Small business owners who have long complained about the challenges they face in the form of government regulation and obtaining capital got welcome news Thursday (March 8), when the House passed the Jumpstart Our Business Startups (JOBS) Act. In a rare show of bipartisanship between House Republicans and Democrats, the measure passed 390-23. The main benefits of this act come from the ability it gives small businesses to grow and go public.
"This bill makes it easier for start-up businesses to happen again in America," said Eric Cantor (R-Va), house majority leader and co-sponsor of the bill, according to a CNN report. "By having a win like this, I think we can demonstrate that (both political parties) really can work together."
The act eased regulations by the Securities and Exchange Commission (SEC) which had made it hard for small businesses to gain new investors. The passage of the act allows small businesses a greater ability to seek new investors and "crowdfund" to raise capital. Additionally small businesses will be able to "sell up to $50 million in shares as part of a public offering before having to register with the SEC and could have up to 1,000 shareholders, up from the current 500-shareholder cap," according to Ed O'Keefe of the Washington Post.
According to a report on CBSNews, the bill will allow 2,000 shareholders to invest in a community bank, quadrupling the current 500-shareholder limit. Although the bill has also been praised for the potential it has in creating jobs, many critics have pointed out that the act itself will not directly create jobs. The logic is that increased capital will allow companies to hire more workers.
House Small Business Committee Chairman Sam Graves applauded the passage saying: "The JOBS Act will help our economy grow by jumpstarting business startups at a time when we need it most."
The jumpstarted economy will come as a direct result of the removal of obstacles which Graves noted had previously discouraged entrepreneurs.
"To build a stronger economic recovery, we should end any threats of tax increases, address our debt crisis, pull back on unnecessary federal regulations, and remove barriers to starting businesses," said Graves. "The JOBS Act will help do this by increasing capital formation opportunities and paving the way for more small-scale businesses to go public and create more jobs."
The act still requires passage in the Senate and by President Barack Obama in order to become a law. Obama , however has already been vocal in support of the act as has Senate Majority Leader Harry Reid (D-Nev.), who said he would introduce similar legislation next week in the Senate, according to the Washington Post.
Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.