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  • Cantor JOBS Bill Would Help Small Businesses Grow

    House Majority Leader Eric Cantor unveils JOBS Act

    In a move designed to make it easier for smaller businesses to raise money for expansion and job creation, House Majority Leader Eric Cantor (R–VA) has announced that he intends to package together six existing smaller bills into a bipartisan package. The combination, to be known as the Jumpstart Our Business Startups (JOBS) Act, is expected to be joined by similar legislation in the Senate.

    Cantor’s package provides growing small businesses with relief from a series of Securities and Exchange Commission (SEC) regulations that sharply limit their ability to raise money by selling stock. In most cases, selling stock is considerably cheaper in the long run than borrowing for business expansion. Of the six specific bills, three have already passed the House by huge bipartisan majorities; two have been approved by the House Finance Services Committee by similar margins; and the sixth has been referred to that committee but not considered.

    The six parts of the JOBS Act are:

    • The Reopening American Capital Markets to Emerging Growth Companies Act introduced by Representative Stephen Fincher (R–TN), which would make it easier for smaller businesses to go public by providing temporary relief from certain SEC regulations. The House Financial Services Committee approved the bill by a vote of 54–1. A Senate version introduced by Senators Pat Toomey (R–PA) and Chuck Schumer (D–NY) also exists.
    • The Access to Capital for Job Creators Act introduced by Representative Kevin McCarthy (R–CA) removes an SEC regulatory ban that says small businesses cannot use advertisements to attract investors. It passed the House by a 413–11 vote. Senator John Thune (R–SD) has introduced a Senate version.
    • The Entrepreneur Access to Credit Act introduced by Representative Patrick McHenry (R–NC) would eliminate SEC restrictions on “crowdfunding,” an increasingly popular way for small businesses to raise money from a large pool of individual investors. It passed the House by a 407–17 vote.
    • The Small Company Capital Formation Act introduced by Representative David Schweikert (R–AZ) would increase the threshold of companies that are exempted from SEC regulation to $50 million from $5 million. This bill passed the House by 421–1. A Senate version was introduced by Senator Jon Tester (D–MT).
    • The Private Company Flexibility and Growth Act, also introduced by Schweikert, would expand the number of shareholders that a smaller business can have before it must meet SEC registration requirements to 1,000 from 500. It was approved by the Financial Services Committee by a voice vote. Senator Pat Toomey (R–PA) introduced a Senate version.
    • The Capital Expansion Act introduced by Representative Ben Quayle (R–AZ) would change an SEC requirement to increase the number of shareholders allowed to invest in a community bank to 2,000 from 500. The bill has not been considered.

    These seemingly technical bills would greatly increase the ability of smaller businesses to grow and to create jobs, while signaling that both Congress and the Obama Administration are serious about dealing with unemployment.

    Posted in Economics [slideshow_deploy]

    7 Responses to Cantor JOBS Bill Would Help Small Businesses Grow

    1. L.Sanchez says:

      Oh, more deregulation of banks so we can go back to 2008?

      Great ideas guys. Way to be so forward thinking. That'll fix it. Allow them to raise more capital with less collateral.

      • Stirling says:

        and how has "more regulation" helped??? Dodd-Frank is a monster that will cost billions alone to companies just to comply with it.. Guess where the added cost of that goes.. to the cost of the products and services that all of us use.. Even you will be affected.. Taking the money out for regulations is money companies could use to hire more employees… Your "forward" is crippling the economy Mr. Sanchez.

    2. L.Sanchez says:

      I love Cantor!

    3. James F. Lavin says:

      This is absolutely thrilling. As a serial entrepreneur who had to deal with SarBox I can confirm it is the single greatest destroyer of the American economy. I vowed I would never go public again in the US and started my latest company in Singapore. With these changes it may be possible to raise public capital for my American manufacturing company (which exports worldwide) rather than have to go back again to investors for growth capital. I agree I love Cantor!

    4. O_Henry says:

      It is a good “first step” to let business sell stock easily. Investors that do their homework will not buy a poor quality stock for an investment. This keeps the cost of borrowing away as well as giving the “little guy” a chance at a good company from its Initial Public Offering in an affordable price range.

    5. O_Henry says:

      To L. Sanchez

      The evaluation of “capital to collateral” regarding stock Initial Public Offerings is not the responsibility of the Federal Government to regulate. It is the job of the individual investor to decide if the ratio is a “good investment.”

      It is this very type of government regulation in a free market that slows and at times stops economic growth. I am sure value added manufacturing will not return in sufficient strength to help the US economy until strangulation by Federal and State government regulation is thoroughly addressed by enshrining good regulations in law (dumping of toxic waste, etc.) and removing the rest from “the books.”

    6. Net Impact Chapter at Marlboro College says:

      Finding this especially relevant to the redevelopment efforts in VT after the wake of tropical storm Irene. Seems like passage of this legislation could help promote community investment and subsequent returns. This, as opposed to donations and no returns, which is how many communities are raising capital to fund redevelopment projects. Makes a lot more sense than having outside investors come in and literally take ownership over the infrastructure of entire towns!

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