Pro-ESOP Bill Signed Into Law

A bill that will make it easier for companies to establish an employee stock ownership plan (ESOP) was signed into law by President Donald Trump.

Among other things, the Main Street Employee Ownership Act focuses on increasing the role of the Small Business Administration (SBA) in facilitating ESOPs by allowing the SBA to make loans to companies that they can then reloan to ESOPs. It also allows ESOP loans to be made under the SBA’s preferred lender program and updates the definition of ESOPs so that they do not have to have full voting rights to qualify.

“This law will help organizations better understand how to pursue a strategy of shared capitalism—something that our country’s founders agreed was vital to the health of our nation,” said ESOP Association President J. Michael Keeling in a statement. “As businesses become more aware of employee ownership’s advantages—which include higher corporate performance, a share in the rewards for employees, and a retirement plan that often outperforms other alternatives—it is easy to see employee ownership increasing.”