If your feet felt cold this morning, it’s because Hell has frozen over.
Last evening the U.S. House passed overwhelmingly (407-17) a piece of President Obama’s American Jobs Act. While the Senate Republicans yesterday blocked the transportation part of the jobs bill, House Republicans and Democrats solidly supported changing Security and Exchange Commission (SEC) regulations to allow small businesses easier access to private investment.
Last year supporters, including the South Carolina Small Business Chamber, of a concept called “crowdfunding” proposed by the Sustainable Economies Law Center lobbied the SEC for reducing strict registration requirements for small businesses to seek investors for security offerings up to $100,000 with $100 maximum per investor. We felt that the onerous registration process was there to protect investors. So if the maximum an investor could lose was only $100, then such requirements should also be minimal.
The SEC listened as did the Administration. The President’s jobs bill included the general concept of responsibly reducing SEC regulatory burdens if investor risk was low. And the SEC established an Advisory Committee on Small and Emerging Companies that had its first meeting Monday of this week. On its agenda was the concept of “crowdfunding” as a vehicle for small businesses to better access capital.
Not waiting for the SEC, last evening the House passed H.R. 2930 with some amendments. The bill takes our original “crowdfunding” proposal and dramatically raises the cap to $1 million on the amount of funds allowed to be generated through this process that would include internet and other forms of advertising. The cap on how much each individual investor can give was raised to $10,000.
Small businesses following the “crowdfunding” guidelines would not have to register with the SEC.
Now this bill goes to the Senate and we’ll have to see if that body can also get over its partisan divide. If it can, then a whole new opportunity for small businesses to meet their capital needs will become a reality.