Committee Democrats Pass Sweeping Small Business Reforms
Washington, DC, March 15, 2018
Democrats Advance Bills to Improve Capital Access, Protect Cybersecurity and Intellectual Property
This week, the House Committee on Small Business approved a number of legislative initiatives designed to break down barriers facing America’s small businesses.
“I am proud that our Committee came together to pass legislation to help small businesses in all sectors,” said Ranking Member Rep. Nydia M. Velázquez (D-NY). “These important reforms will help more businesses access capital, protect small firms from cyber threats, allow more employees to own a stake in businesses they work for and, overall, empower our entrepreneurs to create more jobs.”
Boosting Main Street Businesses and Empowering Employees
As a generation of baby boomer small business owners prepares for retirement, Ranking Member Velázquez is taking legislative action to help many of these entrepreneurs transition their firms to an employee-owned business structure. As a group, baby boomers own nearly half of the nation’s privately-held businesses, or over 2.3 million companies and they employ 1 in 6 workers nationwide.
This week, the Committee passed Velázquez’s bill, H.R. 5236, the Main Street Employee Ownership Act of 2018 which helps employee-owned businesses access capital to cover costs that are often upwards of $80,000.
“While it’s wonderful to think that family members will take over the business – this doesn’t always happen,” said Velázquez. “It is anticipated that many of these businesses will be bought by a rival, while others will be forced to close altogether, leaving empty Main Streets and hard-hit local economies. I am pleased that the bill we passed will help empower employees to become owners in their companies.”
Improving 7(a) Loan Program
For small firms who struggle to secure reliable capital, the Committee passed a bill this week to improve the Small Business Administration’s (SBA) signature 7(a) loan program. After a careful and deliberative process, the bill, H.R. 4743, the Small Business 7(a) Lending Oversight Reform Act of 2018 is the bipartisan product of extensive Committee outreach and hearings. At the center of the bill is an effort to improve transparency and lender oversight of the 7(a) program.
“Without proper oversight, I am concerned that program resources may be unnecessarily strained -- potentially depriving entrepreneurs of valuable credit,” said Velázquez. “It is imperative that SBA designate adequate resources to ensure the program is prioritizing the needs of the small businesses that have trouble securing access to capital elsewhere.”
Importantly, the bill includes a provision spearheaded by Velázquez to prevent an unintended shutdown of the program. In 2015, the 7(a) program ran out of lending authority before the end of the year, creating a crisis for small firms and lenders. To prevent any similar lapse in the future, H.R. 4743 allows SBA to increase the 7(a) cap up to 15%—a provision that Velázquez has previously fought to secure.
“Freezing the 7(a) program has real-life consequences for small firms who depend on these loans to keep operating,” said Velázquez. “When it comes to ensuring that our small businesses have all the resources they need, we must be prepared for times of high demand for these loans.”
Expanding Cybersecurity Training and Protecting Intellectual Property
Meanwhile, as the Russian’s hacking of the 2016 U.S. election remains at the forefront of national discussions, the Committee has approved two bills to address the threat of cyberattacks on small firms. With nearly 40 percent of all cyberattacks focused on companies with under 500 employees, just 14 percent of small firms say they have a plan to keep their company cyber secure. To combat this growing problem, Ranking Member Velázquez joined with Committee Chairman Steve Chabot (R-OH) on H.R. 4668 the Small Business Advanced Cybersecurity Enhancements Act.
“The scope of destruction that we have seen in the past year alone from cyberwarfare is incredibly distressing, said Velázquez. “At a time when cyber criminals see small firms as a prime target to steal information from, these bills take new strides to ensure that small businesses are equipped to defend themselves,” said Velázquez.
Specifically, H.R. 4668 would establish a regional small business cybersecurity assistance unit within each Small Business Development Center (SBDC). SBDCs are a network of nearly 1,000 service centers administered by SBA and located across the United States and its territories that provide training and assistance to over a million small business owners and entrepreneurs each year at no cost.
A second bill, H.R. 3170 Small Business Development Center Cyber Training Act goes one step further by spearheading a certification program to give SBDCs the training they need to help America’s small firms guard themselves against cyberattacks. This bill was introduced by Chairman Chabot and Rep. Dwight Evans (D-PA). Evans also introduced another bill that was passed, H.R. 2655, which requires SBA to partner with the U.S. Patent and Trade Office to offer more education to help small businesses protect their intellectual property.
“Congressman Evans’ bills that were approved in Committee this week will tackle two serious challenges affecting entrepreneurs – protection of intellectual property and cybersecurity,” said Velázquez. “These measures will mean small businesses in Pennsylvania and throughout the nation will be able to focus on what they do best – creating good paying jobs. I thank Congressman Evans for his leadership, congratulate him on the Committee approving these bills and look forward to advancing them further toward enactment.”
Boosting Small Businesses in Puerto Rico
As Puerto Rico continues to rebuild after Hurricane Maria and to recover from longstanding economic malaise, the Committee approved a bill authored by Velázquez aimed at helping small companies in Puerto Rico grow by obtaining a greater share of federal contracts. Her bill, H.R. 5178, the Puerto Rico Small Business Contracting Assistance Act would allow agencies to count contracts awarded to Puerto Rican small firms double when working to reach their small business contracting goals. This would incentivize federal agencies to employ more small businesses on the Island.
“Federal procurement dollars can be one of our most powerful tools in jumpstarting economic growth and creating opportunity,” Velázquez noted. “This legislation will harness the power of federal spending to help small firms in Puerto Rico perform federal work, creating badly needed jobs along the way.”
All measures approved in Committee must now be considered on the floor of the U.S. House of Representatives.
“All in all, this week, the Committee passed a strong package of bills, and I would like to thank Chairman Chabot for his leadership and collaboration,” concluded Velázquez. “I look forward to moving these measures through the full House and, ultimately, seeing them signed into law.”