Earlier today we posted a Yahoo! Small Business Advisor article about legislation that would make it legal for entrepreneurs to sell small stakes in their companies through online crowdfunding platforms. Just a few hours later, the House voted to pass the Jumpstart Our Business Startups (JOBS) Act, a package of six separate pieces of legislation, including the one supporting crowdfunding that it had approved in a vote last November. The Senate will consider a similar bill next week.
Business owners have told Yahoo! that a lack of access to capital is hurting them. Crowdfunding is just one element of the JOBS Act meant to address that problem. As the Washington Post reported this afternoon, small business advocates are applauding the bipartisan passage of a bill that "would ease Securities and Exchange Commission rules that can impede or slow the process for companies trying to enter the public markets."
Aside from legalizing crowdfunding–which would let proprietors raise investments of up to $10,000 per investor from unaccredited investors and to pool up to $1 million this way before being required to provide audited financial statements or register with the SEC–the bill would also:
* make it less expensive for a company to go public by offering a temporary reprieve from SEC regulations, making it possible for smaller companies to go public sooner;
* eliminate an SEC ban that prevents small businesses from using advertisements to solicit investors, increasing the ability of small companies to raise capital;
* permit greater investment in small companies by increasing from $5 million to $50 million the public offering threshold for companies exempted from SEC regulations;
* release restrictions on the number of shareholders and assets a small company can have. Current regulations require companies with more than 499 shareholders and $10 million in assets to file with the SEC as a public company.
* increases the number of shareholders permitted to invest in a community bank from 500 to 2,000, to enable banks to better deploy capital to make loans and create jobs rather than comply with burdensome SEC requirements.
What do you think about the JOBS Act? Do you think it will help your business? Let us know in the comments or Tweet #SmallBizVote.