New York U.S. Senator Kirsten Gillibrand was in Saranac Lake on Monday to promote legislation that would help small businesses transition to employee ownership.
The Main Street Employee Ownership Act is bipartisan legislation that helps small businesses transition to an Employee Stock Ownership Plan, or ESOP, or a cooperative. Senator Gillibrand says it’s one way that the economy can work for everyone. “Right now there’s SBA programs, the Small Business Administration programs, that increases access to capital for small businesses. And so I have a bill that reforms that in a way that makes it easier for employee owned businesses and coops to get access to that same money so they can grow their businesses. ESOPs have a really great track record. People who work in employee owned businesses earn 5 to 10 percent or 5 to 10 percent more and have greater savings. So it’s really important that we invest in models that allow workers to thrive and our economy to grow.”
Gillibrand explained that the bill aims to streamline resources and funding. “One of the problems with the SBA today is that the 7A loans are difficult to navigate for both ESOPs and coops. So it streamlines the process which creates more financing options for the ESOPs. It also can offer loans for the transaction costs of an employee ownership transition which is estimated about $80,000. So let’s just say you do have a baby boom employer who wants to retire and do this the transition costs alone can be expensive. And so it gives access for those loans. The other thing it’s going to do is provide more outreach through the SBA to these small businesses.”
Gillibrand promoted the legislation at ANCA – the Adirondack North Country Association in Saranac Lake. Executive Director Kate Fish calls small business the backbone of rural communities. “Our research indicates that in the North Country, north of Route 90, there’s probably 10 to 16 thousand businesses that are owned by baby boomers who are going to be looking at retirement. That’s a huge number of people employed. And it’s kind of an invisible problem until you see the ‘Going Out Of Business’ sign or the ‘Closed’ sign and you find out that it was somebody who was retired and they just didn’t want to keep going and they couldn’t find anybody to take over their business. So it’s like this invisible problem that we are trying to get a hold of. We need to keep those businesses sticking around.”
Regional Advocacy Coordinator Jacob Vennie-Vollrath is co-director of ANCA’s recently launched Center for Business Transition. “Employee owned businesses have been around for hundreds of years. We’ve seen a transition away from employee owned businesses to more single operators. It’s coming back around. It’s coming full circle because people are realizing, particularly in our rural region, that it’s just a more sustainable viable option for keeping our business open. And a lot of our small businesses don’t have plans in place for their transition. They’re too busy just keeping the doors open. So we’re hoping to provide them a little bit more resources.”
Senator Gillibrand hopes to attach the proposal to what she called a “must-pass” economic growth bill.