Lawmakers hear business owners, advocates on capital, workforce and succession challenges facing Vermont small firms

Montpelier — Lawmakers from the Vermont House Commerce & Economic Development Committee and the Senate Economic development committee held a joint hearing on Jan. 29, 2025, to review the condition of the state’s small‑business sector and hear directly from business‑service providers and entrepreneurs about obstacles to growth and succession.

Presenters emphasized that most Vermont firms are very small, that access to capital and technical assistance is uneven, and that an aging owner population is creating an urgent need for more buyer-ready entrepreneurs. Panelists outlined a “capital continuum” and a separate “business‑assistance continuum” intended to map what types of financing and support are useful at different stages of a company’s life cycle.

Why it matters: Vermont’s private sector is dominated by micro and small firms whose needs differ from larger employers. The presenters said meeting those needs affects employment, household incomes and the state’s economic resilience, particularly in rural areas where access to vendors and technical specialists is limited.

Most firms are under 20 employees and many are microbusinesses. Presenters said there are “over 29,000 private‑sector firms” registered with the Secretary of State, and that roughly 27,204 (about 93 percent of those firms) have fewer than 20 employees; 21,687 of them have 0–4 employees. Panelists reported that Vermont’s small employers account for about 30.5 percent of employment and about $4.1 billion in wages statewide, while a very small share of firms (about 1.1 percent) with more than 100 employees account for a much larger share of jobs and wages.

Capital and financing gaps. Presenters described a broad range of financing types — grants, subordinated debt, royalty financing, convertible debt, equity and traditional bank loans — and stressed that businesses often need multiple stacked sources of capital for expansions. They said grants and flexible capital are especially important in low‑margin sectors such as food and forest products because those businesses frequently lack the collateral or retained earnings banks require. The panel noted that several federal and state grant programs (including the U.S. Small Business Administration’s Community Navigator Pilot Program and sector funds such as the Working Lands Enterprise Fund) have helped fill gaps but that many one‑time federal awards have ended and funding has thinned.

Business‑assistance capacity and navigation. Presenters and business owners said Vermont’s service network includes accelerators, incubators, co‑working space, the Vermont Sustainable Jobs Fund, the Vermont Small Business Development Center (SBDC), regional development corporations and a variety of nonprofit providers, but that capacity is insufficient for demand. Panelists described pilot programs that used a hub‑and‑spoke navigation model to speed referrals across providers; they said that model improved coordination while funding lasted. Several presenters and entrepreneurs called for stronger, easier resource navigation or a “point person” to help owners identify and access appropriate services for their stage of development.

Workforce and wage dynamics. The presenters said many small employers do not yet have HR capacity and that owner time constraints can limit attention to wages and benefits. The result, they said, can be suppressed wages that leave full‑time workers reliant on public assistance. Panelists tied workforce issues to broader affordability concerns and emphasized that improving small‑firm profitability is part of any strategy to raise pay.

Business succession and demographics. A striking graphic in the briefing showed that baby‑boomers own a large share of Vermont firms — presenters said 58 percent of small‑business owners in Vermont are baby‑boomers, versus 37 percent nationally — creating a pronounced succession challenge. Panelists and business owners described lengthy, costly valuation and purchase processes and limited buyer demand; presenters flagged employee ownership and ESOPs as one available path but stressed those options do not fit every firm.

Challenges reported by entrepreneurs. Three early‑stage business owners described real‑time struggles: financing for start‑up equipment and working capital, inability to pay owner wages in the first year, difficulties accessing bank credit without collateral, and the time cost of managing operations while also seeking funding. Several owners said they had used small local grants or internship funding, but called available grants “small” and short‑term compared with need. One clinician‑owner highlighted health‑care billing problems and the risk of payer “clawbacks” by Medicare and Medicaid; she said Medicare reimbursement has not increased in decades and that recent payment cuts and retroactive recoveries create financial uncertainty for small health practices.

Equity and language access. Representatives of the Vermont Professionals of Color Network (VTPOC) and other presenters noted additional barriers for BIPOC and immigrant entrepreneurs: lower household savings, lower average credit scores in national data for young BIPOC entrepreneurs, language and cultural barriers at lenders and local institutions, and the need for culturally competent outreach and translated materials. Weiwei Wang, executive director of VTPOC, summarized the sentiment: "BIPOC businesses want to be in Vermont," and said lenders and programs should adapt outreach and underwriting practices to reach them.

No formal votes or committee actions occurred at the session. The hearing included a business‑owner panel and planned time for follow‑up discussion; presenters asked legislators to consider the staffing and funding needed to sustain navigation and one‑on‑one technical assistance systems.

Panelists and participants

- Ellen Koehler, Executive Director, Vermont Sustainable Jobs Fund, who opened the presentation and noted the joint nature of the hearing. "Very excited to be here," Koehler said as the session began. - Linda Rossi, State Director, Vermont Small Business Development Center — led the SBDC presentation of data and service models. - Andy Julo, President, Regional Development Corporations of Vermont — described RDC work on technical assistance and a vendor‑navigator pilot. - Weiwei Wang, Executive Director, Vermont Professionals of Color Network — described VTPOC survey results and language/capital access barriers for BIPOC entrepreneurs. - Business owners including Jada Kostal (Partners in Integrative Healing / State Street TMS), Maya Kerlin (nurse practitioner, Mountville), and Ruth and Brian Steinmetz (Steinmetz real estate/interior design) described start‑up experiences and difficulties securing capital and customers.

Ending: The committee heard broad agreement that the ecosystem of capital and services should be preserved and strengthened, with particular attention to navigation, working‑capital access, and support for succession planning. Presenters asked legislators to consider how to sustain hub‑and‑spoke or navigator functions and to evaluate funding for flexible capital and technical assistance. No formal committee decisions or budget actions were taken at the hearing; members said the remainder of the session would include an additional panel and time for questions and that follow‑up conversations about policy options and potential requests will come later.