On December 6, the U.S. House of Representatives Committee on Small Business is hosting a hearing to discuss the recently introduced Main Street Employee Ownership 2.0 Act and the Improving SBA Engagement on Employee Ownership Acts sponsored by Chairwoman Nydia Velazquez (D-NY) and Rep. Dean Phillips (D-MN). The historic 2018 Main Street Employee Ownership Act made cooperatives eligible for the Small Business Administration’s (SBA) 7(a) loan program and required SBA to coordinate with the cooperative community.
Since passage of the 2018 legislation, cooperatives have continued to face challenges in accessing SBA lending programs. The Main Street 2.0 and Improving SBA Engagement on Employee Ownership Acts would build on the 2018 legislation to advance the goal of achieving equitable financing for cooperatives and improving SBA engagement with cooperatives.
The Main Street 2.0 Act would:
- Prohibit SBA from requiring mandatory equity or personal/entity guarantees for 7(a) loans
- Make cooperatives eligible for SBA’s disaster assistance program
- Make certain changes to improve access to capital for employee-owned businesses using Employee Stock Ownership Plans.
The Improving SBA Engagement on Employee Ownership Act would require SBA to participate in the Interagency Working Group on Cooperative Development and improve outreach on the Small Business Investment Company (SBIC) Program.
Unfortunately, many cooperatives saw firsthand the institutional challenges that remain at SBA during the administration of the Paycheck Protection Program and Economic Injury Disaster Loan programs. These bills would require changes that will not only benefit cooperative businesses but will build up the institutional knowledge of the cooperative business model at SBA and bring the agency much more in line with the practices at USDA.
If you have questions or would like to get involved in advocacy efforts going forward, email Aaliyah Nedd at email@example.com.