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Pro-ESOP Bill Introduced in Senate

by Patrick Mirza | Jan 23, 2019
Similar to a bill from the previous session of Congress, this bill continues a long term advocacy strategy.
ESOP Advocates in the Senate did not waste any time in offering their clear and public support for ESOPs: Only 14 days into this new session of Congress, Senators Pat Roberts (R-KS) and Ben Cardin (D-MD) introduced a bill that seeks to encourage and expand the use of ESOPs.

The bill—S. 177—is identical to S. 1589, which was introduced in the last session of Congress and gained the support of 40 percent of the Senate. The House version—H.R. 2092—gained support from 86 representatives in the prior Congress.

The reintroduction of bills like this one in successive Congressional sessions is part of The ESOP Association’s legislative strategy. By working to reintroduce bills like S. 177, we ensure that ESOPs and ESOP supporters remain top of mind on Capitol Hill.

Further, the reintroduction of similar or identical bills also helps to generate and increase momentum that builds until these bills have sufficient support to be passed and signed into law.

What the Bill Will Do

Titled the Promotion and Expansion of Private Employee Ownership Act, the bill includes provisions that seek to:

  • Expand financing opportunities for S Corporation ESOPs.
  • Provide technical assistance for companies that may be interested in forming an S Corporation ESOP.
  • Ensure that small businesses that become ESOPs retain their Small Business Administration (SBA) certification.

All these items are valuable and will help protect and advance ESOPs.

The last item on the list has been a particular thorn in the side of the ESOP community for years. Under current regulations, a business that qualifies for the SBA’s 8(a) certification will lose that certification if it sells a majority of its stock to an ESOP.

The 8(a) certification can help a business gain government contracts, as well as qualify for state and local contracts that follow the SBA’s lead. This certification can be very important to a firm’s revenue stream and survival. The loss of that certification can serve as a tremendous disincentive for businesses considering an ESOP.

Congressional Support Continues

The following group of Senators co-sponsored S. 177 as soon as it was introduced. All 24 of these Senators have an established history of supporting ESOPs.

Sen. Thom Tillis (R-NC)

Sen. Rob Portman (R-OH)

Sen. Michael Crapo (R-ID)

Sen. Maria Cantwell (D-WA)

Sen. James E. Risch (R-ID)

Sen. Sheldon Whitehouse (D-RI)

Sen. Patrick Leahy (D-VT)

Sen. Amy Klobuchar (D-MN)

Sen. Debbie Stabenow (D-MI)

Sen. Tammy Baldwin (D-WI)

Sen. Robert P. Casey, Jr. (D-PA)

Sen. Jerry Moran (R-KS)

Sen. Chris Van Hollen (D-MD)

Sen. Gary C. Peters (D-MI)

Sen. Joni Ernst (R-IA)

Sen. Johnny Isakson (R-GA)

Sen. Jack Reed (D-RI)

Sen. John Hoeven (R-ND)

Sen. John Thune (R-SD)

Sen. Patty Murray (D-WA)

Sen. Tammy Duckworth (D-IL)

Sen. Jon Tester (D-MT)

Sen. Susan M. Collins (R-ME)

Sen. Christopher A. Coons (D-DE)

Does your member of the House or Senate have a track record of supporting ESOPs? There is an incredibly easy way to find out: Visit our ESOP Advocates page, which offers a state-by-state listing of our supporters on Capitol Hill.

If your member of the Senate has a record of supporting ESOPs, reach out and thank that person for their ongoing support.

If not, consider reaching out and asking your Senator to sponsor S. 177.

If you are looking for guidance and tips on how to interact with your elected officials, be sure to check out our Advocacy Kit.