Aging small business owners who would like to leave their companies to their employees rather than sell them to an outside interest will have state-sponsored help in doing so, under a bill that was signed into law Thursday morning by Colorado Gov. John Hickenlooper.
House Bill 1214, sponsored by Rep. James Coleman, D-Denver, mandates the Colorado Office of Economic Development and International Trade promote the ability of individually owned businesses to convert to employee stock ownership plans (ESOP) to companies that may be interested in such a move, and it allows OEDIT to offer revolving loans of as much as $10,000 to business owners wanting to follow that path. Coleman estimated the state could help some 20 to 50 companies under the new law.
Coleman, a nonprofit executive, said he got the idea for the legislation after observing how many businesses in his northeast Denver district are mom-and-pop companies, from retail shops to restaurants. Some of those business owners are interested in converting to employee-owned companies but have found the costs of conversion, which can run around $20,000, to be too much for them.
HB 1214 caps the size of the loans at $10,000 not just to allow more companies to take advantage of the program, but to send a message to interested business owners that the state is willing to help them, even though it will not to cover the full cost of their efforts, Coleman said.