WASHINGTON – This week, U.S. Senators Chris Coons (D-Del.), Amy Klobuchar (D-Minn.), Tim Kaine (D-Va.), and Angus King (I-Maine) introduced legislation to strengthen young businesses across the country. 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,” Senator Coons said. “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.”
“New businesses are critically important – they create jobs and drive innovation in this country. They also need help weathering the economic turmoil caused by the coronavirus pandemic,” Senator Klobuchar said. “This legislation will allow the Treasury Department to partner with states to ensure that the most promising new businesses across the country are given a lifeline in the form of an equity investment that will allow them to maintain operations and continue innovating. Congress must continue to work with small business owners, especially women and those who face barriers, to stimulate innovation and create jobs to move our country forward.”
“As we work to support businesses hurt by the coronavirus, we want to make sure that startups are not left behind,” Senator Kaine said. “These businesses have an important role to play to bolster our economy, but they are particularly at risk during the pandemic, especially if they are in cities and towns outside of startup hotspots. Our bill would provide critical support for them and help promote future job development.”
“The coronavirus pandemic that is harming our economy could set back our innovative small businesses for years,” Senator King said. “Our legislation would help create opportunities for dynamic-forward thinking enterprises in parts of the country that are too often left behind. It’s a win-win that supports our economy and our communities.”
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: