Main Street Employee Ownership Act of 2018

Floor Speech

Mr. Speaker, I rise in support of H.R. 5236, the Main Street Employee Ownership Act, a commonsense measure to improve SBA's lending and training programs to enable employees to purchase the companies they work for.

As baby boomers near retirement, the country faces a substantial dilemma: Roughly half of privately held companies are owned by baby boomers, and fewer than 15 percent have a formal exit plan in place. And while it is wonderful to think that family members will take over the business, this is a relatively rare occurrence. Some will be bought out; others will close. This will have significant secondary economic impacts that will ripple through our local communities.

Mr. Speaker, I have been working with Senator Gillibrand's office to help address this looming problem.

The bill before us will reward workers and invest in our Main Street economy by improving the lending landscape for employee-owned businesses, such as employee stock ownership plans and co-ops.

There are 7,000 such companies in existence all over the Nation, contributing to our local communities and economies. However, businesses seeking to transition to employee-owned status face difficulty in obtaining adequate capital to cover the oftentimes prohibitive costs.

The SBA was authorized to loan to ESOPs in 1979. Unfortunately, this tool has rarely been used due to misunderstanding of the business structure and cumbersome transition requirements.

This bill seeks to align common industry practices with SBA protocols to encourage more lending to ESOPs and co-ops. By codifying current SBA standards of practice and easing some burdensome guarantee restrictions, it is my hope we will keep local enterprises in their communities, saving jobs along the way and preventing economic dislocation for many workers.

Mr. Speaker, I urge Members to support this legislation, and I reserve the balance of my time.

Mr. Speaker, there is no question that we need to support our Main Street small businesses, especially those that fall outside of traditional business structures. H.R. 5236 does just that by requiring more training and clarifying lending protocols.

Today's bill is endorsed by at least 25 organizations, including America's SBDCs, the American Sustainable Business Council, the Association for Enterprise Opportunity, ESCA, and a variety of co-ops and employee-owner associations.

Mr. Speaker, I would like to thank Justin Pelletier and Jon Cardinal for their tireless work on this complex topic.

Mr. Speaker, I urge Members to support this bill, and I yield back the balance of my time.

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