Patrick McHenryChairman

Washington, June 12, 2013 - The bipartisan Jumpstart Our Business Startups (JOBS) Act – passed by Congress a year ago – is working to help startup companies grow and hire, but regulatory barriers to capital remain that hinder a stronger economy, members of the Capital Markets and Government Sponsored Enterprises Subcommittee learned at a hearing today.

Although the Securities and Exchange Commission (SEC) has yet to implement much of the JOBS Act, those parts of the law that have gone into effect are already helping small businesses access the capital markets and at a lower cost. Around 600 companies have elected to become an Emerging Growth Company, a new category of issuers established under the JOBS Act. About one-third of these companies are either listed, or their listing is pending, on NASDAQ or the New York Stock Exchange. 

Unfortunately, the regulatory burden is still preventing many small businesses and emerging growth companies from realizing their full potential. 

“Today, America’s startups and small businesses continue to encounter difficulties accessing U.S. capital markets to finance their businesses, and the costs to these companies of going and staying public remains high,” said Subcommittee Chairman Scott Garrett (R-NJ). “On top of this, over the past five years, the Obama Administration has unleashed a record amount of burdensome red tape that has disproportionately increased the costs of doing business for smaller companies compared to their larger peers. As a result, many small businesses have been forced to cut back on hiring and employee benefits at a time when our economy can least afford it.” 

Over the last five years, the Obama Administration has imposed a record-breaking volume of red tape on small businesses. In 2012, the Obama Administration published 79,000 pages in the Federal Register and issued 1,172 new regulations, of which a record 57 were expected to have costs of at least $100 million each.

Although small companies are at the forefront of technological innovation and job creation, they continue to face significant obstacles in obtaining funding in the capital markets. These obstacles are often attributable to the proportionately larger burden that securities regulations—written for large public companies—place on small companies when they seek to go public.

“As our country continues down a path of slow economic growth and persistently high unemployment, it is more important than ever that we continue to reduce burdensome government regulations on small businesses and enhance their ability to obtain capital at a reasonable cost,” Chairman Garrett added.