Today, Congressman Stephen Fincher (R-Frog Jump) voted in favor of H.R. 2930, the Entrepreneur Access to Capital Act, a bill to permit crowdfunding, which is an innovative way to finance new businesses. Included in the final version passed by the House is an amendment offered by Congressman Fincher.
Introduced by Rep. Patrick McHenry (R-NC), H.R. 2930 removes SEC restrictions preventing "crowdfunding," allowing entrepreneurs to raise capital from a large pool of small investors who may or may not be considered "accredited" by the SEC. Companies will be able to pool up to $1 million before registering with the SEC or up to $2 million if investors are provided with audited financial statements. Individual contributions will be limited to $10,000 or 10 percent of the investor's annual income, whichever is less.
Included in the legislation is Congressman Fincher's amendment, which passed by a voice vote. Fincher's amendment indexes the $1 million and $2 million caps in the underlying bill to reflect inflation. Adjusting these numbers ensures investment opportunities today are just as strong tomorrow.
Fincher said, "We have to get government out of the way to allow job creators to put more Americans to work. The ability to access crowdfunding capital is a useful tool for small businesses, start-ups, and entrepreneurs who are often overlooked by conventional lenders. We all know providing capital to small businesses allows for expansion and job creation." Fincher continued, "Passing my amendment to index crowdfunding investment pools for inflation will ensure investment opportunities today are just as strong tomorrow. It just makes sense."
Since the end of World War II, the United States has experienced almost continuous inflation. According to the Congressional Research Service, the cumulative effect of this inflation is staggering: the price level has risen more than 1,000% since the end of World War II. As the real value of money decreases over time, small contribution investors may be discouraged from supporting start-up companies in the future, due to the diminishing buying power of their original investment. Indexing for inflation now will ensure that the $1 million and $2 million numbers are always worth in the future what they are now, which will help businesses get the investments needed to create jobs.