The Employee Equity Investment Act at a Glance
The EEIA aims to help finance conversions to employee ownership
Catch up quick: This week legislators in the US Senate and the US House introduced parallel bills that would expand a US government program to make it easier for employee-owned companies to raise money.
Who’s involved: Senators Marco Rubio (R-Florida) and Chris Van Hollen (D-Maryland), introduced the Employee Equity Investment Act (EEIA) this week, along with a companion bill in the House from Dean Phillips (D-MN) and Blake Moore (R-UT).
What the bill does: The Small Business Investment Company (SBIC) program supports investment funds that invest in small businesses. Through the program, the Small Business Administration (SBA) guarantees a portion of the capital they borrow from the agency. The bill expands that program to include funds focused on employee ownership.
Why it matters: In the text, the authors of the bill have positioned it as a matter of national security, arguing that the program will keep companies in American hands instead of seeing them sold to foreign investors.
On the ground, it aim to address one issue with selling companies to employee stock ownership plans (ESOPs), which is that owners selling companies to an ESOP often have to wait 5-10 years before being paid out in a sale, according to the bill’s associated fact sheet. The bill also includes worker cooperatives.
Read more: Click here for the full bill, here for the companion legislation, and here for a press release from Ownership America, a lobby group that supports the legislation.