Luetkemeyer Supports Legislation to Create Jobs, Expand Opportunities for Small Businesses
Washington,
Mar 8 -
U.S. Rep. Blaine Luetkemeyer (MO-9) today voted for the Jumpstart Our Business Startups (JOBS) Act, legislation that comprises six bipartisan bills that would cut red tape, provide opportunities to create jobs and allow small businesses to grow.
“Washington does not create jobs; the people create jobs, but Washington can stifle the entrepreneurial spirit that helped create our country,” Luetkemeyer said. “Small businesses and entrepreneurs are the key to growing our economy, and this legislation would cut onerous regulations that have threatened the ability of entrepreneurs to take risks and create and grow businesses, which is necessary for job creation.”
The bills that make up the JOBS Acts are:
o The Reopening American Capital Markets to Emerging Growth Companies Act would reduce the cost companies face when taking their businesses public by phasing in Securities and Exchange Commission’s (SEC) regulations over five years. The five-year phase in of certain SEC regulations would allow small startups to go public sooner and create jobs.
o The Access to Capital for Job Creators Act would remove a SEC regulation that prevents small, privately held companies from using advertisements to solicit investors. The current SEC regulation allows small companies to raise capital as long as they do not market their securities through general solicitations or advertising, which has been interpreted to mean that potential investors must have an existing relationship with the company. The current SEC ban limits the ability of small companies to raise capital, which hinders their ability to invest in their business and create much needed jobs for American families.
o The Entrepreneur Access to Capital Act would remove SEC restrictions on crowdfunding so that entrepreneurs can raise capital from a large pool of small investors. Crowdfunding is a technique that raises money to fund a business through relatively small dollar contributions from a large number of people either in person or on the Internet. Currently, the SEC prohibits crowdfunding. This legislation allows new businesses to accept and pool donations up to $5 million without having to register with the SEC.
o The Small Company Capital Formation Act would raise the offering threshold for companies exempted from SEC Regulation A from $5 million to $50 million. The current SEC threshold was adopted in the early 1990s. Increasing the offering threshold would help small companies gain access to needed capital without the costs and delays that result from the full-scale securities registration process.
o The Private Company Flexibility and Growth Act would increase the threshold for mandatory registration under the Securities and Exchange Act of 1934 from 500 shareholders to 1,000 shareholders for all companies, a move that would remove one obstacle to capital formation for small companies.
o The Capital Expansion Act would increase the threshold for mandatory registration under the Securities and Exchange Act of 1934 from 500 shareholders to 2,000 shareholders for all banks and bank holding companies. The legislation would also increase the shareholder deregistration threshold from 300 to 1,200 shareholders. These two actions would provide regulatory relief and eliminate another obstacle to raising equity capital. A similar provision is included in H.R. 1697, Luetkemeyer’s Communities First Act.
According to Kansas City’s Kauffman Foundation, startups have created nearly 40 million jobs since 1980, and the Small Business Administration shows small businesses generate over 60 percent of new jobs in this country. From 1980 to 2005, companies less than 5 years old accounted for all net job growth in the country, with 92 percent of the job growth resulting after the company’s Initial Public Offering (IPO). Beginning in 2006, companies reported an average job growth of 86 percent after the IPO. Increased federal regulations are making IPOs more costly, with the average cost to go public at $2.5 million and annual costs to stay public at $1.5 million. The cost to stay public includes compliance with Sarbanes-Oxley, legal and accounting costs. Luetkemeyer supported each of these provisions or similar provisions when they were considered in the House Financial Services Committee.
