During a Congressional hearing held today by the U.S. House Small Business Committee, TEA Immediate Past Chair and Chairman of Eagle Communications, Gary Shorman, discussed the importance of Employee Ownership, the need for quick access to Small Business Administration loans, and the chilling effect of the Department of Labor’s lack of guidance on ESOP formation.
During Shorman’s testimony he asked Congress to:
- Urge The Small Business Administration (SBA) to streamline lending for ESOPs, as intended by the Main Street Employee Ownership Act by asking for ESOP loans to be included in the Preferred Lending Program.
- Ask that the SBA be directed to resource a specific, centralized office —such as the Office of Small Business Development Centers—with active public education and information efforts about ESOPs. And that the SBA undertake specific ESOP-related educational training for regional SBA staff.
- Require the Department of Labor to define what constitutes “adequate consideration”.
“As Chairwoman Velazquez noted, a recent Employee Ownership Foundation study found employee-owned businesses not only survived but in many cases were able to adapt and thrive despite the pandemic.” Said Jim Bonham, President and CEO of The ESOP Association. “A business model that is so resilient and truly benefits the American worker should continue to be accessible, especially given the looming wave of retirements known as the ‘Silver Tsunami’. Including ESOPs in the preferred lending program will ensure more businesses have access to the capital they need when transitioning to employee ownership.”
“Despite all of these strengths, and their deep roots within our local economies and business communities, there remain far too many unnecessary obstacles to new ESOP formation or expansion of existing ESOPs,” said Shorman during his testimony.
Committee Chairwoman Nydia Velazquez (D-NY)—who introduced the Main Street Employee Ownership Act three years ago—concluded the hearing by stating, “If we generally want to help the American people build back better, we must promote policies to empower American workers. Employee-owned businesses merge ownership and employees’ interests helping to create a symbiotic relationship where everyone thrives. As ESOPs and cooperatives become more prominent, the American workforce will benefit.”