New Act Pledges $5 Billion in Federal Backing to Boost Employee-Owned Businesses

The “American Ownership and Resilience Act” is setting up a major new government lending facility—the Ownership Investment Facility—to funnel up to $5 billion annually in government-guaranteed money into businesses that are converting to employee ownership. Think of it as a massive, specialized loan program run by the Department of Commerce, designed specifically to help businesses transition into Employee Stock Ownership Plans (ESOPs) or worker-owned cooperatives. The goal is simple: use federal financial muscle to create more employee-owned companies.

The $5 Billion Bet on Employee Ownership

This bill creates a new class of financial entity called “ownership investment companies” (OICs). To get licensed, these OICs must commit to making “covered investments,” which means deals where capital is provided to help sell a business to an ESOP or a worker cooperative, ensuring employees end up with a majority stake (SEC. 2). For the OICs, the big incentive is the government-backed leverage: the Commerce Department will guarantee the principal and interest on their bonds (debentures), up to $500 million per OIC (SEC. 7). This guarantee is a huge deal because it comes with the full faith and credit of the U.S. government (SEC. 7(b)). While OICs pay a 3% fee on the leverage they draw, this guarantee means taxpayers are on the hook if the deals go south. For regular people, this is the government making a large, calculated bet that employee ownership is a safer, more resilient business model.

Strict Rules to Protect the Workers’ Stake

If an OIC uses this government-backed money for an ESOP deal, the bill mandates serious protections designed to keep the deal fair for the employees. Before the sale closes, the ESOP must appoint an independent trustee and hire an independent financial advisor to issue a “fairness opinion” confirming the price and terms are financially sound for the ESOP (SEC. 3(c)). This is critical: if your company is being sold to an ESOP using this facility, the law requires a third party to confirm you’re not getting fleeced. Furthermore, employees are generally barred from personally financing the purchase through things like wage cuts or rolling over existing retirement funds, preventing the company from simply making the employees pay for the buyout out of pocket (SEC. 3(d)).

The Commerce Department’s New Regulatory Muscle

One of the most striking aspects of this bill is the immense regulatory power it grants the Secretary of Commerce over these new OICs. The Secretary will license OICs, set capital requirements (SEC. 6), and determine the maximum interest rates they can charge on loans (SEC. 8). But the oversight goes much deeper. The Department can issue cease and desist orders, revoke licenses for misconduct (SEC. 13), and conduct mandatory examinations of every OIC at least once every two years (SEC. 14). If an OIC breaks the rules, the Secretary can even ask a court to appoint the Department itself as the trustee or receiver to manage the company’s assets (SEC. 15). This creates a powerful new financial regulator focused solely on employee-ownership investment vehicles, giving the Commerce Department unprecedented authority in this specialized corner of finance.

Why This Matters for Your Wallet and Workplace

For employees, this bill could mean a significant boost to opportunities for ownership, offering a path to build wealth through company equity rather than just wages. If you work for a mid-sized business whose owner is looking to retire, this new facility makes an ESOP buyout a much more financially viable option. For business owners, it provides a new, government-backed source of capital for selling their company while preserving its legacy and rewarding employees.

However, there are trade-offs. The bill sets up a new class of securities that can be exempted from certain standard SEC rules (SEC. 10). While this is intended to streamline the process, it means investors—including the employees whose retirement funds might be involved—could be operating with slightly less protection than they would under standard securities law. Moreover, the extensive power given to the Secretary means that the success and fairness of the program will heavily depend on future rulemaking. If you’re a manager or director at one of these OICs, be aware: the bill includes strict removal procedures for officials who breach their fiduciary duty or are involved in dishonesty, emphasizing personal accountability for the integrity of these federally backed deals (SEC. 17).