Freshman U.S. Sen. John Hickenlooper, D-Colo., has introduced his first legislation – a package of four bills aimed at increasing access to Small Business Administration resources for minority and women-owned businesses.
If passed, the bills would incentivize businesses to make energy-efficient investments; remove barriers to underrepresented groups in becoming investment managers; expand investments in rural small businesses; double the funding for the SBA Office of Native American Affairs; and allow cooperatives to participate in SBA’s primary loan program.
An entrepreneur and a co-founder of Wynkoop Brewing Co., in Denver, Hickenlooper is familiar with the difficulties of operating a small business.
“Running a small business is tough. It’s tougher when federal resources overwhelmingly go to a select group of people, businesses and places,” Hickenlooper wrote in a news release. “We must break down barriers that diverse businesses and businesspeople face and that’s exactly what these bills do.”
Two of the bills have bipartisan support with Sens. Cynthia Lummis, R-Wyo., and Jim Risch, R-Idaho, co-sponsoring legislation in the package.
Lindsey Vigoda, the Colorado director at the Small Business Majority, said the bills would boost small businesses by getting capital in their pockets, especially those in southern Colorado.
“Whether it's smaller farms, or whether it's Main Street down in Durango, you'll have a lot of small businesses that could really use investments,” she said.
But for any of the proposed bills to be effective, robust public outreach is necessary, Vigoda said. Traditional avenues through email are essential, as are non-traditional modes of outreach like texting and door-knocking to spread the information.
Cass Walker, executive director at the First Southwest Community Fund, said she appreciates Hickenlooper “thinking outside the box” in developing the package.
“I really like that a lot of them are targeted at businesses that have previously not had access to resources,” Walker said. “I think that the package is pretty strong.”
Walker said ensuring minority business owners have a seat at the table in formatting guidelines for the proposed programs is essential. In developing the parameters, the needs of rural and minority-owned businesses need to be taken into account. For example, some small businesses cannot afford to hire accountants, making applying for assistance difficult.
“We've seen time and time again, especially with minority-owned businesses, especially in rural areas, often those businesses get excluded from access to capital because of the barriers that are put up through the processes,” she said.
The four bills contained in Hickenlooper’s legislative package include:
The Small Business Investment Co. was originally established to improve small businesses’ access to capital, but a majority of the funding is invested in Boston, New York City and Silicon Valley. White men also control 93% of the funding, and less than 3% of venture capital funds go to companies with Black and Latino owners, according to Hickenlooper’s May 20 news release.
Introduced with Sen. Risch, the bill creates a new “MicroCapSBIC” entry-level license designation within the existing SBIC program to expand the population eligible to become investment managers.
To take part in the program, managers do not need previous fund management experience, but instead, they must prove a track record of successful business management.
MicroCapSBICs would also be required to invest at least half of their capital in smaller enterprises and a quarter in rural and underserved communities. That will be relevant to southern Colorado, Vigoda said, and boost the farming and manufacturing sectors.
To better support Native American entrepreneurs, Hickenlooper proposes doubling funding for the SBA’s Office of Native American Affairs and creating an associate administrator position with Sen. Lummis.
The administrator would be charged with developing policies and programs to address the entrepreneurial and business development needs of Indigenous-owned businesses.
Amy Thoman, who is Indigenous and the owner of Indigenous Cosmetics based in Denver, said doubling funding for the office would be “amazing.”
“More Native representation would be beneficial,” she said.
Nearly 30,000 U.S. cooperatives operate at 73,000 locations throughout the U.S., generating more than $500 billion in revenue and providing more than $25 billion in wages, according to Hickenlooper’s release. Latinx and Black Americans own 60% of cooperatives in the United States, as well.
Cooperatives are democratically owned by their members, with each member having one equal vote. As of now, cooperatives cannot access SBA’s primary business loan, 7(a), because of its inherent structure. The loan requires a personal guarantee, which is not possible in a cooperative structure because everyone owns the business – no one person is responsible. This bill would fix that technical barrier and allow cooperatives to qualify for the loan program.
Under the proposed bill, the 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 of the business.
If passed, the bill would have the most immediate change for businesses, Vigoda said.
“Whether it's a farming cooperative or even local yoga cooperatives, there's cooperatives across our entire state,” Vigoda said. “This bill could open up the opportunity for more capital.”
The localized approach of the cooperatives bill is integral to assisting communities, said Signal Group Managing Director Patrice Willoughby at a National Press Foundation briefing on Black and minority-owned businesses.
“The senator has correctly identified that cooperatives are really at the ground level, so that really is a local solution,” Willoughby said. “The federal approach in the policy must connect with local needs.”
Hickenlooper proposes nearly doubling the loan amount for businesses making energy-efficient upgrades. Currently, if a business wants to expand and receive a loan from the SBA to make energy-efficient upgrades, energy-efficient investments made during the expansion can qualify the business for a larger loan.
As of now, the loan cap is $5.5 million, and Hickenlooper proposes raising the cap to $10 million.
Eligible projects must either reduce the business’ energy consumption by at least 10% or generate more than 15% of the energy used by the applicant at the project facility through wind, solar or geothermal energy sources to qualify.
Kaela Roeder is an intern for The Durango Herald and The Journal in Cortez and a 2021 graduate of American University in Washington, D.C.