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House Passes McHenry’s Bipartisan Crowdfunding Bill to Support Small Businesses

Washington, Oct 28 -

WASHINGTON – Today, the House of Representatives passed H.R. 4860, the Crowdfunding Amendments Act. This legislation, introduced by the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), will ensure investment crowdfunding can best support American small businesses and entrepreneurs seeking to raise capital.

Ranking Member McHenry on the Crowdfunding Amendments Act: “We all agree small businesses and entrepreneurs are America’s true job creators. This is especially true in communities I represent in western North Carolina. But today, America’s small businesses are still struggling to find capital. Small business lending from traditional banks continues to decline, and small business loans in America’s small towns are less than half they were merely fifteen years ago. Investment crowdfunding is one way we can reverse this concerning trend.”

Background on Ranking Member McHenry’s Crowdfunding Amendments Act:

• In 2012, Ranking Member McHenry wrote the original bill to legalize investment-based crowdfunding, making it easier for businesses to raise capital, which was included in the JOBS Act.
• The Securities and Exchange Commission’s (SEC) final crowdfunding rule contained structural flaws that require Congress’s immediate attention.
• The bill fixes crowdfunding’s “12-g problem” by raising the asset threshold for both small businesses that already have revenue, and for those startups that do not, making it more likely that high-growth companies will consider crowdfunding as an option for raising capital.
• Additionally, it addresses single purpose funds, which are not permitted by the SEC. Single purpose funds allow main street investors to invest along with more sophisticated lead investors who have an obligation to advocate for their best interests, meaning better terms and greater transparency for investors.