Garbarino has hand in proposed bipartisan small business succession legislation
According to a survey conducted by the Federal Reserve Bank, three out of every 10 small businesses in the U.S. say they likely won’t survive 2021 without additional government assistance during the pandemic. And while the amount of COVID-19 relief for the roughly 30 million small businesses in the United States is being debated in Congress along the usual ideological lines, four members of the House are making an effort to pass bipartisan legislation that would provide small business owners the support needed to create a business succession plan.
The quartet is comprised of Republicans Andrew Garbarino (NY-02) and Tom Rice (SC-07) and Democratic Representatives Cheri Bustos (IL-17) and Jason Crow (CO-06). According to Rice, of the nation’s 30 million small businesses, less than 42 percent have succession plans. Bustos added that almost half of small business owners over the age of 55 have no plan of succession, which she pointed out, is an alarming statistic, as small businesses employ roughly 25 million Americans.
For Garbarino and Crow, who both come from families with small business backgrounds (both are attorneys from small law firms), this kind of legislation is crucial, given what small businesses represent to the communities they serve.
“Small business is the backbone of our economy,” Garbarino said. “My district alone consists of 80 percent of my constituents working for a small business. I have downtowns all over my district—restaurants, stores—so many employees. As an assemblyman and a private practice attorney, one thing I saw with government is that they usually don’t help small businesses. They usually get in the way, whether it’s through more regulation or more red tape. That’s why I was so excited to jump on this bill. This actually helps small business.”
Bustos echoed the overarching negative effect that ripples through a community when a small business shuts down, as evidenced by the closing of a dry cleaner in the small Illinois town of Aledo.
“A small business closing can have a significant impact on the larger town or city where the business is located,” Bustos said. “Small businesses drive local economies and offer employment opportunities and services to other businesses. [They also] build wealth for the community as a whole. With no succession plan in place for that Aledo business, residents now have to drive many miles for dry cleaning.”
Crow also emphasized the importance of the succession legislation for first-generation immigrant businesses, which make up a considerable chunk of his district.
“Nearly one in five of my constituents was born outside of the country,” Crow said. “Now these immigrants and refugees are extremely entrepreneurial. We have thousands of businesses in my community started by these folks. But there are also unique challenges faced by under-served communities in first-generation businesses in that succession—ensuring the passing of those businesses onto family and keeping that wealth they have worked so hard to build in their families and within our communities. But too many small businesses do not have a plan for succession, resulting in business closures or forced sales. Small business owners work hard and often spend their lives building their businesses. This bill is going to go a long way toward making that easier.”
Modest in size, the Small Business Succession Act enables the Small Business Administration (SBA) to set up workshops and provide guidance for small businesses to learn how to set up a succession plan. A pair of one-time $250 tax credits, one for creating a plan and one for executing it, are included to encourage small business owners to go forward and ensure their companies don’t fall to the wayside due to improper planning. It’s a scenario Rice saw happen before serving in Congress.
“As a tax lawyer and CPA, I dealt with this a lot in my prior life,” Rice explained. “I have absolutely seen the need and the primary concern for owners to make sure to keep their business running and that their employees and customers are taken care of. Maybe they don’t always have the tools that they need or the foresight to deal with succession plans. Anything we can do to encourage that just helps the economy.”
The Small Business Succession Planning Act would:
• Direct the Small Business Administration (SBA) to create an online business succession planning toolkit that walk small businesses through the process of creating a business succession plan with the help of SBA or resource partners. It would also require the SBA to provide trained staff or partners to help small businesses create their plan;
• Encourage the SBA to hold business succession planning workshops or events across the country;
• Create a plan to increase business succession plans among small businesses, including among minority- owned businesses, through the SBA;
• Incentivize small businesses owners to create their own plan through multiple tax breaks for businesses:
• This includes a one-time $250 tax break to create a business succession plan and an additional one-time $250 tax break when the succession plan is executed.
—Submitted by the office of Congressman Andrew Garbarino