Overview
Title
To require the Administrator of the Small Business Administration to establish a program to allow small business concerns to purchase certain commodities futures, and for other purposes.
ELI5 AI
S. 202 is a plan to help small businesses buy important supplies at steady prices so they aren't surprised by rising costs, like how some kids might plan snacks for a long trip so their lunch money doesn't run out.
Summary AI
S. 202 requires the Small Business Administration (SBA) to create the "Helping Small Businesses Thrive Program." This program enables eligible small businesses to participate in commodities futures markets to manage the risk of increasing input costs by purchasing certain commodities at set prices. The Act outlines the eligibility criteria for businesses and the procedures for applying, including guidance and support for determining participation benefits. It also mandates reports on the program's impact and effectiveness to be submitted to Congress.
Published
Keywords AI
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Bill Statistics
Size
Language
Complexity
AnalysisAI
General Summary of the Bill
The proposed bill, titled the "Helping Small Businesses To Hedge Risk and Insure against Volatile Expenses Act" or the "Helping Small Businesses THRIVE Act," aims to assist small business concerns in managing financial risks associated with fluctuating commodities prices. Through the establishment of a pilot program called the Helping Small Businesses Thrive Program, small businesses are provided opportunities to engage in commodities futures transactions. This endeavor is conceived to help these businesses stabilize their operational costs by providing tools to hedge against price volatilities in essential commodities, like gasoline and diesel. The bill mandates the Small Business Administration (SBA) to oversee this program, working in collaboration with commodity market regulators and various business outreach partners.
Summary of Significant Issues
The bill presents several notable issues:
Complexity and Accessibility: Definitions and intricate references to other legislative acts within the bill might obscure understanding for small businesses. Terms like "eligible entities" are complex, containing multiple exclusions and cross-references, which may necessitate legal interpretation.
Administrative Discretion and Fairness: The bill seems to grant significant discretion to the SBA Administrator, allowing them to exclude entities for vague reasons such as preserving program integrity. This could lead to perceived or actual bias or favoritism.
Financial Accountability: There is no clear cap on program funding, raising concerns about unchecked government expenditure. Similarly, the absence of explicit guidelines for fund management and auditing could highlight transparency and accountability issues.
Potential Conflicts of Interest: The dual role of the SBA as both regulator and participant in the commodity markets could present conflicts of interest, possibly undermining the credibility and impartiality of program administration.
Reporting and Oversight Deficiencies: The requirement for periodic reports to Congress lacks definitive oversight mechanisms, which could lead to concerns about the completeness and objectivity of these reports.
Impact on the Public Broadly
For the broader public, this bill could signify an enhanced support system for small businesses, potentially leading to greater stability in pricing for goods and services they offer. If businesses are better protected against volatile expenses, these savings might be passed down to consumers. On the other hand, without clear financial management and transparent operations, the program could contribute to inefficient government spending without delivering proportional benefits.
Impact on Specific Stakeholders
Small Businesses: For eligible small businesses, the program could offer valuable protection against commodity price volatility, contributing to more predictable financial planning. However, the complexity of application processes and lack of clarity in cost determinations could exclude those not equipped to navigate or afford professional consultation.
Financial Sector and Commodity Markets: Increased participation by small businesses in commodity markets could broaden market activities. Nevertheless, lack of transparency in which commodities are covered and potential administrator favoritism might disadvantage certain market participants.
Government Agencies: The program mandates considerable coordination between the SBA, the Treasury, and financial regulators. The lack of a defined budget and oversight for spending and reporting can strain resources if not managed appropriately.
Consumers: Indirectly, consumers could benefit from businesses stabilizing their costs and thereby potentially stabilizing prices of certain goods and services. However, inefficiencies or biases in program implementation could negate these potential consumer savings.
In essence, while the bill seeks to provide a support structure for small businesses against economic pressures from commodity markets, it must address significant operational clarity, fairness, accountability, and efficiency concerns to fully achieve its goals.
Issues
The definition of 'eligible entity' in Section 2 might be difficult for small businesses to understand due to its complexity and numerous exclusions, forcing them to seek additional legal consultation, which could be a financial and logistical burden for small businesses.
The significant discretion given to the Administrator to exclude entities from the Program based on vague terms such as 'to preserve the integrity of the Program' in Section 2 can result in bias or favoritism, potentially undermining the Program's fairness and transparency.
There is no specified cap on the amount of money that can be appropriated for the Program in Section 3, which poses a risk of unchecked government spending, raising concerns about financial accountability and fiscal responsibility.
The language complexity in Section 3 can be a barrier for small business owners trying to understand their eligibility and application process, potentially excluding those who cannot afford legal or professional consultation.
The lack of clear guidelines for the management and auditing of funds authorized under Section 3 for up to 5 years raises accountability concerns, particularly for long-term government spending without oversight.
The Administrator's dual role as a regulator and participant in commodity trading activities as noted in Section 3 could represent a conflict of interest, undermining trust in the Program's administration and impartiality.
Section 4's provision allowing the Administrator to determine which commodities are covered provides broad discretion that might lead to favoritism or lack of transparency, potentially disadvantaging certain small businesses.
Section 4's lack of clarity on the definition of actual costs, fees, or commissions associated with agreements can lead to inconsistencies, increasing the financial burden on small businesses who might not fully comprehend the total costs.
Section 5's lack of specified budget or resources allocated for the preparation of reports could result in indeterminate or wasteful spending, affecting the Program's efficiency and fiscal responsibility.
There is no oversight or review mechanism for the Administrator's reports in Section 5, which could lead to biased or unchecked reporting, impacting decision-making and transparency in the Program's operation.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill is called the "Helping Small Businesses To Hedge Risk and Insure against Volatile Expenses Act", or simply the "Helping Small Businesses THRIVE Act".
2. Definitions Read Opens in new tab
Summary AI
The section defines terms used in the Act, including the Administrator of the Small Business Administration, various commodities and related financial terms as per other legislative acts, and covered commodities eligible for specific agreements. It also defines eligible entities as small businesses that aren't financial or investment institutions, haven't been operational for less than a year, and don't compromise the Program's integrity. The Program referred to is the Helping Small Businesses Thrive Program, and resource partners include organizations like small business development centers and veteran outreach centers.
3. Helping Small Businesses Thrive Program Read Opens in new tab
Summary AI
The Helping Small Businesses Thrive Program is a pilot program established within the Small Business Administration to help eligible small businesses manage the risk of rising costs from commodities. It includes application guidance, outreach to small businesses, and rules for program administration, with funding available for up to five years after the law is enacted.
4. Assisting small businesses transacting in commodity futures markets Read Opens in new tab
Summary AI
The section describes a program where the Administrator makes agreements with eligible small businesses to help them trade in commodity futures markets. These agreements allow the businesses to purchase certain commodities, like gasoline and diesel, at costs that include fees, with the aim to reduce expenses and simplify trading, while any profits generated are used to cover the program's costs and any extra is returned to the Treasury.
5. Reports Read Opens in new tab
Summary AI
The Administrator is required to submit an initial report within 120 days and annual reports every year to specific Senate and House committees about how a Program is run, including details of participants and commodities involved. The reports also include feedback from participants, with limits on how often they must report this information back to the Administrator, especially in the first two years of involvement.