President signs $1.5 trillion funding package
The $1.5 trillion FY2022 federal budget, signed into law on March 15, includes some important wins for employee ownership — support for the Main Street Employee Ownership Act and a generous allocation for the Vermont Employee Ownership Center.
Support for the Main Street Employee Ownership Act
Most importantly, the Committee Report accompanying the bill — which carries significant weight with federal agencies — includes language that supports implementation of the Main Street Employee Ownership Act (MSEOA), which passed in 2018. The Committee Report urges the Small Business Administration to fully implement the MSEOA and to ensure lending programs are inclusive of employee-owned businesses:
Employee Ownership.—The Committee recognizes that employee-owned businesses are uniquely structured and provide wide-ranging benefits for businesses, workers, and the local economy. The Committee notes that the Main Street Employee Ownership Act, which Congress enacted in section 862 of Public Law 115–232, requires SBA to make structural changes in SBA lending programs to ease the challenges faced by employee-owned businesses in accessing financing. This legislation also requires SBA to use Small Business Development Centers (SBDCs) establish an employee-owned business promotion program to provide assistance on structure, business succession, and planning. SBA is directed to fully implement these requirements. The Committee further directs SBA to work with the Departments of Agriculture, Labor, and Commerce to provide education and outreach to businesses, employees and financial institutions about employee-ownership, including cooperatives and employee stock ownership plans; provide technical assistance to assist employees’ efforts to become businesses; and assist in accessing capital sources.
The Committee report also encourages SBA to develop resources for succession planning, including the development of an online toolkit that could be used by “SBA and its resource partners to guide small businesses through the process of creating a business succession plan.”
The SBA received an increase in funding of $109 million, bringing its budget to $1 billion. The SBDC’s received $138 million, $2 million more than what it received in 2021. Though not required, the additional funding could go to support these Congressional priorities.
Allocation for Vermont Employee Ownership Center
The omnibus spending bill funds the Vermont Employee Ownership Center with $158,000 allocation for outreach, technical assistance grants, and development of legal resources.
“This grant comes at an opportune time when both the need for our services and the opportunities to expand the number of Vermonters experiencing the benefits of employee ownership are significant,” said Executive Director Matt Cropp in a press statement. “We look forward to the additional resources helping us to maximize our impact in the coming year while also creating resources that will benefit Vermonters for years to come!”
VEOC submitted a Congressionally Directed Spending request to Senator Bernie Sanders, who secured the funds. VEOC plans to use the funding to:
- Increase staffing capacity ($83,000);
- Award technical assistance grants to help cover feasibility studies, valuations, and legal costs for employee-ownership conversions ($50,000); and
- Develop a Vermont-specific legal guide and template for employees seeking to raise capital to transition their business to broad-based employee ownership ($25,000).
VEOC has been working with the state to ensure that the state uses some of its $57 million in SSBCI funds to support employee ownership transitions. Recognizing that financing is only useful if businesses are prepared to transition, the organization is ramping up its outreach and education activities. In September 2021, VEOC created a full-time communications and outreach position to reach out to near-retirement owners and educate them about employee ownership as a succession strategy.