New bills have been introduced to ensure fair access to small business loan (SBA) programs for employee-owned small businesses.
New bill would expand access to SBA loan programs for some small businesses
The bills were presented by Nydia M. Velázquez, chairman of the House Small Business Committee, and Dean Phillips, chairman of the Subcommittee on Oversight, Investigation, and Regulation. They follow the Main Street Ownership Act of 2018, which was also introduced by Chairman Velázquez and included provisions to relax cumbersome warranty restrictions and help retired entrepreneurs transition to an employee-owned model.
Boost for employee business ownership
In the past, employee-owned businesses often struggled to access funding through SBA programs. For example, SBA’s flagship 7(a) loan program requires a personal guarantee from someone who owns 20% or more of the company’s stock. This has been a hindrance to many employee-owned businesses, and these bills attempt to further address the problem.
Chairman Velázquez and Congressman Phillips hope the new bills will provide a boost to employee-owned businesses, allowing employees to benefit when sales and profits grow.
Remove unfair exclusion
Chairman Velázquez explained, “Employee-owned companies have a proven track record of aligning the interests of employees and owners. When a company embraces employee ownership, wages often rise, the local economy gets a boost, and job security increases. These companies provide a range of benefits to their employees and communities, and they must have adequate and equal access to SBA programs. The bills introduced today help lower barriers to access to capital and ensure employee-owned companies are not unfairly excluded from critical programs.”
Congressman Phillips added, “Boosting employee ownership will help sustain an economy that protects local jobs and builds resilient small businesses.”
SBA involves employee property
The Improving SBA Engagement on Employee Ownership Act is the new bill that aims to improve the SBA’s reach and involvement in employee ownership and cooperative development. It will accomplish this by including SBIC limited partners and SBIC fund sponsors in the Main Street Act’s outreach and education requirement.
The SBA must also begin attending any work groups or other engagements organized by other federal entities related to employee or cooperative property.
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