Obama Signs JOBS Act Into Law
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In hopes of giving a boost to small businesses in need of capital, President Obama signed the bipartisan Jumpstart Our Business Startups (JOBS) Act into law today (April 5).
The package, which gained overwhelming support in the House and Senate last month, comprises a series of bills that supporters believe will help loosen the regulations that make it difficult for small companies to raise money.
Among other things, the act aims to reduce the cost of going public by providing companies with a reprieve from Securities and Exchange Commission regulations; remove the SEC ban that prevented small businesses from using advertisements to solicit investors; and cut SEC restrictions that prohibited crowdfunding.
"America’s high-growth entrepreneurs and small businesses play a vital role in creating jobs and growing the economy," Obama said today in a press release issued before the signing."These proposals will help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.”
Despite backing from both sides of the aisle, the JOBS Act has been met with mixed emotions among the small-business community.
House Small Business Committee Chairman Sam Graves (R-Mo.) is among the supporters, saying small-business growth is the key to addressing the nation's unemployment problem.
"This JOBS Act is further proof that both parties can work together to accomplish some good for this nation and our small businesses," Graves said. "Access to capital continues to be a significant challenge for entrepreneurs and small firms who want to start or grow their business, and this bill helps to provide solutions to that problem."
Kenneth Wisnefski, owner of Internet marketing firm WebiMax, believes the bill will help companies like his to expand operations and create jobs, but he is concerned the JOBS Act could create a toxic financial situation for the overall economy.
"What happens when we have a small business without a proven track record of growth trying to secure financing to launch an IPO?" Wisnefski asked. "There may not be enough regulation within the bill to prevent another 2008 financial crisis."
The Main Street Alliance, a national network of state-based small-business coalitions, opposes the act in its current form because its members feel it favors big corporate interests at the expense of small businesses.
"The JOBS Act, in its current form, contains problematic provisions that are not in the best interests of small businesses," Main Street members Jim Houser, Melanie Collins and Freddy Castiblanco wrote in a letter last month to U.S. senators. "The bill contains provisions that could undermine the confidence of small investors and thereby reduce, rather than increase, access to capital for small businesses."
Like Wisnefski, the Main Street Alliance believes there are not enough safeguards in place to protect the economy from another significant downturn.
"We are fully in favor of increasing access to capital for small businesses to grow, create jobs, and jumpstart local economies," wrote Houser, Collins and Castiblanco. "We believe this can and should be done in ways that maintain the important safeguards that have been put in place to protect us from a repeat of the 2008 financial crisis and the extreme credit crunch that followed."
Chad Brooks is a Chicago-based freelance business and technology writer who has worked in public relations and spent 10 years as a newspaper reporter. You can reach him at email@example.com or follow him on Twitter @cbrooks76.