Four Hickenlooper bills would remove barriers for women, minorities, Native American small businesses and employee-owned co-ops
Washington, D.C.- U.S. Senator John Hickenlooper, member of the Senate Small Business Committee, today introduced a package of bills to increase access to Small Business Administration (SBA) resources for traditionally underserved individuals, communities, and small businesses.
The raft of legislation would increase the participation of women and minorities as investment managers, give Native American small businesses a voice at the highest levels of the SBA, allow employee-owned cooperatives to qualify for SBA loans, and provide more resources for small businesses to switch to renewable energy.
“Running a small business is tough. It’s tougher when federal resources overwhelmingly go to a select group of people, businesses, and places,” said Hickenlooper. “We must break down barriers that diverse businesses and businesspeople face and that’s exactly what these bills do.”
Hickenlooper’s four bills include:
MicroCapSBIC Designation, with Senator Jim Risch (R-Idaho)
- The SBA operates the Small Business Investment Company (SBIC) program, which was established to improve small businesses’ access to capital and help them grow. To participate, investment companies firms must be licensed with the SBA.
- White men control 93 percent of venture capital funding. and a majority of the venture capital is invested in Boston, New York City, and Silicon Valley.
- Less than 1 percent of venture capital funds go to companies with Black founders and only 2 percent to Latino founders.
- Hickenlooper’s bill would create a new “MicroCapSBIC” entry-level license designation within the existing SBIC program that would help:
- Expand the universe of eligible investment managers among to spur investment and access to capital to help small businesses grow;
- Grow the number of smaller funds in underserved markets; and
- Create more investment vehicles serving small businesses in rural parts of the country, underserved markets.
- Specifically, the bill would:
- Authorize the SBA to create a MicroCap Small Business Investment Company license that will allow qualified underrepresented investment managers to participate in the program.
- Managers would not need to have prior fund management experience. Instead, they must have proven business expertise and a track record of successful business management. This would allow a more diverse group of fund managers to obtain SBIC licenses.
- MicroSBIC’s would be required to invest at least half of their capital in “smaller enterprises” and a quarter in rural and underserved communities and important sectors like manufacturing.
SBA Office of Native American Affairs (ONAA) Enhancement and Modernization Act, with Senator Cynthia Lummis (R-Wyo.)
Doubling funding for the SBA’s Office of Native American Affairs and creating an Associate Administrator position to set direction.
- The SBA’s Office of Native American Affairs is designed to promote and support Native American entrepreneurs. However, the office’s effectiveness is limited by a lack of funding and the absence of an Associate Administrator to set policy and direction. Most similar offices within the SBA have such an Administrator.
- Hickenlooper’s bill would:
- Create an Associate Administrator of the ONAA to carry out meaningful, substantive, and effective Native American Outreach programs. The Associate Administrator would be charged with formulating and promoting policies, programs, and assistance that better address the entrepreneurial, capital access, business development and contracting needs of Tribes and Native businesses.
- Boost authorized funding for the ONAA to twice its current levels.
Capital for Cooperatives Act
Fixing a technicality that unfairly bars co-ops from being eligible for SBA’s primary loan program.
- Cooperatives are businesses organized, owned, and governed by the people that use them. Nearly 30,000 U.S. cooperatives operate at 73,000 locations throughout the U.S., generating over $500 billion in revenue and providing over $25 billion in wages.
- Cooperatives’ unique one member, one vote structure bars them from being eligible for the SBA’s primary business loan program – the 7(a) loan program – because cooperatives are not able to provide a personal guarantee, a requirement of the 7a loan program.
- Hickenlooper’s bill would fix this technical barrier by amending criteria for cooperative businesses to qualify for these loan guarantees.
- Under the bill, SBA would be able to consider documented proof of a co-op borrower’s ability to repay the loan based on equity, cash flow, and profitability to determine lending criteria.
- The bill would also allow SBA to establish new lending criteria for cooperatives as long as they are not based on personal or entity guarantees by the member owners.
Green Energy Loan Enhancement Act
Further incentivizing small businesses to make energy efficient investments.
- The SBA 504 loan program provides long-term, fixed-rate financing for businesses to expand. The program incentivizes energy efficient investments by allowing businesses who are looking to make such investments qualify for a larger loan – $500,000 more than the cap for non-energy efficient investments, which is $5 million.
- Hickenlooper’s bill would double the loan amount for businesses making energy efficient upgrades – from $5.5 million to $10 million.
- Eligible projects must either reduce the business’ energy consumption by at least 10% or generate more than 15% of the energy used by the applicant at the project facility (e.g. wind, solar or geothermal energy sources).