Washington, D.C. (Press Release – October 28, 2011) – The Small Business & Entrepreneurship Council (SBE Council) cheered the momentum behind one of its key initiatives to help small business owners and entrepreneurs access capital. On October 27, the House Financial Services Committee passed the “Entrepreneurs Access to Capital Act,” H.R. 2930 by voice vote. SBE Council and its members planted the seed — and a specific model — for crowd fund investing. For much of 2011 they have been aggressively advocating for a new regulatory framework that would make this innovative approach a reality. President Barack Obama supports the group’s framework, and U.S. Representative Patrick McHenry (R-N.C.) put forward legislation in mid-September.
Regarding the positive momentum behind modernizing outdated Securities and Exchange Commission (SEC) rules to allow for crowd fund investing, entrepreneur and SBE Council member Woodie Neiss said: “It is amazing to see members of both parties get behind this important issue. The understanding that small businesses face a critical shortfall in their capital needs runs deep, and crowd fund investing is a common sense solution. Entrepreneurs now have hope that Washington is coming together to address one of their top concerns.”
Neiss testified before the House in mid-September where he provided ideas and a crowd funding model for House members. The model includes strong protections for investors, and ways to tap into the power of technology to increase transparency and investor knowledge. Along with Neiss’s framework which was the impetus for H.R. 2930, other elements of his model were adopted by the Financial Services Committee including the thresholds for investment, registration of crowdfunding sites with the SEC, an online investor test, among other provisions.
(You can access Neiss’s testimony here, which explains the rationale behind crowd fund investing, and why old security laws need to be updated. The framework SBE Council supports is also included in the testimony.)
SBE Council President & CEO Karen Kerrigan said that the quick pace of this legislative initiative demonstrates that members in both political parties understand capital access is a critical issue for both entrepreneurs and our nation’s economic recovery. “We are pleased to see bipartisan support behind this common sense approach. Crowd fund investing will give small business owners and entrepreneurs access to sources of capital they currently cannot tap into without triggering complex SEC rules. With common sense reforms, more Americans will be able to invest in promising small businesses, which means more jobs and greater economic growth. Reformulating outdated rules while maintaining investor protections will help entrepreneurs identify and connect with qualified, potential funders,” added Kerrigan.
Kerrigan concluded: “We are very excited that Congress and President Obama are seeking intelligent and innovative ways to help small business owners access capital. Technology and the Internet have leveled the playing field in so many other areas for entrepreneurs, and it only makes sense that they are allowed to tap into its power for needed capital.”
SBE Council is a nonprofit, nonpartisan advocacy, research and training organization dedicated to protecting small business and promoting entrepreneurship. For more information, please visit www.sbecouncil.org.