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SEC. 862. OPPORTUNITIES FOR EMPLOYEE-OWNED BUSINESS CONCERNS
THROUGH SMALL BUSINESS ADMINISTRATION LOAN PROGRAMS.
(a) Definitions.—In this Act—
(1) the terms “Administration” and “Administrator” means the
Small Business Administration and the Administrator thereof,
respectively;
(2) the term “cooperative” means an entity that is determined to
be a cooperative by the Administrator, in accordance with
applicable Federal and State laws and regulations;
(3) the term “employee-owned business concern” means—
(A) a cooperative; and
(B) a qualified employee trust;
(4) the terms “qualified employee trust” and “small business
concern” have the meanings given those terms in section 3 of the
Small Business Act (15 U.S.C. 632); and
(5) the term “small business development center” means a small
business development center described in section 21 of the Small
Business Act (15 U.S.C. 648).
(b) Expansion Of 7(A) Loans.—
(1) IN GENERAL.—Section 7(a) of the Small Business Act (15 U.S.C.
636(a)) is amended—
(A) in paragraph (15)—
(i) in subparagraph (A)—
(I) by striking “this subsection to qualified employee trusts”
and inserting “this subsection—
“(i) to qualified employee trusts”;
(II) in clause (i), as so designated—
(aa) by inserting “, and for any transaction costs associated
with purchasing,” after “purchasing”;
(bb) by striking the period at the end and inserting “; and”;
and
(III) by adding at the end the following:
“(ii) to a small business concern under a plan approved by the
Administrator, if the proceeds from the loan are only used to
make a loan to a qualified employee trust, and for any
transaction costs associated with making that loan, that results
in the qualified employee trust owning at least 51 percent of
the small business concern.”;
(ii) in subparagraph (B)—
(I) in the matter preceding clause (i), by inserting “or by the
small business concern” after “the trustee of such trust”;
(II) in clause (ii), by striking “and” at the end;
(III) in clause (iii), by striking the period at the end and
inserting “, and”; and
(IV) by adding at the end the following:
“(iv) with respect to a loan made to a trust, or to a
cooperative in accordance with paragraph (35)—
“(I) a seller of the small business concern may remain involved
as an officer, director, or key employee of the small business
concern when a qualified employee trust or cooperative has
acquired 100 percent of ownership of the small business concern;
and
“(II) any seller of the small business concern who remains as an
owner of the small business concern, regardless of the
percentage of ownership interest, shall be required to provide a
personal guarantee by the Administration.”; and
(iii) by adding at the end the following:
“(F) A small business concern that makes a loan to a qualified
employee trust under subparagraph (A)(ii) is not required to
contain the same terms and conditions as the loan made to the
small business concern that is guaranteed by the Administration
under such subparagraph.
“(G) With respect to a loan made to a qualified employee trust
under this paragraph, or to a cooperative in accordance with
paragraph (35), the Administrator may, as deemed appropriate,
elect to not require any mandatory equity to be provided by the
qualified employee trust or cooperative to make the loan.”; and
(B) by adding at the end the following:
“(35) LOANS TO COOPERATIVES.—
“(A) DEFINITION.—In this paragraph, the term ‘cooperative’ means
an entity that is determined to be a cooperative by the
Administrator, in accordance with applicable Federal and State
laws and regulation.
“(B) AUTHORITY.—The Administration shall guarantee loans made to
a cooperative for the purpose described in paragraph (15).”.
(2) DELEGATION OF AUTHORITY TO PREFERRED LENDERS.—Section
5(b)(7) of the Small Business Act (15 U.S.C. 634(b)(7)) is
amended by inserting “, including loans guaranteed under
paragraph (15) or (35) of section 7(a)” after “deferred
participation loans”.
(c) Small Business Investment Company Program Outreach.—The
Administrator shall provide outreach and educational materials
to companies licensed under section 301(c) of the Small Business
Investment Act of 1958 (15 U.S.C. 681(c)) to increase the use of
funds to make investments in company transitions to
employee-owned business concerns.
(d) Small Business Microloan Program Outreach.—The Administrator
shall provide outreach and educational materials to
intermediaries under section 7(m) of the Small Business Act (15
U.S.C. 636(m)) to increase the use of funds to make loans to
employee-owned business concerns, including transitions to
employee-owned business concerns.
(e) Small Business Development Center Outreach And Assistance.—
(1) ESTABLISHMENT.—The Administrator shall establish a Small
Business Employee Ownership and Cooperatives Promotion Program
to offer technical assistance and training on the transition to
employee ownership through cooperatives and qualified employee
trusts.
(2) SMALL BUSINESS DEVELOPMENT CENTERS.—
(A) IN GENERAL.—In carrying out the program established under
subsection (a), the Administrator shall enter into agreements
with small business development centers under which the centers
shall—
(i) provide access to information and resources on employee
ownership through cooperatives or qualified employee trusts as a
business succession strategy;
(ii) conduct training and educational activities; and
(iii) carry out the activities described in subparagraph (U) of
section 21(c)(3) of the Small Business Act (15 U.S.C.
648(c)(3)).
(B) ADDITIONAL SERVICES.—Section 21(c)(3) of the Small Business
Act (15 U.S.C. 648(c)(3)) is amended—
(i) in subparagraph (S), by striking “and” at the end;
(ii) in subparagraph (T), by striking the period at the end and
inserting “; and”; and
(iii) by adding at the end the following:
“(U) encouraging and assisting the provision of succession
planning to small business concerns with a focus on
transitioning to cooperatives, as defined in section 7(a)(35),
and qualified employee trusts (collectively referred to in this
subparagraph as ‘employee-owned business concerns’), including
by—
“(i) providing training to individuals to promote the successful
management, governance, or operation of a business purchased by
those individuals in the formation of an employee-owned business
concern;
“(ii) assisting employee-owned business concerns that meet
applicable size standards established under section 3(a) with
education and technical assistance with respect to financing and
contracting programs administered by the Administration;
“(iii) coordinating with lenders on conducting outreach on
financing through programs administered by the Administration
that may be used to support the transition of ownership to
employees;
“(iv) supporting small business concerns in exploring or
assessing the possibility of transitioning to an employee-owned
business concern; and
“(v) coordinating with the cooperative development centers of
the Department of Agriculture, the land grant extension network,
the Manufacturing Extension Partnership, community development
financial institutions, employee ownership associations and
service providers, and local, regional and national cooperative
associations.”.
(f) Amendment To Report To Congress On Status Of Employee-Owned
Firms.—Section 7(a)(15)(E) of the Small Business Act (15 U.S.C.
636(a)(15)(E)) is amended by striking “Administration.” and
inserting“Administration, which shall include—
“(i) the total number of loans made to employee-owned business
concerns that were guaranteed by the Administrator under section
7(a) of the Small Business Act (15 U.S.C. 636(a)) or section 502
of the Small Business Investment Act of 1958 (15 U.S.C. 696),
including the number of loans made—
“(I) to small business concerns owned and controlled by socially
and economically disadvantaged individuals; and
“(II) to cooperatives;
“(ii) the total number of financings made to employee-owned
business concerns by companies licensed under section 301(c) of
the Small Business Investment Act of 1958 (15 U.S.C. 696(c)),
including the number of financings made—
“(I) to small business concerns owned and controlled by socially
and economically disadvantaged individuals; and
“(II) to cooperatives; and
“(iii) any outreach and educational activities conducted by the
Administration with respect to employee-owned business
concerns.”.
(g) Report On Cooperative Lending.—
(1) SENSE OF CONGRESS.—It is the sense of Congress that
cooperatives have a unique business structure and are unable to
access the lending programs of the Administration effectively
due to loan guarantee requirements that are incompatible with
the business structure of cooperatives.
(2) STUDY AND REPORT.—
(A) STUDY.—The Administrator, in coordination with lenders,
stakeholders, and Federal agencies, shall study and recommend
practical alternatives for cooperatives that will satisfy the
loan guarantee requirements of the Administration.
(B) REPORT.—Not later than 180 days after the date of enactment
of this Act, the Administrator shall submit to Congress the
recommendations developed under paragraph (1) and a plan to
implement such recommendations.
(h) Amendment To Definition Of Qualified Employee Trust.—Section
3(c)(2)(A)(ii) of the Small Business Act (15 U.S.C. 632(c)(2)(A)(ii))
is amended to read as follows:
“(ii) which provides that each participant is entitled to direct
the plan trustee as to the manner of how to vote the qualified
employer securities (as defined in section 4975(e)(8) of the
Internal Revenue Code of 1986), which are allocated to the
account of such participant with respect to a corporate matter
which (by law or charter) must be decided by a vote conducted in
accordance with section 409(e) of the Internal Revenue Code of
1986; and”. |
Opportunities for employee-owned
business concerns through Small Business Administration loan
programs (sec. 862)
The House bill contained a provision
(sec. 866) that would amend the Small Business Act to expand
some loans for small business concerns and direct the
Administrator of the United States Small Business Administration
(SBA) to undertake outreach and assistance activities, and a
report on these activities.
The Senate amendment contained a similar
provision (sec. 6006) that would strengthen SBA loan programs to
support employee-owned small businesses.
The Senate recedes with clarifying and
technical amendments. |
