Federal Agencies Mandated to Support Worker-Owned Cooperatives; Pilot Lending Program Gets $40 Million Boost and 10-Year Extension

The “National Worker Cooperative Development and Support Act” is a major push to make worker-owned businesses a bigger part of the U.S. economy. This bill mandates that six key federal agencies—including the Small Business Administration (SBA), the Department of Labor, and the Treasury Department—must actively create programs to support and expand worker cooperatives. It also establishes a new, temporary federal council to coordinate strategy and increases the funding cap for a key lending pilot program from $20 million to $60 million, extending it through 2036.

Clearing the Path for Employee Ownership

If you’ve ever worked at a place where the employees actually own the company, you know the structure can be very different. This legislation aims to make that model less of a niche idea and more of a mainstream option. The bill requires the six “covered agencies” to regularly review their existing regulations and propose changes to remove barriers that currently prevent worker cooperatives from forming or expanding. This is huge because often, the biggest hurdle for these businesses isn't the idea, but navigating a regulatory landscape built for traditional corporations.

For example, if you and five colleagues want to buy out your retiring boss and turn the existing business into a co-op, the SBA and Treasury are now required to look at how their rules might be unintentionally making that transition difficult. They also have to figure out how to help these co-ops access capital, which means exploring new financing methods and making sure existing federal support programs are actually usable by co-ops. This means more resources for technical assistance and training for federal workers so they can accurately advise co-ops when they come knocking.

The Federal Co-op Strategy Team

To make sure all these agencies aren't just doing their own thing, the bill creates the United States Council on Worker Cooperatives, chaired by the Secretary of Labor, which must be established within 180 days. This Council will act as the federal government’s strategy team for co-ops. Its main job is to develop a cohesive federal strategy that positions worker co-ops as a tool for national economic development. It will also coordinate research, identify regulatory roadblocks, and propose solutions.

This coordination effort is critical. If you’re a small business owner considering a co-op model, you shouldn't have to get conflicting information from the Department of Commerce and the SBA. The Council is designed to prevent this kind of confusion by coordinating educational initiatives and research across the government. The Council is temporary, set to terminate 10 years after enactment, and is required to report its progress and policy recommendations to Congress annually.

Funding and Financial Gateways Get a Boost

Beyond the regulatory and strategic changes, the bill tackles the money problem. It amends the Small Business Act to significantly enhance the small business intermediary lending pilot program specifically for worker cooperatives. Currently, this program has a $20 million funding cap and was set to expire. This bill extends the program for a full decade, covering the years 2026 through 2036, and triples the maximum funding amount to $60,000,000. This means more money available for intermediaries (like non-profits and community lenders) to make loans to worker co-ops.

In another important financial change, the bill expands the authorized activities of Community Development Financial Institutions (CDFIs). CDFIs are often the financial backbone of underserved communities. Under this act, CDFIs are explicitly authorized to provide education and services to help establish and manage worker-owned cooperative businesses. If you live in a community with a CDFI, that institution can now become a local resource center for learning how to start a co-op, making the model much more accessible outside of major urban centers.