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Two bills authored by House Small Business Committee Democrats were approved on the House floor today. The measures passed today will increase access to capital for employee-owned ventures and improve the Small Business Administration’s (SBA) networks of Small Business Development Centers. 

“Today, Democrats on the Committee voted to stand with America’s 30 million small businesses and pass meaningful reforms that will create well-paying jobs and fuel local economies,” said Ranking Member Rep. Nydia M. Velázquez (D-NY). “Ultimately, these reforms will allow more employees to own a stake in businesses they work for, expand technical assistance to diverse corners of America and empower our entrepreneurs to create more jobs.”

Boosting Main Street Businesses and Empowering Employees 

As a group, baby boomers own nearly half of the nation’s privately-held businesses, and as they prepare to retire, Ranking Member Velázquez is looking to make it easier for business owners to transition their firms to an employee-owned business structure, such as an employee stock ownership plan (ESOP) or a cooperative. Under these models, employees are given a stake in the company’s ownership. However, such businesses have traditionally been left out of the small business lending landscape, a gap that Velázquez’s bill seeks to close. 

In her bill, H.R. 5236, the Main Street Employee Ownership Act of 2018, Ranking Member Velázquez has worked to improve the lending landscape for ESOPs and cooperatives. The bill would help employee-owned businesses access capital to cover the cost of becoming a ESOP, which are often upwards of $80,000.

“As a wave of entrepreneurs from the baby boom generation seek to retire, we could see many of them liquidating their enterprises, causing local jobs to evaporate,” noted Velázquez. “This legislation seeks to fill an important gap, allowing many of these firms to instead transition to an employee-owned structure, keeping the businesses intact and retaining jobs in the local community.” 

Velázquez noted that New York City has seen a boost in employee ownership of local food co-ops, which are employee-owned ventures.  

“In New York City, a surge in employee-owned food co-operatives has helped residents shop locally and engage with their neighbors,” said Velázquez. “This success ought to be replicated throughout the country and expanded into other economic sectors. The legislation I’ve authored will make it more affordable for local businesses to adopt an employee-owned structure, creating retirement opportunities for more entrepreneurs, while financially empowering employees with a stake in their workplace.” 

A companion bill to Velázquez’s has been introduced in the Senate by U.S. Senator Kirsten Gillibrand (D-NY).  

“I am pleased that the Main Street Employee Ownership Act has passed in the House of Representatives and I am proud to work alongside Congresswoman Velázquez on this important legislation. Too many hardworking New Yorkers are still struggling to get jobs that pay them enough to take care of their families and save for retirement, and this legislation would help companies reward work without sacrificing profit,” said Senator Gillibrand (D-NY), the lead sponsor of the Main Street Employee Ownership Act in the Senate. “Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs. I will continue to fight as hard as I can to pass this bipartisan legislation in the Senate so we can make the investments needed to support employee ownership around New York and the country.”

Improving Accessible and Affordable Technical Assistance 

The House also passed a bill today authored by Rep. Dwight Evans (D-PA), H.R.1702, the Small Business Development Centers Improvement Act of 2017, to modernize and strengthen Small Business Development Centers (SBDCs) so they can better serve America’s entrepreneurs. In just one year, SBDCs have helped 13,400 entrepreneurs launch new businesses, provided training sessions for over 260,000 attendees, advised 192,000 clients, and helped clients obtain $4.6 billion in financing for their businesses. Rep. Evans’ bill would undertake a series of systemic reforms to the program by improving data collection, streamlining collaboration, reducing paperwork and expanding outreach. 

“Whether in urban centers like New York City and Philadelphia or rural corners of the Midwest, having a reliable one-stop-shop for technical assistance is key for the aspiring small business owner,” said Rep. Velázquez. “I commend Rep. Evans for his tireless dedication to improving the SBDC program and ensuring that hands-on assistance is accessible and affordable for those who need it most.” 

“Access to capital is key for small business owners and entrepreneurs in the city of Philadelphia, the Commonwealth of Pennsylvania and our neighborhoods nationwide. Our Small Business Development Centers (SBDC) play a crucial role in helping to bridge the gap to provide small businesses with the financing they rely on to get their businesses off the ground and keep them up and running. I have used my strategic role as Ranking Member of the House Small Business Committee, Subcommittee on Economic Growth, Tax, and Capital Access to look for ways to level the playing field and ensure everyone in our neighborhoods is afforded the same opportunities and chance to gain capital and grow wealth in their business. Our small business community depends on essential resources that our SBDCs provide and I am proud to see the House vote on my bill which will allow this mutually beneficial relationship between our small businesses and SBDCs to continue to grow, thrive and prosper. When we level the playing field and remove barriers to entry we can and will increase productivity and spur economic growth in each and every corner of our neighborhoods,” Congressman Evans said.

The measures approved by the House must now be considered on the floor of the U.S. Senate. 

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