Senate Appropriations Committee includes Several Provisions Supporting ESOPs and Employee Ownership Growth in FY25 Financial Services and General Government Funding Package

The Senate Committee on Appropriations has passed several provisions that support employee ownership and ESOPs in the Fiscal 2025 Financial Services and General Government Appropriations bill. All three provisions were included in the Small Business Administration (SBA) portion of the Appropriations Committee report accompanying the bill text, which provides instruction and direction from Congress to Federal agencies about their budget, goals, and initiatives. The full Committee approved the funding package in a unanimous 27-0 vote. 

The first provision included would create a Coordinator of Employee Ownership at the SBA whose goal would be to “promote the use of the SBA's financing programs for conversions to employee-owned structures,” including ESOPs, in a variety of ways. The second provision directs the SBA to create a publicly available toolkit for small businesses that would guide small business owners in succession planning, including information on ESOPs. The third directive instructs the SBA to “fully implement” the Main Street Employee Ownership Act provisions that require the SBA establish a Small Business Employee Ownership and Cooperatives Promotion Program to offer technical assistance and training on the transition to employee ownership. The unanimous passage in the Committee is a strong message in support of employee ownership.  

The ESOP Association has been supportive of efforts to fully implement the Main Street Employee Ownership Act, and has been working to expand the role of ESOPs at the SBA. Senator Van Hollen (D-MD), chairman of the Senate FSGG Appropriations Subcommittee, has been a consistent and strong supporter of employee ownership and ESOPs. He is the lead Senate sponsor, along with Senator Marco Rubio (R-FL), of the Employee Equity Investment Act (EEIA), which would create a credit facility at the SBA to provide needed access to capital for ESOP growth and formation. That bill (S 1618/HR 3383) has drawn bipartisan support in both the House and Senate and was introduced the week of TEA’s National Conference in 2023.     

The Financial Services and General Government Appropriations bill “provides funding for the Department of the Treasury, including the IRS, the Executive Office of the President, the Judiciary; the District of Columbia; and more than two dozen independent Federal agencies,” including the Small Business Administration. 

Click here to read the full Senate Appropriations Committee Report on the Fiscal 2025 Financial Services and General Government Appropriations bill.

Small Business Administration

Coordinator of Employee Ownership: “The Committee recognizes that employee-owned businesses are uniquely structured and provide wide-ranging benefits for businesses, workers, and local communities. The Committee encourages the SBA to designate a Coordinator of Employee Ownership who will develop expertise in employee ownership structures, including Employee Stock Ownership Plans and cooperatives, in cooperation with Small Business Development Centers. The Committee further encourages the Coordinator to promote the use of the SBA's financing programs for conversions to employee-owned structures, work with the Office of Investment and Innovation and the Office of Capital Access to increase the number of Small Business Investment Companies and 7(a) lenders, respectively, providing financing for employee-ownership conversions, and coordinate with employee ownership stakeholders.”

Succession Planning Toolkit: “The Committee encourages the SBA to develop a publicly available online toolkit that can be used by the SBA and its resource partners, including Small Business Development Centers, to guide small business owners through the process of creating a business succession plan, connect owners with relevant resources and provide information on employee ownership options, including Employee Stock Ownership Plans and cooperatives, as a succession planning strategy.”

Small Business Employee Ownership and Cooperatives Promotion Program: “The Committee notes that the Main Street Employee Ownership Act, which Congress enacted in section 862 of Public Law 115-232, requires the SBA to 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. SBA is urged to fully implement this provision and report to the Committee on the status of implementation no later than· 90 days after the enactment of this act.”