Finally, Republicans and Democrats actually overwhelmingly agree on something –the JOBS Act – the Jump start Our Business Startups, which Obama is expected to sign soon. “The bipartisan JOBS Act represents an increasingly rare legislative victory in Washington where both sides seized the opportunity to work together, improved the bill and passed it with strong bipartisan support,” House Majority Leader Eric Cantor (R-Va.) said in a statement after the bill passed the House.
So what’s in it?
The JOBS Act is made up of six bills neatly tied together that both parties think will help companies through a quicker, easier transition to go public and raise money.
1. The Private Company Flexibility and Growth Act would allow small companies to increase their number of shareholders from 500 to 1,000. Under old regulations from the 1960s, small businesses were pushed into filing with the SEC when they had 499 shareholders and $10 million in assets, which ruffled the feathers of lawmakers. Cantor said it “severely limits the growth stage” for small business that need time to develop.
2. The Entrepreneur Access to Capital Act loosens SEC regulations that prevent “crowdfunding.” Through this measure, small businesses could gain revenue from pools of up to $2 million from a number of small investors.
3. The Small Company Capital Formation Act is the provision that makes it easier for small businesses to go public. It increases the ceiling for companies exempt from $5 million to $50 million. In theory, this would promote more investment in the companies and create more jobs.
4. The Access to Capital for Job Creators Act allows companies to use advertisements to solicit investors, which was previously banned under an SEC regulation. Cantor said that regulation limited the pool of potential investors, inhibiting small companies’ ability to create jobs.
5. The Reopening American Capital Markets to Emerging Growth Companies Act reduces the cost of going public. This makes it easier for companies to go public sooner, something that should directly lead to greater job creation. This provision also creates the category of “Emerging Growth Company,” which helps small companies stave off the bulk of SEC regulations and fees in the first few years of being public.
6. The Capital Expansion Act increases the number of shareholders investing in a community bank from 500 to 2,000.
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