Eren Bali Advocates for Employee-Owned Businesses, Citing SBA Loan Advantages and Competitive Edge

Eren Bali, co-founder of Udemy and Carbon Health, recently highlighted the inherent advantages of employee-owned businesses within a capitalist framework, particularly for ventures like community-centered cafés. Bali asserted that such models could access "cheaper capital than corporations do through SBA loans" and potentially offer superior service due to employee investment. His remarks underscore a growing discussion around alternative ownership structures and their economic viability.

"The beauty of capitalism is that employees are free to leave and set up an employee-owned association to open a chain of sustainable, community-centered cafés," Bali stated in a recent social media post. He further added, "They’d have access to cheaper capital than corporations do through SBA loans and there’s an argument that service will be better."

The U.S. Small Business Administration (SBA) indeed offers various loan programs, such as the 7(a) loan, which can facilitate employee buyouts and the establishment of Employee Stock Ownership Plans (ESOPs). These government-backed loans typically feature lower down payments, extended repayment terms, and competitive interest rates, making them more accessible to small businesses that might not qualify for traditional financing. The SBA's support aims to reduce risk for lenders and encourage business transitions to employee ownership.

Bali pointed to Publix Super Markets, a prominent employee-owned grocery chain, as a successful example of this model. Publix is largely owned by current and former employees through an ESOP, which is often credited with fostering high employee morale, strong customer service, and sustained profitability. This structure allows employees to share in the company's success, aligning their interests with the business's long-term performance.

The entrepreneur also suggested a pragmatic approach for aspiring employee-owned ventures: "You can start with one or two coffee shops to try the model. If it doesn’t work well in small scale it’ll definitely not work for a 10,000 location chain." This incremental strategy allows for testing the model's effectiveness and adapting it based on real-world performance before scaling. Bali concluded that whether such ventures succeed or fail, the capitalist system ensures the freedom to innovate and compete fairly.