House passes bill to amend lending landscape for worker co-ops

Broader access to SBA loans makes the conversion of privately-held businesses to worker-owned cooperatives a more viable option.Broader access to SBA loans makes the conversion of privately-held businesses to worker-owned cooperatives a more viable option.Broader access to SBA loans makes the conversion of privately-held businesses to worker-owned cooperatives a more viable option.The U.S. House of Representatives yesterday passed a bipartisan bill set to curb barriers facing America’s small businesses and increase access to financing for a new crop of employee-owned businesses and worker cooperatives.

Co-sponsored by Rep. Nydia Velazquez (D-NY) and Rep. Steve Chabot (R-OH), the Main Street Employee Ownership Act of 2018 (H.R. 5236) seeks to amend longstanding inequities in how the Small Business Administration (SBA) administers loans to Employee Stock Ownership Plans (ESOPs) and worker cooperatives.

“Small businesses are at the heart of stable, sustainable communities and worker co-op conversions are a proven strategy to strengthen and preserve local businesses nationwide,” said Doug O’Brien, president and CEO of NCBA CLUSA. “We applaud this bill and stand ready to support local economic development through employee ownership.”

The Main Street Employee Ownership Act comes at a pivotal moment as a generation of Baby Boomer small business owners prepares for retirement, seeking viable options that preserve the values and principles of their family businesses and ensure the employees continue to have decent jobs.

As a group, Baby Boomers own close to half of the nation’s privately-held businesses, employing one in six workers nationwide. “This legislation seeks to fill an important gap, allowing many of these firms to transition to an employee-owned structure, keeping the businesses intact and retaining jobs in the local community,” Velazquez said in a May 8 statement.

Velazquez noted that a recent surge in employee-owned food cooperatives in New York City is fueling local economic development. “This success ought to be replicated throughout the country and expanded into other economic sectors,” she said, adding that this week’s legislation will make it more affordable for local businesses to adopt an employee-owned structure. The costs associated with such a transition can exceed $80,000, the statement said.

Beyond improving the lending landscape for ESOPs and worker cooperatives, the Main Street Employee Ownership Act creates viable retirement opportunities for entrepreneurs, provides more employees a stake in the businesses they work for and expands technical assistance nationwide.

Sen. Kristen Gillibrand (D-NY) introduced a companion bill to Velazquez’s legislation on Monday.

“Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs,” Gillibrand said in yesterday’s statement. “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… the country.”

O’Brien called Gillibrand’s bill a “lifeline” for thousands of firms facing an uncertain future and said NCBA CLUSA and the broader cooperative business community the organization represents are poised to work toward passage of the legislation.
 

 

TWITTER FEED

Fri Nov 16 22:22:20 +0000 2018

As we look to a new House and Senate in 2019, here's how co-ops can impact communities, writes our Pres and CEO:… https://t.co/ASymC13YJi
Fri Nov 16 20:36:01 +0000 2018

Looking toward a new House and Senate in 2019 - The benefits of #cooperation have the potential to impact every Ame… https://t.co/QXDGq9QPyf
Fri Nov 16 19:23:01 +0000 2018

Have you registered for our ABCs of #CoopImpact? Free event on Dec 5th: 9-11am in our offices with @urbaninstitutehttps://t.co/dkFU8MvyvP

NEWSLETTER

CONTACT US

This email address is being protected from spambots. You need JavaScript enabled to view it.

202.638.6222

1775 Eye Street NW
8th Floor
Washington, DC 20006