House Passes Bill to Help Entrepreneurs
Washington,
November 9, 2017 -
WASHINGTON -- The House today passed legislation that will make it easier for entrepreneurs and small business owners to raise limited amounts of capital from their personal network of family and friends without running afoul of federal securities laws.
Under the Micro Offering Safe Harbor Act sponsored by Rep. Tom Emmer (R-MN), private businesses would be permitted to seek community-based financing of up to $500,000 per year to hire new workers or expand their operations. The bill includes a number of investor protections to help prevent fraud and abuse.
Under current law, businesses that seek to raise money by publicly selling stock must register with the Securities and Exchange Commission. Registration can cost more than $2 million, an amount most small business owners cannot afford.
“This important bill will help unlock seed capital for small businesses and startup companies,” said Financial Services Committee Chairman Jeb Hensarling (R-TX). SEC regulation makes it “very difficult for our early-stage entrepreneurial growth companies to go out and do any kind of private placement to raise funds from friends and family,” he said.
“Small business owners and entrepreneurs are the backbone of our society, and responsible for more than half of new jobs created each year. Unfortunately, for far too long, government regulations have tied their hands making it difficult to startup or expand. Today, the House of Representatives took a step to change that with the passage of the Micro Offering Safe Harbor Act. This legislation clarifies existing law so that small businesses and startups have more ways to access capital which is so vital to their success, getting them one step closer to achieving the American Dream,” said Rep. Emmer.
The bill passed the House by a vote of 232-188.
To watch Chairman Hensarling’s remarks on the bill during debate in the House, click here.
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