The House Small Business Committee passes $500 million Co-op Lending Pilot Program

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On Thursday, September 9, the House Small Business Committee passed a $25 billion bill that would provide funding and assistance to small businesses, including a $500 million pilot program for worker and consumer cooperatives to access Small Business Administration (SBA) loan products without the requirement of a personal or entity guarantee.

The personal guarantee requirement for SBA loan products has long been an issue for cooperatives in accessing loans through the SBA. The USFWC alongside partners including NCBA CLUSA and the National Cooperative Bank have worked for years to advocate for the personal guarantee requirement to be removed for cooperatives. During the COVID-19 pandemic, seeing the Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) proved that this was an unnecessary barrier, and our advocacy work toward a permanent solution for cooperatives has been a main focus of the USFWC’s recent public policy and advocacy work.

The pilot program, modeled on the Small Business Administration’s 7(a) program, will provide loan guarantees to eligible small business cooperatives for activities including short- and long-term working capital; purchasing equipment and materials; purchasing, constructing or renovating real estate and buildings; and expanding existing business.

“The U.S. Federation of Worker Cooperatives (USFWC) applauds the Small Business Committee and particularly Chairwoman Velázquez for their ongoing commitment to cooperatives, a traditionally underserved sector of the small business community that provides vital skill-building and wealth-building opportunities.” said Esteban Kelly, the Executive Director of the USFWC. “This bill recognizes that cooperatives are a business model that bolsters economies in times of crisis, bringing stability and resiliency particularly for Black and Brown people, low-income communities, and other communities traditionally locked out of wealth-building opportunities. The Co-op Lending Pilot Program is an important step toward ensuring wider use of worker and consumer cooperatives as we work as a country to build a more resilient, more sustainable economy.”

“Small businesses are the foundation of our economy and ultimately the key to our nation making a full economic recovery,” said Chairwoman Velázquez. “The small business policies that we advanced today represent a generational investment in America’s entrepreneurs and will help businesses recover from COVID now and prosper in the future. That’s why Congress and the Biden administration must continue moving forward with the Build Back Better Agenda and pass this legislation.” 

“Co-ops are a tested model for building a more resilient, inclusive and sustainable economy. The Co-op Lending Pilot Program will be critical to ensuring more people can use the cooperative business model to recover from the impacts of COVID-19 by supporting community-owned businesses” said Doug O’Brien, president and CEO of the National Cooperative Business Association CLUSA International (NCBA CLUSA). 

“National Cooperative Bank thanks Chairwoman Velázquez for her support of small business cooperatives. This bill will increase access to capital for this vital business segment that helps create jobs and fuel local economies,” said Chuck Snyder, chairman and CEO of National Cooperative Bank.

In addition to the $500 million to fund the Co-op Lending Pilot Program, The legislation also includes:

  • $35 million in funding for veteran federal procurement entrepreneurship training
  • $1 billion in funding for an uplift accelerator program and business development academy at Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs) for underrepresented small businesses
  • Provides $1 billion to establish a national network of business incubators 
  • $20 million to enhance the SBA’s Office of Native American Affairs
  • $9.5 billion to establish a subprogram within the Small Business Investment Company program to provide patient capital to underserved markets and small manufacturers
  • $600 million to enhance, improve, and expand the SBA’s Community Advantage program
  • $4.465 billion to fund a direct loan product under the current 7(a) lending program administered by the SBA 
  • Invests $2.746 billion to establish a direct lending subprogram under the 504/CDC lending program to allow CDCs to make loans to small contractors, small manufacturers, and small businesses in underrepresented markets
  • Over $100 million to invest in entrepreneurial training initiatives for the formerly incarcerated

The bill now returns to the House Budget Committee to be included in the larger Build Back Better Act before being considered by the full House of Representatives and then the Senate. 


Read the press release from the House Small Business Committee and the bill summary.

Posted in News, Public Policy and Advocacy.