, AdvaMed, Center for American Entrepreneurship, Medical Device Manufacturers Association (MDMA), Angel Capital Association, and Technology Councils of North America.

“On behalf of startups, their 2.27 million workers, and investors, we are thrilled to endorse the IGNITE American Innovation Act, the most significant pro-startup proposal under consideration during economic recovery package negotiations,” said the coalition. “This bill will create jobs and sustain critical economic activity immediately, activity that will pay long-term dividends to American workers and the U.S. economy through greater innovation and market competition, and the creation of more cutting-edge U.S. companies…”

Congress is currently negotiating a fourth COVID-19 stimulus package. While they hope to reach agreement, Democrats and the Administration still remain at odds on many of the major provisions. BioUtah, along with other IGNITE supporters, are urging lawmakers to include the IGNITE legislation in any new stimulus agreement.

View BioUtah’s briefing paper on the bill here.