Coons, Klobuchar, Kaine, King introduce legislation to protect, strengthen young businesses
Sens. Chris Coons, D-Delaware; Amy Klobuchar, D-Minnesota; Tim Kaine, D-Virginia; and Angus King, I-Maine, introduced on March 17 legislation to strengthen young businesses across the U.S.
The New Business Preservation Act would create a new program at the Treasury Department that will partner with states to invest in promising new businesses alongside private investors in areas of the country that do not currently attract significant equity investment in new businesses. Special consideration will be given to businesses founded by women and persons of color, who face additional barriers in accessing investment capital.
“Critical to American job creation is the ability of Americans to translate an idea into a business. As our economy continues to suffer due to the COVID-19 pandemic, we should be doing everything we can in Congress to support both existing and new businesses, so our economy can recover,” said Coons. “I’m proud to work with Senator Klobuchar to introduce legislation that would create a program at the Treasury Department to pair innovative new business ideas with venture capital companies so we can turn those ideas into realities.”
The economic effects of the COVID-19 pandemic are expected to disproportionately harm new businesses, which tend to have less cash on hand and are often poorly positioned to weather a drop-off in customer demand and lender financing. Equity financing, which this program provides, is critical because it does not require repayment but instead represents a long-term investment in the business. A significant reduction in the number of new businesses in our economy would have a devastating impact on job openings since research has shown that these new businesses are the source of most new job creation.
The New Business Preservation Act is supported by the Progressive Policy Institute, Third Way, Small Business Majority, Center for American Entrepreneurship, Economic Innovation Group, Small Business and Entrepreneurship Council, and the Information Technology and Innovation Foundation.
The New Business Preservation Act would create a new program at the Treasury Department that will partner with states to invest alongside private venture capital companies in new businesses in areas of the country that do not currently attract significant equity investment in new businesses.
Special consideration is given to businesses created by women and persons of color, who face additional barriers in accessing investment capital.
The program will be self-sustaining, with any returns on investment being reinvested in new businesses in future years.