A new bill that was recently introduced in the U.S. House of Representatives could make it easier for small businesses to access funding.
Reps. Steve Chabot (R-OH) and Scott Garrett (R-NJ) have introduced the Main Street Growth Act (PDF). Chabot is the Chairman of the House Small Business Committee and Garrett is the Chairman of the Subcommittee on Capital Markets and Government-Sponsored Enterprises of the House Financial Services Committee.
The purpose of the bill is to enable the creation of “venture exchanges” for smaller companies. So basically, a national securities exchange like Nasdaq could create a venture exchange market to facilitate the resale of privately held securities specifically for small and emerging companies. And this venture exchange market could be registered with the Securities and Exchange Commission.
In order to qualify as an “early-stage growth” company, businesses would need to have a market capitalization of $1 billion or less. For such businesses to access capital from venture exchanges, they would currently have to meet the same standards and regulations as larger companies currently listed on Nasdaq or with other exchanges. And this could still be particularly challenging.
Chabot explained in an email interview with Small Business Trends. “The Main Street Growth Act helps America’s small businesses access capital without having to jump through a lot of regulatory hoops that were designed with major corporations in mind. A one-size-fits-all approach to capital access simply doesn’t work, and small businesses should be able to compete in these markets without a government-imposed handicap.”
The bill is making its way through Congress right now. It recently passed out of the Financial Services Committee by a 32-25 vote. It’s also not the only bill currently making its way through Congress with the purpose of helping small businesses better access capital.
Chabot has also worked on the HALOS (Helping Angels Lead Our Startups) Act, which could lift some of the roadblocks startups face when showcasing work to potential investors at events like Demo Days.
In general, these types of bills try to give startups and growing companies a better chance at competing with larger, more established businesses. That can be a challenge, given the rapidly changing startup landscape. But Chabot and his colleagues are dedicated to giving small businesses an improved path and access to funding.
Chabot says, “The 2012 JOBS (Jumpstarting Our Business Startups) Act did a lot to put us on the right path, and this bill and others that are making their way through the legislative process are building on that success. Small businesses are so dynamic and Washington has to do a better job keeping up with them. “
Helping to lift some of those roadblocks that small businesses face when it comes to getting funded could not only benefit the businesses themselves, but also the economy as a whole. According to Chabot, helping out small businesses is so important because they employ about half of the private sector workforce and create seven out of every ten new jobs.
But to continue that rate of job creation, small businesses need to be able to have access to funding.
Chabot says, “As Chairman of the House Small Business Committee, I hear from entrepreneurs from all over the country about how they are struggling to access the capital they need to get off the ground and stay off the ground.”
And that, he says, is what the Main Street Growth Act, and others like it, aim to accomplish.
Main Street Photo via Shutterstock