U.S. Sens. Shelley Moore Capito (R-WV) and Joni Ernst (R-IA) have introduced legislation to ensure women-owned small businesses maintain priority federal contracting status so they are better able to access venture capital financing.
“This measure will increase access to capital for our women-owned small businesses and make sure federal contracting policies are being followed so we can give women every opportunity to thrive, grow their businesses, and support our communities and economy,” said Sen. Ernst, who sponsored the Empowering Women in Small Business Act, S. 3896, with original cosponsor Sen. Capito on March 22.
According to a bill summary provided by the lawmakers, the Small Business Administration (SBA) supports venture capital financing to eligible small businesses through SBA-certified, privately owned Small Business Investment Corporations (SBICs).
Many women-owned small businesses (WOSBs) are unable to receive venture capital financing, including from the SBICs, because they must maintain beneficial ownership of 51 percent or more owned by women to maintain priority federal contracting status. The result is that WOSBs are unfairly penalized regarding capital growth options supported by the SBA compared to other small businesses that do not have a beneficial ownership requirement, according to the summary.
At the same time, federal agencies are failing to meet the required 5 percent of WOSB federal contracting goal, said Sen. Capito.
“In 1994, the SBA set a goal to award 5 percent of all federal contracts to women-owned small businesses, however they have only met that goal twice,” Sen. Capito said, adding that WOSBs in 2019 employed 10.1 million employees and generated trillions of dollars to support the economy.
“I’m proud to join my colleague, Senator Ernst, in introducing this legislation that would help expand access to capital and increase federal contract opportunities for women-owned small businesses in West Virginia,” said Sen. Capito.
If enacted, S. 3896 would allow WOSBs with priority federal contracting status to receive venture capital funding from the SBA’s SBIC network without losing priority-contracting status for seven years, according to the bill summary, and would require training for federal agencies that fail to award 5 percent of contracts to WOSBs.
Additionally, the bill would require federal agencies to submit a report to the SBA that includes a list of agencies that failed to meet WOSB federal contracting goals, the number of training sessions provided to these agencies, an overview of the content the training sessions provided, and the result of the training sessions, among other provisions, the summary says.
The Small Business Investor Alliance and the SCORE Foundation endorsed S. 3896, which has been referred for consideration to the U.S. Senate Small Business and Entrepreneurship Committee.