Congressman Chris Smith (NJ-04) today voted for passage of the Jumpstart Our Business Startups Act or JOBS Act, a package of six bipartisan proposals that are specifically designed to increase capital and growth opportunities for small businesses and create jobs for the unemployed and under-employed.
“Creating new jobs and boosting the economy remain a number one priority for the entire nation,” Smith said. “Enactment of the JOBS ACT—bipartisan legislation—will spur real job growth and put people back to work.”
Small business owners employ over 50 percent of the U.S. private workforce and have generated two of every three new jobs over the past two decades. They can help improve a sustained job market and spark a recovery. Some of the proposals incorporated into the new JOBS Act, had already passed the House but stalled in the Senate, while some have garnered bipartisan support in their respective committees.
“It is hoped that combining these initiatives—that have a clear emphasis on job creation and creating a better environment for American entrepreneurship—will help break the log jam on the Senate side and lead to enactment,” Smith said.
The components of the legislation passed in a 390-23 vote were:
Reopening American Capitol Markets to Emerging Growth Companies (EGC) Act, H.R. 3606. H.R. 3606, which serves as the base bill for the new JOBS Act package, offers a reprieve to companies by allowing a phase-in of financial reporting regulations over five years after a company’s initial public offering (IPO). This enables smaller companies to go public sooner, which directly leads to more job creation within the company—on average 92 percent of business expansion and hiring occurs after a company goes public. The bill would delay some regulatory requirements that could otherwise prove extraordinarily difficult for newly formed companies. At the same time, however, H.R. 3606 ensures investors are protected by requiring EGCs to provide audited financial statements, and by establishing and maintaining internal controls over financial reporting. The bill strikes a balance, recognizing that too much government bureaucracy—even when well intended—can stymie growth and burden emerging job creators.
The Access to Capital for Job Creators Act, H.R. 2940. This legislation, now Title II of the JOBS Act, would eliminate a regulatory ban that prohibits certain small businesses from advertising to solicit investors to obtain capital. It will allow small businesses to talk to accredited investors and adds the protection of requiring insurers to verify that purchasers are in fact Securities and Exchange Commission (SEC) accredited. The cash flow is critical in a small business to grow and create jobs. The ban on advertising limits the pool of potential investors and hampers the ability to grow. I voted for this bill as a stand-alone measure when it passed the House by a bipartisan vote of 413-11.
The Entrepreneur Access to Capital Act, H.R. 2930. This bill, now Title III of the JOBS Act, removes a SEC regulatory restriction that currently prevents entrepreneurs from raising equity capital from a large pool of small investors who may or may not be accredited by the SEC. This provision fosters what is called crowdfunding– earning investments through relatively small contributions from a large number of people. The bill allows companies to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides investors with audited financial statements. Individual contributions will create a crowdfunding exemption from SEC regulations for firms raising up to $2 million, with individual investments limited to $10,000 or 10 percent of an investor’s annual income, whichever is less. I voted for H.R. 2930 when it originally passed the House by a vote of 407-17 on Nov. 3.
The Small Company Capital Formation Act, H.R. 1070. Title IV of the JOBS Act, originally introduced as H.R. 1070, raises the limit before a business is required to register with the SEC from $5 million (a limit set 20 years ago) to $50 million. Adopted by the House by a huge bipartisan majority (421-1) this reform legislation has been held up in the Senate. If enacted, the legislation would make it easier for small businesses to grow and create jobs by raising capital for a future IPO. The outdated limit has not been increased to reflect the rising costs associated with bringing a small company public.
The Private Company Flexibility and Growth Act, H.R. 2167. This bill, Title V, which was reported out of the Financial Services Committee in December by a bipartisan voice vote, would raise the threshold for a business to be required to register with the SEC from 500 shareholders to 1,000 shareholders. The current shareholder threshold rule was adopted in 1964 and has not been updated since. The outdated rule restricts the number of shareholders and assets a company can have, thereby limiting growth opportunities. We need to modernize our rules and provide an environment in which successful small businesses can grow.
The Capital Expansion Act, H.R. 4088. Title VI of the JOBS Act, H.R. 4088 increases the number of shareholders—from 500 to 2,000—who are allowed to invest in a community bank. The legislation is designed to give community banks more flexibility in making loans to proven small businesses resulting in economic growth and jobs.