Source: Maura Little, Community Liaison, Congressman Jay Inslee, 206-361-0233, Maura.Little@mail.house.gov.
Congressman Inslee asked me to reach out to you all due to your interest in small business issues. During the first week of November, the House of Representatives passed three pieces of legislation that aim to make it easier for small business to raise capital. With the banks lending activity slowing in the wake of the recession, Congressman Inslee and I too often hear from constituents with a good idea, a good plan, but no capital. This stops our unemployed from getting back to work and needs to change.
Below is a summary of the different pieces of legislation. All three have been sent to the Senate for further action, but have yet to be considered in that chamber.
H.R.1070, the “Small Company Capital Formation Act of 2011”
This bill would require the Securities and Exchange Commission (SEC) to allow companies to raise $50 million through securities offerings before registering with the SEC, significantly raising the threshold from its current limit of $5 million. This would provide small and medium companies the ability to offer securities up to $50 million publicly without the full cost of a registered offering, potentially expanding their access to capital beyond the private offerings many now use. Also, the bill includes important investor protections such as requiring companies to provide investors with audited financial statements annually and affording investors legal recourse for misstatements companies make in the prospectus documents.
H.R. 2930, the “Entrepreneur Access to Capital Act of 2011”
H.R. 2930 would create a new exemption for so-called “crowdfunding” securities. Under the bill, eligible crowdfunding securities would be capped at $1 million annually, or $2 million if the issuer provides the investor with audited financial statements. Also, the bill would only allow an investor to invest the lesser of either $10,000 or 10% of their annual income. While the bill pre-empts state regulators’ registration authority for the exempt securities, websites and issuers would be required to provide notice to the SEC that would also be shared with the states.
H.R. 2940, the “Access to Capital for Job Creators Act”
H.R. 2940, the “Access to Capital for Job Creators Act,” would permit the use of public solicitation in connection with private securities offerings. This would reverse a long-standing rule that allows companies to raise funds through securities offerings so long as they don’t engage in public solicitation for the funds.
Congressman Inslee supported these bills in an effort to free up the flow of capital to small business, both in Washington state and nationwide. Please contact me if you have any questions, or to share your reactions. Also, feel free to share this news with others in the small business community that you think might be interested.
Congressman Jay Inslee
18560 1st Avenue NE, Suite E-800
Shoreline, WA 98155-2150