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Witnesses Express Support For Schweikert’s Proposal To Help Small Businesses Obtain Financing

Washington, Sep 20 -

Tomorrow, the Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing on five proposals designed to help small businesses access the capital markets for the financing they need to grow their companies and hire more workers. This hearing continues the Full Committee’s ongoing efforts to promote small business capital formation and job creation.

One of the bills on tomorrow’s agenda is H.R. 2167, the Private Company Flexibility and Growth Act. The bill has been introduced by Rep. David Schweikert.  Witnesses scheduled to testify before the Subcommittee are praising the bill as the type of pro-growth proposal needed to improve the economy.  The legislation would modernize the shareholder threshold for mandatory registration with the Securities and Exchange Commission from 500 shareholders to 1,000 shareholders.

Following are excerpts from some of the testimony in support of H.R. 2167:

Vincent Molinari, Founder and Chief Executive Officer, GATE Technologies LLC:
“Turning to the specific proposals being considered today, the proposed reform of Regulation D, as part of Representative David Schweikert’s Private Company Flexibility and Growth Act, would be a welcome change in the capital formation process that would promote economic expansion and job creation.”

“Currently, entrepreneurs and small businesses cannot access the capital they need to grow and create jobs. A record 41 percent of small business owners cannot get adequate financing, according to the National Small Business Association – up from 22 percent in 2008. A critical source of funding – the public capital markets – has been largely closed off to America’s proven job creators.”

H.R. 2167 “will improve the ability of small companies to access desperately needed capital. By reducing the regulatory burden and expense of raising capital from the investing public, Congress can boost the flow of capital to small businesses and fuel America’s most vigorous job-creation machine.”

Mr. William D. Waddill, Senior Vice President and Chief Financial Officer, OncoMed Pharmaceuticals, Inc., on behalf of the Biotechnology Industry Organization:

“[Increasing] the shareholder limit from 500 to 1000 would relieve small biotech companies from unnecessary costs and burdens as they continue to grow. As it stands, the limit encumbers capital formation by forcing companies to focus their investor base on large institutional investors at the expense of smaller ones that have been the backbone of our industry. Further, it hinders a company’s ability to compensate its employees with equity interests and negatively affects the liquidity of its shares.

“Increasing the shareholder limit and exempting employees and accredited investors from the count are measures that, together, would remove significant financing burdens from small, growing companies.”

Mr. Matthew H. Williams, Chairman and President, Gothenburg State Bank:

“This change would enable banks to deploy their capital in lending rather than spend it on regulatory requirements that provide little incremental benefit to the banks, shareholders, or the public.”

H.R. 2167 would provide “another valuable capital tool as banks work to improve the economy in our local areas and in the whole of the U.S.”