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
The Helping Small Businesses THRIVE Act is like giving small shops a magic tool to buy important stuff like gas at steady prices, so they don't worry if prices suddenly jump up and down. The government will help by guiding these small shops on how to use this special buying tool safely and smartly.
Summary AI
The bill, known as the "Helping Small Businesses THRIVE Act," aims to help small businesses manage the risk of rising costs by allowing them to purchase commodities futures through a new pilot program established by the Small Business Administration (SBA). The program will assist eligible small businesses in securing stable prices for key commodities like gasoline and diesel, reducing the impact of price volatility on their operations. The SBA will provide guidance, outreach, and consultation to help small businesses determine their eligibility and potential benefits from participating in the program. The bill also includes provisions for reporting and assessing the program's effectiveness in aiding small business growth and stability.
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AnalysisAI
The bill titled "Helping Small Businesses To Hedge Risk and Insure against Volatile Expenses Act," aims to empower small businesses by enabling them to manage risks associated with fluctuating commodity costs. The proposed legislation mandates the creation of a pilot program within the Small Business Administration (SBA) that allows eligible small businesses to purchase certain commodities futures. This initiative seeks to reduce the financial unpredictability that these businesses face due to volatile input expenses such as fuel and other essential commodities.
General Summary
The bill outlines the creation of the "Helping Small Businesses Thrive Program." The SBA, in collaboration with other federal bodies, will guide and assist eligible small business entities. By enabling these businesses to enter the commodities futures market, the program strives to provide stability against erratic cost increments. The program includes outreach efforts and provides potential participants with educational resources and guidance.
Significant Issues
Several issues within the bill text require careful consideration:
Vague Budgeting: Section 3(e) authorizes funding without setting a clear budget limit. The phrase "such sums as may be necessary" could lead to uncontrolled spending.
Ambiguity with Definitions: The bill's definition sections contain vague terms like "owned or controlled by," which could hamper small business participation. Furthermore, key terms like "eligible entity" and "Administrator" lack clear definitions.
Broad Discretion: There is a notable latitude given to the Administrator, particularly in sections involving the selection of covered commodities and types of agreements. This discretion might result in biased or inconsistent decisions.
Unclear Criteria for Extreme Measures: Terms such as "extreme and exigent circumstances" are not clearly defined, introducing potential for misuse.
Reporting and Accountability: The bill lacks specific consequences for late or incomplete reports. This could weaken oversight and accountability measures.
Impact on the Public
The proposed legislation has the potential to broadly benefit the public, particularly by bolstering small businesses, which are vital to the U.S. economy. By mitigating financial unpredictability due to fluctuating commodity prices, these small businesses may achieve greater stability, which in turn could foster job creation and economic resilience. Consumers might indirectly benefit as businesses could stabilize pricing for goods and services, alleviating inflationary pressures.
Specific Stakeholder Impact
Positive Impacts:
Small Businesses: Those able to participate may benefit from reduced exposure to commodity price volatility, leading to more predictable financial planning and the opportunity for business expansion.
Commodity Markets: Increased participation from small businesses could lead to greater liquidity and market stability.
Negative Impacts:
Excluded Businesses: Companies indirectly linked to the financial sector or newly operational entities might find themselves unjustly barred from participation, limiting the bill’s potential outreach.
Regulatory Oversight Bodies: The broad discretion allowed to the Administrator could strain these bodies, necessitating strict oversight to prevent misuse or favoritism.
In summary, while the bill provides a meaningful opportunity for small businesses to mitigate risks associated with commodity price fluctuations, it raises essential questions about clarity of terms, administrative discretion, and financial oversight. These areas need refinement to ensure the program's success and maximize its positive impact on U.S. small businesses and the broader economy.
Issues
The authorization for appropriations in Section 3(e) includes 'such sums as may be necessary' without a clear cap or detailed budget, which could result in unchecked government spending.
Section 2 definitions include vague terms such as 'owned or controlled by' within 'eligible entity' and the exclusion criteria may limit small business participation unfairly, lacking clear justification.
The broad discretion granted to the Administrator throughout the bill, such as in Section 4 for selection of covered commodities and agreements, could lead to potential biases, favoritism, or lack of oversight.
The phrase 'extreme and exigent circumstances' in Section 3(d)(2)(A) is ambiguous and can be misused, lacking clear criteria for Administrator action.
The lack of a clear definition for key terms such as 'eligible entity' and 'Administrator' in Sections 2 and 4 leads to potential misinterpretation and misuse.
The eligibility exclusions in Section 2(4)(B) might unfairly restrict certain small businesses without clear rationale, especially those indirectly related to the financial sector.
The process for determining costs associated with futures agreements in Section 4(a)(2)(D) is not transparently defined, which may lead to financial mismanagement or unexpected expenses for participating entities.
Section 5's lack of specification on consequences for not submitting reports on time or if reports are incomplete, might lead to decreased accountability of the Administrator.
The reporting frequency limitation described in Section 5(b)(2) might delay crucial data collection, impacting the program’s timely assessment and adjustments.
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 Act gives it the official name, allowing it to be referred to as 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 provides definitions for terms used in an Act, such as the "Administrator" who is in charge of the Small Business Administration, a "covered commodity" which is eligible for a specific agreement, and an "eligible entity," which refers to a small business that meets certain conditions. It also explains the "Program" intended to support small businesses, and "resource partners" like small business development centers and other support groups.
3. Helping Small Businesses Thrive Program Read Opens in new tab
Summary AI
The proposed "Helping Small Businesses Thrive Program" aims to support small businesses by reducing the risks from increasing commodity costs. It involves creating a pilot program within the Small Business Administration, providing guidance and outreach to assist eligible businesses, and managing the program with rules and potential commodity market interactions, ensuring funds are allocated as necessary.
4. Assisting small businesses transacting in commodity futures markets Read Opens in new tab
Summary AI
The section outlines a program where the Administrator makes agreements with eligible small businesses to help them trade in commodity futures markets for selected commodities such as gasoline. These agreements will be offered at cost and can vary in type, including futures purchase and call option agreements, with durations from 60 days to 3 years. The Administrator will also manage how commodities are selected or removed, considering factors like demand and market liquidity, and will use any proceeds to cover program costs or return them to the Treasury.
5. Reports Read Opens in new tab
Summary AI
The section outlines that the Administrator must submit an initial report about the Program to certain Senate and House committees within 120 days, and then yearly reports after that. These reports should include details about the Program's structure, management plans, the merit-based review process, and the effects on participating entities, while also outlining a limitation on how frequently these entities must report information.