Scientific Opinion Poll: Small Businesses Support Legislation Requiring Transparency in Business Formation

Washington, DC—A scientific opinion poll released today found small business owners are concerned about shell companies that are fraudulently winning contracts meant for small businesses, and they overwhelmingly agree Congress should address this issue with legislation.

The survey, conducted by Chesapeake Beach Consulting on behalf of Small Business Majority, found 84 percent of small business owners say the use of shell companies to secure contracts or obtain government set-asides reserved for small businesses is a problem, and 77 percent of small business owners agree Congress should pass legislation that would mandate businesses to disclose the true identity of their owners.

“As a certified-disabled veteran and a woman, I’ve already faced my share of barriers to breaking into the government contracting space,” said Laurie Calkins, owner of Harpy Information Technology Solutions in St. Louis, Mo. “My small firm is successful, but I still need every advantage I can get to compete—including contracts reserved by the government for small employers. When a few bad actors commit fraud to reap benefits that are supposed to go to firms like mine, however, I’m left with little recourse while my bottom line suffers. I support a law that would curb this sort of illicit behavior because it is one of the only ways to protect small businesses like mine from being victimized.”

Business owners are not currently required to list their identity when they establish a business, which has encouraged some to create anonymous shell companies that facilitate illicit behavior. Congress, however, is currently considering bipartisan legislation that would require businesses to list the true identity of their owners, but this information would only be made available to law enforcement with a proper subpoena or summons. This increased transparency could boost accountability and confidence in the system.

While some critics of such legislation claim these requirements would be a burden on small businesses, the survey results indicate entrepreneurs disagree. Indeed, 76 percent of small business owners say legislation requiring small businesses to list the true identities of their owners would protect them from contract fraud and give them fair access to government set-asides.

“We know shell corporations are frequently masquerading as small businesses in order to obtain government contracts or set-asides intended for small firms,” said Small Business Majority Founder & CEO John Arensmeyer. “This type of fraud can cost small businesses millions of dollars, but we can help ensure this doesn’t continue to happen by passing common sense, bipartisan legislation that would require businesses to disclose their owners’ true identity.”

The poll also found virtually all small business owners already show the kind of ownership transparency they would like to see from shell companies. In fact, just 3 percent of small employers say they did not disclose their identity when establishing their small business.

The survey reflects interviews of 500 small business owners nationwide with 1-100 employees. It has a margin of error of +/- 4.4 percent.

For the full poll report, please visit: http://smallbusinessmajority.org/small-business-owners-support-legislation-requiring-transparency-business-formation