U.S. Senator Mark Pryor today applauded passage of legislation to make it easier for small companies to raise money from investors.
Pryor said he often hears from the Arkansas business community that burdensome regulations and access to capital stand in the way between success and failure for a small business. He believes the Jump-starting Our Business Start-ups Act will help provide smaller companies with easier access to capital. The bill relaxes securities laws relating to capital formation. Specifically, it permits "crowdfunding" or the use of social media to finance new businesses. Companies can issue securities totaling up to $1 million without registering the sale with the SEC. Small companies would also be able to sell up to $50 million in shares as part of a public offering before having to register with the SEC.
"For small business owners, I know one of the biggest obstacles for getting a company off the ground or expanding is access to capital," Pryor said. "My Six-Point Solution to job creation enhances the government's capacity to help, and this legislation does the same. It empowers small business start-ups to succeed even during tough economic times."
The JOBS Act also includes a measure by Pryor and Senator Kay Bailey Hutchison (R-TX) to provide regulatory relief for community banks. The provision maintains the $10 million asset requirement but increases the shareholder threshold for SEC registration for bank and bank holding companies to 2,000 from the current 500 threshold. While the asset measure has twice been increased, the shareholder gauge has not--prohibiting community banks from expanding in fear of the additional compliance costs.
"Community banks are the backbone of economic growth in many small towns, and we need them to keep growing and lending in their communities," Pryor said. "Updating these threshold numbers removes a major roadblock to their growth."
"We certainly appreciate the efforts of Sen. Mark Pryor (D-Ark) along with Sen. Kay Bailey Hutchison (R-TX) in leading a bi-partisan effort for the cause of small business and community banks in the passage of HR 3606 in the Senate. The ability to increase the Securities and Exchange Commission threshold from 500 to 2,000 shareholders before embarking on the very costly burden of registration will assist many of our small business' and banks' in acquiring the needed capital to fuel their future growth and development. This effort was long overdue to help relieve an outdated regulation," said Scott Grigsby, Executive Vice President and Regional Manager of Arvest Bank.