Sponsors (2)
The bill gives many small businesses new, government-supported tools to hedge volatile commodity costs and funds a multi-year pilot with outreach and oversight, but it exposes participants and taxpayers to financial, operational, and administrative risks while narrowing and potentially unpredictably limiting who can participate.
Small businesses across sectors can access a government-backed pilot hedging program that lets them lock in commodity and fuel prices to reduce exposure to volatile input costs.
Small business owners get clearer eligibility rules plus explicit inclusion of SBDCs, WBCs, SCORE, and Veteran Business Outreach Centers and program outreach (webinars, hotline), improving awareness and practical assistance to apply and use risk-management tools.
The bill creates a government-backed commodity-pooling option and hedging tools (including call options) that can lower transaction costs and expand access to hedging for small firms that otherwise could not participate in derivatives markets.
Small businesses that participate face meaningful financial risks — potential losses from complex commodity derivatives, the possibility that Administrator-set prices diverge from markets, and substantial upfront costs that can strain cash flow.
Taxpayers and the federal government could bear material fiscal and operational exposure because funding is open-ended for up to five years, the SBA faces financial/operational risks in running hedging positions, and Program proceeds may alter Treasury receipts timing.
Eligibility is narrowed and could be unpredictably changed: financial firms and certain CEA-covered entities are excluded, startups under one year are barred, and the Administrator has broad authority to add exclusions, limiting who can benefit.
Based on analysis of 5 sections of legislative text.
Creates an SBA pilot to help eligible small businesses hedge commodity price risk via cost-priced futures/derivative agreements covering gasoline/diesel and up to three more commodities.
Introduced January 23, 2025 by Jeanne Shaheen · Last progress January 23, 2025
Creates a new SBA pilot program that helps eligible small businesses manage rising input costs by enabling them to enter commodity futures and related derivative agreements arranged or facilitated by the SBA. The program will offer cost-priced agreements (including option-like protections), start with gasoline and diesel as covered commodities, may add up to three more, and must be set up within one year of enactment with funding authorized for up to five years. The SBA must consult the Commodity Futures Trading Commission and Treasury, run outreach and support (website, hotline, webinars), publish guidance and performance reports, and limit program participation and data collection by rule to protect program integrity and small-business burdens.