In August of 2018, the Main Street Employee Ownership Act was passed into law. The Act seeks to transform the challenge of business succession into an opportunity, providing a path to retirement for business owners and creating an ownership stake for employees through Worker Co-ops and Employee Stock Ownership Programs (ESOPs), directing the Small Business Administration (SBA) to work with the nation’s network of 900 Small Business Development Centers to provide lending and transition-related technical training, executive education, and one-on-one consulting for business owners.
The NFCA was an early supporter of the Main Street Employee Ownership Act and Crowell, who also serves on the Board of the National Cooperative Business Association (NCBA CLUSA), contributed to the final language of the bill, including recognition of the contribution of the wider co-operative movement to employee ownership, the importance of co-operative legal statutes and regulations, and the role of co-operative associations in advocacy and economic development.
The legislation also calls for the elimination of obstacles that co-ops have faced in receiving SBA support, stating that “it is the sense of Congress that co-operatives have a unique business structure and are unable to access the lending programs of the [SBA] effectively due to loan guarantee requirements.” Specifically, the requirement of personal guarantees has disqualified co-ops, due to the fact that they typically have large numbers of members who each own small shares in the business. As a remedy, the Act calls on the SBA to “recommend practical alternatives for co-operatives that will satisfy the loan guarantee requirements of the Administration.” This means that co-ops may finally be able to access to support already available to other small businesses.
The successful passage of the Main Street Employee Ownership Act is not just a victory for worker co-ops. It also opens the way for recognition of the contribution of co-operatives of all kinds to local economies, and the removal of obstacles that prevent them from taking advantage of SBA loans and services available to other businesses. Whether we are talking about worker co-ops or food co-ops, credit unions or farmer co-ops, housing co-ops or artisan co-ops, we know that co-operative enterprises help build stronger communities. You can help ensure that the Act is implemented in a way that will enable worker co-ops — and co-operatives of all kinds — to grow, creating good jobs and building a more sustainable, resilient, and inclusive economy that works for everyone.
- Contact your Senators and Representatives. Share how your food co-op and other co-ops have made a difference in your community and across our region, creating good jobs, building wealth, and growing local economies. For example, the Neighboring Food Co-op Association includes 35 food co-ops and start-ups, locally owned by more than 140,000 people, employing 2,300 people, and selling more than $90 million in products from local suppliers. Ask them to encourage the SBA to quickly begin implementing the Main Street Employee Ownership Act, specifically by replacing the personal guarantee requirement for SBA loans to co-ops with a practical alternative, and helping them to grow and serve their communities. (For a sample letter, e-mail .
- Write to the SBA Northeast Regional Office and your local Small Business Development Center. Share the impact that your food co-op has had on the local economy and how together the Neighboring Food Co-op Association includes 35 food co-ops and start-ups, locally owned by more than 140,000 people, employing 2,300 people, and selling more than $90 million in products from local suppliers. Tell them that you want SBA headquarters to carry out the Main Street Employee Ownership Act as soon as possible, specifically by replacing the personal guarantee requirement for SBA loans to co-ops with a practical alternative, and that your food co-op can be a local partner in its implementation.
- Join the National Cooperative Business Association (NCBA CLUSA). Membership in NCBA CLUSA gives you a direct and powerful connection to policymakers, and helps them to advance, promote and defend co-operative business and advocate for legislation like the Main Street Employee Ownership Act before federal legislators and the Administration. Membership is available to individuals and co-operatives, and NFCA Member Food Co-ops can join at a special discount. For more information, visit their webpage or e-mail Stephen McDow at SMcDow@ncba.coop.