The "Helping Small Businesses THRIVE Act" establishes a program within the Small Business Administration to help eligible small businesses manage the risk of rising costs for raw materials by entering into agreements to transact in commodity futures markets. This program aims to stabilize operating costs for small businesses by allowing them to purchase covered commodities at a set price.
Jeanne Shaheen
Senator
NH
The "Helping Small Businesses THRIVE Act" establishes a program within the Small Business Administration to help eligible small businesses manage the risk of rising costs for raw materials by entering into agreements to purchase covered commodities at a set price. The Administrator will determine which commodities are covered, with gasoline and diesel being mandatory, and will conduct outreach to inform small businesses about the program. The bill requires the Administrator to submit reports to Congress on the program's structure, management, and impact on participating small businesses. The program is authorized for 5 years and allows the Administrator to partner with commodity trading advisors and futures commission merchants.
New SBA Program Lets Small Businesses Hedge Against Rising Fuel and Commodity Costs, Starting 2025
The "Helping Small Businesses THRIVE Act" creates a new Small Business Administration (SBA) program designed to shield small businesses from wild swings in raw material prices. Instead of just watching costs jump around, eligible businesses can enter into agreements that effectively lock in prices for key commodities. The program, slated to launch within a year of the bill's enactment, specifically names gasoline and diesel as covered commodities, with the SBA having the power to add up to three more within the first year, and more after that. (SEC. 4).
Fueling Stability: Locking in Prices
This bill aims to give small businesses a tool to manage one of their biggest headaches: unpredictable costs. The core of the program revolves around letting eligible businesses enter into agreements to purchase covered commodities at a predetermined price set by the Administrator (SEC. 4(a)(1)). Think of it like this: a local bakery that relies on flour deliveries can lock in a set price for a certain period, say a year, protecting them from sudden spikes in wheat prices. Or a small construction firm can secure a stable diesel price for their trucks, making it easier to bid on jobs without worrying about fuel costs eating into their profits. The agreements can last anywhere from 60 days to three years, though most are expected to be at least 120 days. The SBA will even offer options to protect businesses if a commodity price increases by more than 5 percent (SEC. 4(a)(1)(D)).
How It Works: SBA as the Middleman
The SBA is tasked with making this all happen. They'll be the ones determining which commodities are covered (beyond the mandatory gasoline and diesel), and they'll handle the actual transactions in the commodity derivatives markets (SEC. 4(c)). They can even partner with commodity trading advisors or futures commission merchants to get the job done. The SBA is also responsible for creating clear guidelines and providing outreach, including webinars and a dedicated website, to help businesses understand if the program is right for them (SEC. 3(c)). The bill requires the SBA to prioritize using existing contracts available through regulated entities whenever possible (SEC. 4(b)(4)).
Real-World Wrinkles
While the bill aims to provide stability, there are some practical points to consider. The success of the program hinges on the SBA's ability to effectively manage the commodity pool and choose the right commodities. There's also the risk, however small, of market manipulation, as the bill prohibits the Administrator from taking physical delivery of any commodity except in "extreme circumstances" (SEC. 3(e)). The bill also defines who is not eligible, mainly excluding financial institutions, investment advisors, and brokers, and any business that has been operational for less than a year (SEC. 2). The SBA is also authorized to exclude any other entity to "maintain the Program's integrity." The SBA will report back to Congress on the program's structure, management, and impact on participating businesses, so there's some built-in oversight (SEC. 5). The bill authorizes funds for 5 years after the enactment of this Act (SEC.3(f)).