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Today, the U.S. House of Representatives passed a set of key small business reforms championed by Democratic Members of the House Small Business Committee.  Once enacted, the bills will take valuable steps to strengthen the small business sector, from promoting diversity in contracting, to spurring innovation and increasing the flow of capital to small firms. 

“In every corner of the country, from major cities to rural America, small businesses are the cornerstones of local economies and the propellant for job creation,” said Rep. Nydia M. Velázquez (D-NY), the top Democrat on the House Small Business Committee. “The Democratic bills approved today by the House will help more existing businesses grow and hire, while empowering more Americans to launch new ventures and pursue dreams of entrepreneurship.”

Expanding Entrepreneurs Access to Capital

Today the House passed H.R. 6347, the “7(a) Real Estate Harmonization Act.” Authored by Rep. Dwight D. Evans (D-PA), this legislation would reduce burdens on lenders and small business borrowers participating in Small Business Administration’s (SBA) 7(a) program.  

Under current rules, for loans over $250,000 secured by commercial real property, the lender or SBA must obtain an appraisal of the property being used as collateral.  Evans’ bill would update these standards to be in line with appraisal thresholds established by federal regulators. By reducing the number of loans that require an appraisal, the bill would help channel capital to small companies more quickly.   

Congressman Dwight Evans (D-PA), who introduced H.R. 6347, the 7(a) Real Estate Harmonization Act, said, “Small businesses are the backbone of our economy and they often operate on tight margins. This bill would lower the cost of doing business by requiring fewer mandatory appraisals. Appraisal costs passed on to SBA borrowers would be greatly reduced since formal appraisals would only be mandatory on loans over $500,000, or above any threshold established by the regulators in the future. Updating the Small Business Act statutory appraisal threshold is important to both SBA lending partners and small business borrowers. Philadelphia has a robust real estate industry which employs appraisers, lenders, construction workers, bankers, and numerous others. This industry is responsible for critical job creation. And I look forward to working with my colleagues as we continue to look for more tools to add to the toolbox to ensure that America’s small businesses can continue to grow, prosper, and most importantly, hire.”

“Representative Evans’ legislation would significantly reduce the red tape small firms encounter when seeking a loan through SBA’s most popular capital access program,” Velázquez noted. “The end result is more capital reaching entrepreneurs more quickly and I commend Congressman Evans for shepherding this bill through the House of Representatives.” 

Preventing Intellectual Property Theft

The Senate companion to a bill introduced by Evans also cleared the House today. The bill, S. 791 “Small Business Innovation Protection Act,” was introduced by Senator Gary Peters (D-MI) and mirrors Evans’ bill, H.R. 2655. These bills require the Small Business Administration (SBA) to partner with the U.S. Patent and Trade Office (USPTO) to expand cyber training for small firms so as to protect their intellectual property.  With House passage, the bill now heads to the President who is expected to sign it into law.

Congressman Evans said, “As members of Congress we have a special duty to ensure that our small businesses have all the tools in the toolbox that they need to succeed.  We know that small businesses are critical to the economic strength of our country, both in the middle neighborhoods in cities like Philadelphia, and in the new and growing tech-based economy.  Creating and supporting their growth is essential to helping entrepreneurs prosper. I appreciate the bipartisan cooperation on these bills from Senator Peters, Congresswoman Velazquez, Congressman Curtis and everyone who has been involved with these bills.”

“Many of the fastest growing firms with the greatest potential for job creation are in fields where intellectual property and trade secrets are among their most valuable assets,” said Velázquez. “Unfortunately, we’ve seen bad actors abroad repeatedly work to steal small companies’ intellectual property.  Under this legislation, there will be more resources available for entrepreneurs to learn how to protect themselves against these amorphous, rapidly evolving threats.”   

Helping Small Firms Win Federal Work

Additional Democratic bills that passed today aim to expand small firms’ involvement in the federal marketplace.  H.R. 6367, “the Incentivizing Fairness in Subcontracting Act,” authored by Rep. Al Lawson (D-FL) has passed the House.  It would allow federal agencies in certain instances to count dollars spent by prime contractors on subcontractors toward agencies’ statutory small business contracting goals. The bill further includes provisions to ensure prompt payment to subcontractors when work is completed.  

“I am proud to sponsor H.R. 6367, the Incentivizing Fairness in Subcontracting Act," said Lawson. "This bill will help our Small business contractors receive the credit they need to satisfy federal requirements. Small businesses put in a tremendous amount of effort to receive federal contracting jobs and in doing so, they continue to be the backbone of our country’s economy.”  

“Small businesses are increasingly involved in the federal marketplace as subcontractors, rather than as vendors dealing directly with a federal agency,” Velázquez noted. “Mr. Lawson’s legislation takes this change into account and would create incentives for larger companies to employ small firms as they deliver goods and services to the federal government. Moreover, this bill will help ensure small companies are paid on time, helping address a recurring and widespread problem we hear about frequently from entrepreneurs operating in the federal sector.”

Another Democratic measure passed by the House seeks to address the growing use of “category management,” a federal contracting practice which many critics say increasingly locks small businesses out of the contracting process.  Committee hearings have previously found that category management, while billed as lowering costs for contracting agencies, actually does the opposite. Moreover, the model often results in further exclusion of small businesses from the federal marketplace.  

As a first step to address this issue, Rep. Alma Adams (D-NC) authored the “Clarity on Small Business Participation in Category Management Act,” H.R. 6382.  The bill, which also cleared the House today, would require that federal agencies and the SBA include in their annual report information on “best in class” contractors, companies that largely benefit from category management. This bill would provide lawmakers with information on whether category management is reducing the role of small firms, women-owned firms, minority-owned companies and veteran-owned enterprises in federal contracting.  

“I authored H.R. 6382, the Clarity on Small Business Participation in Category Management Act, as a first-step to address the harmful effects of the Office of Management and Budget’s (OMB) category management model on minorities, women, veterans and other already disadvantaged small business owners in the federal marketplace,” said Congresswoman Adams (D-NC). “I applaud the House for passing this bill, which requires the Small Business Administration to report on the amount of small businesses who participate in and benefit from the ‘best in class’ designation. Small businesses are the heart of American enterprise, and we must ensure a level playing field for them to compete for federal contracts.”

“Unfortunately, the current Administration has sought to expand the use of Category Management, which makes it harder for smaller firms to secure federal work,” Velázquez noted. “Congresswoman Adams has been a stalwart defender of small companies and her bill would gather the data we need to determine the scope of this problem, examine how Category Management harms small businesses and other disadvantaged firms and start moving us away from this anticompetitive practice. I salute Ms. Adams for getting this bill through the House.”

Utilizing Leading Edge Firms to Tackle Technological Challenges

A final Democratic bill approved by the House today will help foster entrepreneurship and technological partnership between small businesses and the federal government. H.R. 6368, “the Encouraging Small Business Innovators Act,” written by Rep. Adriano Espaillat (D-NY) makes changes to the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) initiatives. Among other steps, the bill will allow experienced firms in the SBIR/STTR programs to mentor younger companies, encouraging more firms to be involved.  

“I introduced the Encouraging Small Business Innovators Act in an effort to bring more small businesses into the forefront of groundbreaking research, development, testing and evaluation of technologies that will help make government more efficient as well as yield great value throughout the commercial marketplace,” said Rep. Adriano Espaillat (D-NY). “Small businesses are often excluded from patent pending industries, and miss out on valuable opportunities for growth and expansion. This bill very simply harmonizes and updates the definition of research and development in the Small Business Act to include testing and evaluation in order to increase the diversity of opportunities for small businesses, the communities they serve, and our nation’s overall economy.”

“SBIR and STTR put some of our most innovative, cutting edge companies to work solving government’s problems, developing new products to bring to market and creating jobs along the way,” Velázquez noted. “Mr. Espaillat’s bill will improve how this public-private partnership functions, creating room for additional economic growth in communities throughout the nation.”

All of the bills passed today with strong bipartisan support.  With the exception of S. 791, which heads immediately to the President’s desk, the House-passed measures will now need to be considered in the Senate.  

“This is a strong package of legislation and I commend my colleagues on the Committee for authoring these proposals. I urge my Senate colleagues to pass all these bills, so they are enacted before the end of the current Congress,” Velázquez concluded.  

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