Financial Services Committee Chairman Spencer Bachus commended the Treasury Department for convening today’s conference on “Access to Capital” since small businesses are essential to a growing economy.
“Small businesses generate the ideas and innovation necessary to grow and sustain a robust economy,” said Chairman Bachus.
The Chairman also said the Obama Administration could demonstrate its commitment to promoting access to capital for small business by supporting legislation introduced last week by Committee Member Rep. David Schweikert (R-AZ).
Rep. Schweikert’s bill, the Small Company Capital Formation Act (H.R. 1070), modernizes the Securities and Exchange Commission’s Regulation A to ensure small businesses can access the capital markets. The bill increases the offering threshold for companies exempted from SEC registration under Regulation A from $5 million to $50 million. The SEC set the threshold at $5 million in the early 1990s but has not updated it since.
“Amending Regulation A to make it a viable channel for small business to access capital will result in economic growth and more jobs. Small business creates most of the new jobs in our country and also new and better products that are so necessary to keep a mature economy vibrant and competitive,” said Chairman Bachus.
The bill also requires the SEC to re-examine the threshold every two years and report to Congress on decisions regarding the adjustment to the threshold.
“Taking a small business public is an important, but expensive process that requires millions in underwriting costs. By lowering the costs of raising capital, small businesses can more efficiently raise funds to invest and hire employees,” said Rep. Schweikert. “Raising the Regulation A threshold to $50 million is one way to lower those costs and promote economic growth and job creation. At a time when so many small businesses are in need of capital, this is a common sense proposal that will make our capital markets more vibrant and competitive.”
The Financial Services Committee held a Subcommittee hearing last week on the Small Company Capital Formation Act and four other proposals designed to create jobs, reduce economic uncertainty, promote capital formation, and help make America’s capital markets more competitive.