Washington state takes on noncompete clause and Rhode Island picks local banks to support small businesses.
Welcome to the Small Business Run Down. Each day, we bring you stories and trends that impact small business owners and their workforce.
Today: Rhode Island’s efforts to keep money at home and in the hands of SBOs, a new noncompete law in Washington state, and an online tool to connect female entrepreneurs with VC funds.
Rhode Island keeps money in local banks to support small businesses
Rhode Island’s BankLOCAL initiative is having a big impact on the state’s small business. The state treasurer’s program seeks to incentivize small business lending by depositing state funds in local banks and credit unions when they make a qualifying loan to a local small business. The program, which launched in 2017, has expanded to include ten participating banks that have granted loans to over 235 small businesses in Rhode Island.
The Number: $26 million. By incentivizing local bank to lend to local small businesses, the BankLOCAL program has kept $26 million in Rhode Island financial institutions instead of sending it to big banks or overseas.
The Quote: “The program moves the state’s money, which has historically been deposited in big national and international banks, to local credit unions and banks to incentivize them to make loans to small businesses in Rhode Island.”
New noncompete law may have big impact on Washington businesses
Washington state recently passed legislation that limits employers ability to make employees and contractors sign noncompetition agreements. Signed into law on May 8th, 2019, the new law will not take effect until January 1, 2020 and aims to promote workforce mobility and economic growth. The law also includes protections for workers who moonlight for competing business and franchise owners who solicits an employee of a franchisee of the same franchisor or any employee of the franchisor.
The Number: $100,000. The new law automatically makes non-compete clauses unenforceable unless earns at least $100,00. For independent contractors, the threshold is $250,000.
The Quote: “Washington employers who rely on noncompetition covenants to protect their companies must meet the new stringent conditions or face a cause of action from covered workers.”
New tool connects female entrepreneurs with capital
A new online database called “Fundery” is helping more female entrepreneurs connect with investors. Launched by Inc., Fundery attempts to correct gender disparities in business that result in female CEOs, especially women of color, receiving less than 3% of VC funding.
The Number: 57. Currently there are about 57 funds listed on the site, representing $1.5 billion.
The Quote: “Some of the larger L.P.’s are starting to say we can’t walk into a room and have only dudes at the table. Adding token women won’t solve that.”
Offering employees a 401(k) has its (tax) advantages…
Not only is offering an employer-sponsored 401(k) a good recruiting tool, it can also save your small business money next year when tax season rolls around. Employer contributions to employee retirement accounts are deductible from taxable business earnings and some businesses even qualify for a plan startup tax credit which can help offset some of the costs of implementing the program.
The Number: 90%. Across the US, 90% of small businesses do not offer their employees a 401(k).
The Quote: “Offering a 401(k) sends a clear message to your employees that you care about—and are willing to literally invest in—their future. It doesn’t just alleviate retirement anxiety among your employees, it helps recruit and retain top talent in the first place.”