[Congressional Record Volume 164, Number 93 (Wednesday, June 6, 2018)]
[Senate]
[Pages S3248-S3250]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2335. Mrs. GILLIBRAND (for herself, Mr. Risch, Mr. Young, Mr.
Booker, and Mr. Cardin) submitted an amendment intended to be proposed
to amendment SA 2282 submitted by Mr. Inhofe (for himself and Mr.
McCain) and intended to be proposed to the bill H.R. 5515, to authorize
appropriations for fiscal year 2019 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:
At the end of subtitle F of title X, add the following:
SEC. 1066. IMPROVING SMALL BUSINESS LOAN PROGRAMS FOR
EMPLOYEE-OWNED BUSINESS CONCERNS.
(a) Short Title.--This section may be cited as the ``Main
Street Employee Ownership Act of 2018''.
(b) Definitions.--In this section--
(1) the terms ``Administration'' and ``Administrator'' mean
the Small Business Administration and the Administrator
thereof, respectively;
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(2) the term ``cooperative'' has the meaning given the term
in section 7(a)(35) of the Small Business Act, as added by
subsection (c);
(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), as
amended by this section; 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).
(c) 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 determined
appropriate by the Administrator, 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 regulations.
``(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''.
(d) 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.
(e) 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.
(f) 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 paragraph (1), 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)), as added by subparagraph (B).
(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.''.
(g) Interagency Working Group.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Administrator or a designee of the
Administrator shall coordinate and chair an interagency
working group, which shall--
(A) develop recommendations on how Federal programs can
promote, support, and increase the number of employee-owned
business concerns;
(B) ensure coordination with Federal agencies and national
and local employee ownership, cooperative, and small business
organizations; and
(C) publish a report on the activities of the interagency
working group that is indexed and maintained for public
review.
(2) Meetings.--The interagency working group described in
paragraph (1) shall meet in person or via electronic
resources at such times as determined necessary by the
Administrator, but not less frequently than biannually.
(h) Amendment to Report to Congress on Status of Employee-
owned Firms.--Section 7(a)(15) of the Small Business Act (15
U.S.C. 636(a)(15)), as amended by this section, is amended--
(1) in subparagraph (E), by striking ``Administration.''
and inserting ``Administration, which shall include--
``(i) the total number of loans made to cooperatives and
qualified employee trusts (collectively referred to in this
subparagraph as `employee-owned business concerns') that were
guaranteed by the Administrator under this section 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.''; and
(A) by adding at the end the following:
``(H) In this paragraph--
``(i) the term `cooperative' has the meaning given the term
in paragraph (35); and
``(ii) the term `small business concern owned and
controlled by socially and economically disadvantaged
individuals' has the meaning given the term in section
8(d)(3)(C).''.
(i) 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
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practical alternatives for cooperatives that will satisfy the
loan guarantee requirements of the Administration.
(B) Report.--Not later than 120 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 those recommendations.
(j) 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''.
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