A bill removing the requirement that co-operatives provide a personal guarantee to secure certain Small Business Administration (SBA) loans was introduced to the US House of Representatives on 22 December 2021.
Welcomed by the country’s co-operative apexes, the Capital for Cooperatives Act highlights that this requirement “has prevented co-operatives from accessing the safe and affordable financing available from the administration”.
To address this, the bill requires the SBA to establish “lending criteria for cooperatives under the programme that are not based on personal or entity guarantees provided by the member-owners of the co-operative”.
Furthermore, the SBA would have to report on the number of applications submitted by co-operatives for loans under the programme, including those approved by it and collaborate with the Interagency Working Group on Cooperative Development to develop recommendations and co-operate with federal agencies and other entities to “promote, support, and increase the number of co-operatives” in the US.
Related: US Congress Committee passes legislation to enable co-ops to access SBA loan guarantees
Introducing the bill, Congressman Joe Neguse (Dem, Colorado 2nd District) said: “Small businesses are the heartbeat of our economy. Yet, far too often bureaucratic measures are keeping them from accessing the resources and support they need to grow and thrive. The Capital for Cooperatives Act will address one such roadblock, so that more people can unlock the funds they need to start or grow their co-operative businesses.”
More than 300 co-operatives and organisations have signed on to support this legislation, including NCBA CLUSA and US Federation of Worker Cooperatives (USFWC).
NCBA CLUSA president and CEO Doug O’Brien thanked Rep Neguse for leading the Capital for Cooperatives Act in the House. He said in a press release: “This legislation will pave the way for a long-term solution at the U.S. Small Business Administration to ensure that more people can unlock the capital needed to start or grow their co-operative business.
“As our nation continues to weather the impacts of the Covid-19 pandemic and turns toward recovery, it is critically important that people can use the co-operative model to invest in local ownership, create new economic opportunities, and build a more inclusive and resilient local economy.”
“The USFWC applauds Representative Neguse and Senator Hickenlooper for their support for the development and growth of cooperatives in Colorado and across the nation,” said Esteban Kelly, executive director of the USFWC. “As we face the challenges of the pandemic and the impending silver tsunami of retiring business owners, co-operatives must play a key role in the recovery of our economy.
“Co-operatives have historically been a solution to create wealth-, skill-, and community-building opportunities throughout the world. In order to truly build back a better economy, it is vital that we invest now in shared ownership business models for a more resilient future.”
The Capital for Cooperatives Act was also introduced in the US Senate by Sen Hickenlooper (CO) in May 2021.
