Helping Small Businesses THRIVE Act
- Bill Number
- S. 202
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Commerce
- Status
- Introduced
- Latest Action
- 2025-01-23: Read twice and referred to the Committee on Small Business and Entrepreneurship.
- Last Updated
- 2025-02-25T12:48:30Z
AI-Generated Summary
Purpose of the Legislation
The Helping Small Businesses THRIVE Act (S. 202) aims to help small businesses protect themselves from sudden increases in commodity prices, such as fuel costs, by giving them access to financial tools called "futures contracts." These are agreements to buy commodities at a set price in the future, which can stabilize expenses. The bill creates a pilot program run by the Small Business Administration (SBA) to make this easier and more affordable for qualifying small businesses.
Key Provisions
- Program Establishment: The SBA must create the "Helping Small Businesses Thrive Program" within one year of the bill's enactment. It will work with the Commodity Futures Trading Commission (CFTC, a federal agency that oversees futures markets), the Treasury Secretary, and others to assist small businesses in hedging (protecting) against rising costs of key inputs like fuel.
- Eligibility and Application:
- Eligible businesses are small businesses (as defined under existing SBA rules) that are at least one year old and not owned or controlled by financial institutions, investment firms, or brokers.
- Businesses apply through the SBA, providing details on their commodity-related expenses. The SBA will offer online guidance to help businesses decide if participating is worthwhile, including tips on cost calculations and when hedging makes sense (e.g., if commodity expenses are a significant portion of operations).
- Outreach and Support:
- The SBA must promote the program through small business centers, trade groups, webinars, a website, and a helpline. This includes reaching out to newer businesses that aren't eligible but might benefit from learning about hedging.
- Agreements for Hedging:
- The SBA will enter contracts with eligible businesses to provide access to futures or related derivatives (financial products tied to commodity prices) at cost—no profit for the SBA, just covering fees.
- Contracts focus on "covered commodities," starting with gasoline and diesel fuel. Up to three additional commodities can be added in the first year (one tailored to a specific industry), with factors like demand, market liquidity, and program capacity considered. Utilities like electricity and natural gas get special attention.
- Types of agreements: Primarily call options (a right to buy at a fixed price if costs rise more than 5%). Durations range from 60 days to 3 years, with most at least 120 days.
- The SBA can form a "commodity pool" (a shared fund for trading) and register as an operator under federal rules, but it cannot take physical delivery of commodities except in rare emergencies. Any profits offset program costs, with extras returned to the U.S. Treasury.
- Reporting Requirements:
- An initial report to Congress within 120 days details program structure, management, and selection process.
- Annual reports cover applications, contracts issued, total value traded (by commodity), and participant feedback on benefits like business growth. Reporting from businesses is limited to once per year or contract end to avoid burden.
- Funding: Authorizes necessary funds for setup and operation, available for 5 years.
Significant Changes to Existing Law
This bill does not directly amend prior laws but introduces a new federal pilot program under the SBA's authority. It builds on the Commodity Exchange Act (which regulates futures trading) by incorporating its definitions (e.g., "commodity," "futures commission merchant" as a licensed trader) and requiring SBA-CFTC coordination. No major overhauls to commodity trading rules occur, but it expands SBA's role into financial risk management for small businesses, which was not previously authorized at this scale.
Potential Impacts
- On Government Agencies: The SBA gains new duties in commodity trading oversight, requiring staff training and potential partnerships with trading experts. This could strain resources initially but aims for self-sustaining operations via fees. The CFTC provides consultation but faces no added enforcement role.
- On Citizens (Small Businesses): Eligible small businesses could see more predictable costs for essentials like fuel, reducing financial stress and supporting expansion or survival during price spikes. However, only established non-financial small businesses qualify, potentially excluding startups or finance-linked firms. Broader awareness efforts may educate all small businesses on hedging without program access.
- On International Relations: No direct impacts; the program uses U.S.-regulated markets and focuses on domestic small businesses.
Main Stakeholders Affected
- Small Business Concerns: Primary beneficiaries, especially those reliant on volatile commodities (e.g., transportation, manufacturing, or agriculture firms using fuel). Exclusions protect the program from misuse by financial entities.
- Small Business Administration (SBA): Leads implementation, including outreach via its network of resource partners like Small Business Development Centers, Women's Business Centers, SCORE mentors, and Veteran Business Outreach Centers.
- Federal Regulators: CFTC (for market compliance and consultation) and Treasury (advisory role).
- Commodity Market Participants: Futures exchanges and trading advisors may see increased volume from SBA-facilitated deals.
- Congress: Receives reports for oversight, with focus on small business committees.
Notable Legal, Constitutional, or Political Implications
- Legal: Ensures compliance with federal commodity laws by using regulated markets and prohibiting physical deliveries to avoid storage issues. The SBA's commodity pool must register, adding accountability but potential litigation risks if trades go awry (e.g., disputes over "at cost" pricing). Exclusions for financial entities prevent conflicts with banking regulations like the Gramm-Leach-Bliley Act.
- Constitutional: Aligns with Congress's commerce clause powers to regulate interstate trade and support economic stability. Involves federal spending (appropriations), which requires balanced budgeting considerations but promotes general welfare for small businesses as economic engines.
- Political: Bipartisan sponsorship (Senators Shaheen and Cassidy) highlights cross-party support for small business aid amid inflation concerns. As a 5-year pilot, it allows evaluation before permanence, potentially influencing future economic policy debates on government intervention in markets. No overt partisan elements; focuses on practical stability rather than ideology.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2025-01-23: Read twice and referred to the Committee on Small Business and Entrepreneurship.
- 2025-01-23: Introduced in Senate
Bill Versions
- Helping Small Businesses To Hedge Risk and Insure against Volatile Expenses Act — issued 2025-01-23 — PDF (17 pages)