The bill would amend participation requirements for SBA’s 8(a) and 8(m) programs. Current policy requires that a qualifying woman or minority business owner own an unconditional majority of the business.
But the definition of “unconditional” has essentially prevented equity investment in these companies and forced business owners to choose between program participation and growing their businesses.
“Anyone who has watched ‘Shark Tank’ knows that investors don’t just part with their money. They want to be part of building a company; they want to ensure success for their investments,” Kelly said in a statement.
“Unfortunately, our current laws and policies do not reflect this reality of today’s capital market. This bill preserves the program’s intention – aiding, training, and resources for disadvantaged business owners – while allowing them to access venture capital to grow their business and become industry leaders.”
Kelly’s legislation would amend these requirements to ensure disadvantaged business owners can participate in the program, as long as a socially or economically disadvantaged individual or individuals retains 51 percent or more ownership stake in the business.
“Fundamentally, this bill is about bringing older SBA programs into modern reality. Requesting a board seat is not an uncommon practice in 2019. Forcing business owners to choose between the program and capital simply makes no sense,” Kelly said.
Bipartisan companion legislation was introduced in the U.S. Senate on June 26 by Small Business Committee Chairman, Senator Marco Rubio (R-FL), and Senator Maria Cantwell (D-WA).