The House of Representatives today passed a bipartisan amendment offered by Representatives Brad Sherman (D-CA) and Stephen Fincher (R-TN) to H.R. 2930, the Entrepreneur Access to Capital Act, which creates a "crowdfunding" exemption for startup companies raising capital from small investors. The bill, which accomplishes a cornerstone of President Obama's Startup America initiative, allows small startup companies to raise up to $2 million by cutting away the bureaucratic red tape that often prevents small companies with limited resources from seeking small investments.
"Small businesses are the backbone of our economy, they employ nearly two-thirds of the American workforce, and the health of new small business creation is critical to our economic recovery efforts," said Congressman Sherman. "This is a model that has shown great promise and bipartisan support as a tool to help small businesses raise startup capital and grow."
"We have to get government out of the way to allow our job creators to put more Americans to work," said Congressman Fincher. "This is one of the best ways we can get our economy moving in the right direction. Indexing crowdfunding investment pools for inflation will ensure investment opportunities today are just as strong tomorrow. The ability to access crowdfunding capital is a useful tool for small businesses, start-ups, and entrepreneurs who are often overlooked by conventional lenders. And we all know providing capital to small businesses allows for expansion and job creation."
Previously, small businesses that wished to raise startup capital through small investments were burdened by complex paperwork and regulatory burdens. This bill makes it easier for small businesses to raise money through independent investors that meet certain standards for investors' protections.
The Sherman/Fincher Amendment ensures that this policy will remain available for future generations by indexing the contribution limits in the bill to inflation, to make sure the $2 million allowed today remains worthwhile to future entrepreneurs.