On July 21, 2020, U.S. Senator Ron Johnson (R-WI) introduced a bill to provide grants to businesses who either establish an Employee Stock Ownership Plan (ESOP) or expand an existing ESOP.
Highlights of the bill include the following:
- Grants of up to $20,000 per employee for qualified businesses that seek to establish a new ESOP, or expand the employee ownership share in an existing ESOP;
- Grants of up to $50,000 for some of the transaction costs associated with the establishment of a new ESOP;
- Requires a certification that the grant recipient will ultimately use the funds for business operations. Examples include investment in or replacement of fixed assets including manufacturing equipment and tools, computers, land, buildings, facilities, health and safety equipment, and other similar investments;
- Requires a completed agreement that shows either the establishment of an ESOP or an increase in the ownership stake of an existing ESOP:
- Requires supporting documentation of value by an independent valuation expert using generally accepted valuation approaches, or by the trustee of the employee stock ownership trust if the valuation is certified by an independent valuation expert.
- The Grant program will continue for two years, until September 30, 2022.
The following quote comes from Senator Johnson as it relates to this bill:
“Unfortunately, many businesses of all sizes remain either totally or significantly shut down months into the coronavirus pandemic. PPP provided short-term financial support to small businesses, but now Congress needs to think outside the box to help otherwise viable businesses reopen,” said Sen. Johnson. “This legislation would help affected businesses resume operations while also giving employees a stake in a business’ success. I hope my colleagues will embrace this innovative approach to an unprecedented challenge.”