Bill Overview
Title: Main Street Employee Ownership 2.0 Act of 2022
Description: This bill prohibits the Small Business Administration (SBA) from imposing certain requirements on loans to specified employee-owned businesses. For example, the SBA may not require a qualified employee trust or cooperative to provide any mandatory equity to receive a loan.
Sponsors: Rep. Velazquez, Nydia M. [D-NY-7]
Target Audience
Population: Employees of businesses that could transition partially or fully to employee ownership using SBA loans
Estimated Size: 20000000
- The bill impacts businesses that are or plan to become employee-owned, including cooperatives and businesses with employee stock ownership plans (ESOPs).
- Employee-owned businesses can exist in both urban and rural areas, affecting a variety of economic sectors from agriculture to technology.
- The potential target population includes current employees of businesses that might convert to employee ownership due to easier loan conditions.
- There are millions of businesses in the U.S. that could potentially benefit from this legislation.
Reasoning
- The population distribution includes a mixture of employees from small businesses and medium-sized firms, some of which might actively pursue employee ownership models. It also encompasses workers from various sectors: agricultural, technological, manufacturing, and services.
- Given the policy aims to ease financial constraints for employee-owned business conversions, it might primarily benefit employees of financially viable businesses with the ability to repay loans.
- The budget is limited, so the focus should be on businesses more likely to succeed in an employee-ownership model. Thus, medium impact may be more common than high impact since not all businesses will transition immediately or at all.
- Wellbeing scores are likely to show small improvements in the initial years post-policy implementation with greater benefits visible towards year 10 and beyond as businesses transition successfully.
- Data from the National Center for Employee Ownership and SBA projections indicate a relatively broad base of smaller-sized businesses could pursue these options.
- The policy impact might be negligible for employees of large corporations or very small businesses not looking to become employee-owned.
Simulated Interviews
Factory Worker (Detroit, MI)
Age: 34 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I think employee ownership could give us more say in how things run.
- The idea of owning part of the company is exciting but depends on how it plays out financially.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Software Developer (San Francisco, CA)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- It's about time we got a push in this direction. This could boost our morale and keep talent from leaving.
- My main concern is how mission-aligned this policy is with business goals.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Barista (Austin, TX)
Age: 29 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- More funds can mean we can expand better worker benefits.
- Ultimately, the success hinges on our business performance and market reach.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Manager at Retail Chain (Atlanta, GA)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 8.0 years
Commonness: 12/20
Statement of Opinion:
- Additional funding could be valuable for scaling.
- This will likely not significantly alter how we conduct business as our structure is in place already.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Accountant (Denver, CO)
Age: 36 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- This could actually stabilize jobs and grow our company.
- As much as the ownership idea sounds empowering, financial returns should justify it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 7 |
Farmer (Rural Kansas)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- It's challenging even maintaining farms, let alone converting legally.
- This policy could help but depends on if it's simple to access.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Graphic Designer (Chicago, IL)
Age: 52 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- With loans available, perhaps this is the time to build a more collaborative work space.
- There are risks, but they might be manageable under this policy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 10 | 8 |
Chef (New York, NY)
Age: 41 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 15/20
Statement of Opinion:
- ESOPs are new for us; the transition is exciting but also uncertain.
- The culinary field is competitive, so better incentives could retain talent.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Healthcare Administrator (Portland, OR)
Age: 39 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This could enable us more resources to focus on patient care.
- It's crucial to ensure all employees understand the benefits and responsibilities involved.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Owner of Small Construction Company (Miami, FL)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 3/20
Statement of Opinion:
- Going co-op would mean everyone benefits directly from our growth.
- We're cautiously optimistic this can turn around our business.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 10 | 7 |
| Year 20 | 10 | 7 |
Cost Estimates
Year 1: $20000000 (Low: $15000000, High: $30000000)
Year 2: $25000000 (Low: $20000000, High: $35000000)
Year 3: $30000000 (Low: $25000000, High: $40000000)
Year 5: $35000000 (Low: $30000000, High: $45000000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Ensuring adequate oversight on loan distributions to prevent misuse or defaults.
- Assessing how to balance increased loan guarantees with potential financial risk to SBA.
- Understanding the potential for long-term structural changes in the SME sector with increased employee ownership.