JOBS Act Passes U.S. Senate, Several Amendments Opposed by Small Business Leaders

The National Small Business Association applauded the Senate for bipartisan passage (73-26) of the JOBS Act late last week. Although not identical to the House-passed version, the amended Senate bill will, without question, positively transform the ability of small businesses to raise capital and help companies generate sustainable economic growth and jobs.

“There is a direct correlation between job growth and small-business owners’ ability to garner financing,” stated NSBA President and CEO Todd McCracken. “This is the right bill at the right time, and we applaud the Senate for moving beyond partisan politics to pass this very important legislation.

Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan issued the following statement upon U.S. Senate passage of the JOBS Act:

“Startups and high-potential businesses have been plagued by a capital chasm since the financial crises, and the JOBS Act offers several reforms to help entrepreneurial firms at their various stages of growth and development. We would prefer that the crowdfunding provision be less onerous and complex, and feel the Securities and Exchange Commission has been given to much rein from a regulatory perspective (Reed amendment). Still, the Merkley amendment to H.R. 3606 was an improved measure from the original Senate bills. We applaud President Obama for his support of this initiative, as well as the bipartisan collaboration in Congress that made this legislation possible,” said Kerrigan.

According to Kerrigan, the final product will be a powerful package with significant benefits for the small business community. Other reforms contained within the JOBS Act will help small businesses access and accelerate their growth in the public markets. Inflexible and costly rules impeding the growth of promising enterprises are properly addressed in H.R. 3606, allowing these firms to more efficiently scale up while freeing up more resources for investment and job creation.

“A strong entrepreneurial ecosystem depends on access to capital. Freeing up new sources of capital – as the JOBS Act will do – will strengthen our nation’s small business sector, and add to their job creating capacity,” added Kerrigan.

Majority Leader Eric Cantor (R-VA) said the U.S. House would vote on the Senate amended package early next week.

However, prior to the Senate vote, Kerrigan stated opposition to both the Reed and Merkley amendments for the following reasons:

“The Reed Amendment (#1931) proposes a significant policy change that will burden small businesses with new and costly Security and Exchange Commission (SEC) registration and compliance burdens. The intent of H.R. 3606 is to help jumpstart and encourage entrepreneurship, small business growth and investment – not drive up their costs. The Reed Amendment eviscerates Section 601 of the legislation for community banks, which means they would be deprived of the opportunity to raise capital. That means less lending to the communities and small businesses they serve.

“The Merkley Amendment (#1884) unnecessarily restricts the potential of crowdfund investing. The Amendment imposes excessive costs and burdens on small issuers, provides for unfettered regulatory activity by the SEC, and is too restrictive and complex when it comes to setting and defining investment limits. For example, audit requirements in the Amendment represent a significant barrier to entry (a “crowdfunding tax”) that many promising and eligible small businesses will not be able to afford. Why require an audit for the smallest of firms when a CPA review would do? With respect to SEC oversight, the Amendment goes overboard in granting the agency profound authority. The potential for regulatory intrusiveness is a major concern, particularly as the SEC has not demonstrated a consistent record of action in responding to the concerns of small businesses. SBE Council believes the $1 million cap in the Amendment is too low, and the caps on individuals are far too complex.”

If the amended JOBS bill is passed by the House, it is still expected more small businesses and start-ups will get the adequate funding they need, more jobs will be created, and a healthier pro-business environment will be created.

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