Bipartisan legislation has been introduced in the Senate that would support small businesses that “invest in and reward their workers and communities” by transitioning to an employee stock ownership plan (ESOP).
The bipartisan Main Street Employee Ownership Act was introduced by Sen. Kirsten Gillibrand (D-NY), who noted it would “improve access to capital and technical assistance to transition small businesses to employee ownership and save thousands of small companies and jobs.”
A press release announcing the legislation explains that there are more than 2.3 million companies, employing one in six workers nationwide, with owners who are at or near retirement, and that as these business owners retire, local economies will experience a massive shift that could trigger the closure of small businesses and loss of jobs and investment.
Noting that the U.S. Small Business Administration (SBA) is primed to lead a national effort in expanding small business employee ownership, she explained that the legislation would give the SBA new authority and tools to achieve this goal, including:
- empowering the SBA to assist small business owners in converting their companies to employee ownership;
- updating the agency’s lending practices to better serve employee-owned businesses; and
- facilitating SBA lending to cooperative businesses
In announcing the most recent legislation, Gillibrand noted that ESOPs and co-ops have demonstrated that employee ownership is good for businesses, workers, and the local economy, and that firms that transition to employee ownership see an increase in productivity by 4%-5% the year the business becomes employee-owned.
She also noted that ESOPs are less likely than comparable businesses to lay off workers in economic downturns, and employee-owned companies are less likely to go bankrupt and tend to stay in business longer.
The Main Street Employee Ownership Act was cosponsored by Sens. Todd Young (R-IN), James Risch (R-ID), Jeanne Shaheen (D-NH), Corey Booker (D-NJ), Susan Collins (R-ME) and Ben Cardin (D-MD).
Other Bills
Gillibrand also supports two bipartisan bills that would encourage employee ownership of companies:
- The Promotion and Expansion of Private Employee Ownership Act would, according to Gillibrand, eliminate barriers to establishing new small business ESOPs and ensure that small businesses eligible for SBA programs would remain eligible if the company becomes an ESOP.
- The Small Business Employee Ownership Promotion Enhancement Act would encourage small businesses to become employee-owned by providing technical assistance to help companies transition ownership to workers through an ESOP.
