H.R. 5236 Passes House Committee Quickly, Unanimously

by The ESOP Association | Mar 19, 2018
In less than 10 minutes, a new pro-ESOP bill is introduced and then passed in the House Small Business Committee.

On March 14, a new bill aimed at helping ESOP creation by small businesses was considered in the House Small Business Committee. In less than 10 minutes, the bill passed unanimously. It will now move to the full House for consideration. 

The Main Street Employee Ownership Act of 2018, also known as H.R. 5236, was introduced by Rep. Nydia Velazquez (D-NY), a new advocate for ESOPs in Congress. The bill seeks to encourage the Small Business Administration (SBA) to increase lending to ESOPs. 

 “The SBA was authorized to loan to ESOPs in 1979,” Rep. Velazquez said while introducing the bill. “Unfortunately, this tool has been rarely used, due to a lack of understanding of the business structure [of employee owned firms] and cumbersome transition requirements.”

Rep. Steve Chabot (R-OH), the Committee Chair and a veteran advocate for ESOPs, bolstered H.R. 5236 by adding a chair’s amendment and by urging other committee members to support the bill. 

 “H.R. 5236 provides important reforms to how the SBA treats employee owned businesses,” he said during the Committee meeting. “From updating reporting statistics to capturing accurate data, to codifying ownership transition plans, H.R. 5236 will provide clarity to small businesses that truly need it.”

The bill underscores the strong bipartisan and bicameral support that ESOPs have long enjoyed, and continue to enjoy. Rep. Velazquez (a Democrat), and Chair Chabot (a Republican) worked together to bring the bill to a quick resolution, and Rep. Velazquez thanked Rep. Chabot and his staff for working with her on the amendment and on the underlying bill. 

 In addition, Rep. Velazquez noted that she had worked closely with the office of Sen. Kirsten Gillibrand (D-NY), another ESOP advocate for employee ownership. 

 The bill provides an encouraging sign that ESOPs continue to hold the attention of lawmakers familiar with the benefits of employee ownership, while also attracting new lawmakers. It also serves as a reminder of how quickly the legal landscape for ESOPs can change, either positively or negatively: In this case, the change took about eight minutes.