December 21, 2021

Neguse, Hickenlooper Work to Fix Technicality That Unfairly Bars Co-ops from Being Eligible for SBA’s Primary Loan Program

Washington D.C.— Today, Congressman Joe Neguse unveiled the Capital for Cooperatives Act, bicameral legislation to fix a technicality that unfairly bars co-ops from being eligible for SBA’s primary loan program. The legislation is sponsored by Senator John Hickenlooper in the Senate. 

“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,” said Congressman Joe Neguse. “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 cooperative businesses.”

“The National Cooperative Business Association appreciates Congressman Neguse leading the Capital for Cooperatives Act in the House of Representatives. 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 cooperative business,” said Doug O’Brien, President and CEO, National Cooperative Business Association CLUSA International. “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 cooperative model to invest in local ownership, create new economic opportunities, and build a more inclusive and resilient local economy.”  

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.

The Capital for Cooperatives Act 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. 

Over 300 co-op organizations and partners support this bill including Advisory Cooperative (Boulder, Colorado), Amicus Solar Cooperative (Boulder, Colorado), Black Shirt Brewing Co. and Craft Pizza Kitchen (Denver, Colorado), BookBar (Denver, Colorado), Colorado Solidarity Fund (Denver, Colorado), I Am Me Mentors (Denver, Colorado), Jason Wiener | p.c. (Boulder, Colorado), Mayu Meditation Cooperative (Denver, Colorado), Reconnect Clean Energy (Carbondale, Colorado), Remerg (Denver, Colorado), Robert Clarke Associates, LLC, (Boulder, Colorado), Rocky Mountain Employee Ownership Center (Denver, Colorado), Rocky Mountain Farmers Union (Denver, Colorado), Rocky Mountain MicroFinance Institute (Denver, Colorado), Saluzo Business Solutions (Denver, Colorado), The Child and Family Therapy Center of Denver (Denver, Colorado), UpRoot Colorado (Boulder, Colorado), D Squared Financial Group, PBC (Denver, Colorado), and Actall Corporation (Denver, Colorado).