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This bill would make it easier for the Small Business Administration (SBA) to help employee stock ownership plans (ESOPs) by allowing the SBA to make loans to intermediaries that can then turn around and make smaller loans available to ESOPs or worker cooperatives. It also allows loans to employee-owned companies to be made under the SBA’s preferred lender program.

Additionally, to help make it easier for retiring business owners to sell to employees, the bill would create an exception to an SBA rule that sellers for a company cannot have an ongoing role in the firm: a measure that recognizes the prevalence of owners exiting in stages when selling to employees.

For similar reasons, the bill would waive the current SBA requirement of a 10% equity investment in a business transaction loan and allow financing (loans) to be used to cover transaction costs and makes it easier to loan to worker cooperatives. In another effort to lower barriers for employee buy in to ESOPs, the bill would enable the SBA to waive the requirement for a personal guarantee (a requirement that is not workable when there are large numbers of owners who all own small shares of a business, a common scenario in the case of ESOPs).

The bill would also require the SBA to coordinate with investment funds licensed through the SBA’s Small Investment Company (SBIC) program and intermediary lenders through SBA’s Microloan program to promote employee ownership as an area to be considered for investment and lending.

To build out the ecosystem for conversions to employee ownership, the bill calls for the creation of a Small Business Employee Ownership and Co-operatives Promotion Program to partner with the United States’ national network of 900 Small Business Development Centers to offer technical assistance and training to support transitions to employee ownership.

Finally, the bill would create an interagency group to 1) develop recommendations on how Federal programs can promote, support, and increase the number of employee-owned business concerns; (2) ensure coordination with Federal agencies and national and local employee ownership, cooperative, and small business organizations; and 3) submit an annual report to Congress.

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The SBA must guarantee loans to cooperatives in which employees are eligible for membership for such stock purchases.\n\nThe SBA shall: (1) provide outreach and educational materials to licensed small business investment companies to increase investment in transitions to employee-owned businesses, and (2) establish a Small Business Employe...","summarized":true,"cost":null,"cost_commentary":"A CBO estimate is unavailable.","impact":"Small businesses and small business owners; small business employees; and the Small Business Administration.","argument_for":"This commonsense, bipartisan bill would help small businesses stay open as more than two million baby boomer business owners retire over the next 10-15 years by making it easier for retiring owners to sell their businesses to employees.","argument_against":"The Employee Stock Ownership Programs that this bill looks to bolster are very complex to administer and aren’t suitable for all small businesses, especially those with volatile revenue streams or that lack sophisticated accounting processes.","bill_type":"hr","published":true,"type":"FederalBill","id":"hr5236-115","bill_id":"hr5236-115","formal_id":"H.R. 5236","chamber":"house","congress":115,"last_action_at":"2018-05-09T00:00:00.000Z","active":true,"enacted":false,"enacted_at":null,"vetoed":false,"last_vote_at":"2018-05-08T18:57:59.000Z","debated_on":"2018-05-07T00:00:00.000Z","congress_url":"https://www.congress.gov/bill/115th/house-bill/5236","plain_text_url":"https://www.gpo.gov/fdsys/pkg/BILLS-115hr5236rfs/html/BILLS-115hr5236rfs.htm","shareable_image_url":"https://n.causes.com/share-images/bills/hr5236-115.png","congress_full_text_url":"https://www.congress.gov/bill/115th/house-bill/5236/text","is_current_congress":false,"last_version_on":"2018-05-09","related_bill_ids":["hr5515-115","hr4319-115"],"progress":"Passed House","house_passage_result":true,"senate_passage_result":false,"position_count":8,"committees":[{"name":"Committee on Small Business","chamber":"house","committee_id":"HSSM","subcommittee":false},{"name":"Committee on Small Business and Entrepreneurship","chamber":"senate","committee_id":"SSSB","subcommittee":false}],"links":{"rollCalls":"/api/roll_calls?bill_id=hr5236-115","details":"/api/bills/hr5236-115/details","sharingMessage":"/api/sharing_messages/hr5236-115","positionsFor":"/api/bills/hr5236-115/positions/for","positionsAgainst":"/api/bills/hr5236-115/positions/against"},"upcoming":false,"cosponsors_count":0,"slug":"hr5236-115-main-street-employee-ownership-act-of-2018","latest_chamber_votes_id":null,"official_url":null,"target_video":true,"following":false,"vote_count":51,"yea_vote_count":47,"nay_vote_count":3,"passed_house":true,"passed_senate":false,"vote_id":null,"my_position_id":null,"topic_ids":["work","economy","government","financial-markets"],"issue_ids":["work","federal-agencies","economy","government","financial-markets","banking"],"sponsor_id":210}],"votes":[],"issues":[{"id":"work","name":"Work","slug":"work","description":null,"page_title":null,"icons":{"black":"https://assets.causes.com/issue/icon/work/black_work-1429042040.svg","grey":"https://assets.causes.com/issue/icon/work/grey_work-1429042040.svg","white":"https://assets.causes.com/issue/icon/work/white_work-1429042040.svg"},"cover_image_url":null,"is_following":false},{"id":"federal-agencies","name":"Federal Agencies","slug":"federal-agencies","description":"Vote on the latest federal legislation regarding Federal Agencies. 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Should the SBA Provide Financial Support to Small Businesses in the Form of Loans to Employee Stock Ownership Plans?