news

Three crucial Democratic Small Business Committee provisions passed the House of Representatives today as a part of the FY 2019 National Defense Authorization Act (NDAA).  The amendments passed will help start-ups pursue commercialization, make the employee-owned business model more accessible and funnel much-needed federal dollars into Puerto Rican small businesses.

“I am proud that today, colleagues from both sides of the aisle, voted to dedicate important federal resources towards helping America’s diverse entrepreneurial sector,” said Ranking Member Rep. Nydia M. Velázquez. “These pieces of legislation will go a long way in helping entrepreneurs across the country pursue their dream.” 

Empowering Employees by Supporting Cooperatives

In the NDAA, the House passed a measure to empower employees to own a stake in their workplace. The Velázquez-led provision would make it easier for small firms to utilize the Small Business Administration’s 7(a) program to finance their transition to employee-owned models such as an Employee Stock Ownership Plan (ESOP) or a cooperative (co-op).

ESOPs and co-ops have a known track record of success, with companies that transition to the employee-ownership model seeing an increase in productivity by 4 to 5 percent. Velázquez’s bill would help employee-owned businesses access capital to cover the high costs of becoming a ESOP, which are often upwards of $80,000.

Velázquez’s provision was further prompted by the success of local employee-owned co-operatives in her home district of New York City. She has worked closely with Senator Kirsten Gillibrand (D-NY) in crafting this legislation. 

“As an surge of baby boomer business owners move towards retirement, this bill takes steps to help employees retain their jobs by gaining a stake in their company’s ownership,” said Velázquez. “I am proud to have partnered with Senator Gillibrand to advance this important legislation which will help make the co-operative model more accessible to local businesses in New York City and around the country.” 

Paving the Path to Start-Up Commercialization

Also included in the NDAA is an amendment authored by Rep. Al Lawson (D-FL) to help innovative startups and small firms bring their products to commercialization. To support entrepreneurs who seek to develop their product, Congress created the Small Business Innovative Research (SBIR) program. Rep. Lawson’s amendment would build upon the program by leveraging funds to require participating federal agencies to implement a Commercialization Assistance Pilot Program—which would support more products to the market. 

“The Small Business Innovation Research Program will help businesses throughout our communities grow, stimulate high-tech innovation and boost our nation’s economy,” said Lawson. “I am proud to provide legislation that helps small business owners increase their reach and make way for the future of innovation.”

“On our Committee, Rep. Lawson has been a steadfast champion of helping to bring America’s budding small firms to the next level,” said Velázquez. “Start-ups across America are on the cutting edge of technological breakthroughs in fields such as medicine and engineering. Rep. Lawson’s legislation will help identify and support these start-ups as they continue America’s legacy of innovation.”  

Creating Economic Opportunity in Puerto Rico

Lastly, the House has passed legislation authored by Velázquez to allow federal agencies to count procurement dollars awarded to firms in Puerto Rico, double towards their statutory small business contracting goals. The bill will thus incentivize federal agencies to do business with Puerto Rican businesses, helping create jobs on the hurricane-ravaged island.

Currently, a small number of federal contracts are performed in Puerto Rico with the Island ranking 50th out of 56, in comparison to all U.S. states and territories.  Between Fiscal Years 2014 and 2015 the total awards of federal contracts to Puerto Rican small businesses declined by nearly $85 million.  

“As the Island continues to recover ten months after Hurricane Maria made landfall, this provision harnesses the power of federal procurement spending to spur economic recovery,” said Velázquez. “By passing this bill to employ local firms in the recovery process, the House has taken an important step in supporting our fellow Americans in Puerto Rico.” 

The NDAA package passed in the House today. It now moves to the U.S. Senate for consideration where it is expected to be considered next week. 

###