Senate pushes bills to boost small business

WASHINGTON Tue Feb 28, 2012 5:54pm EST

U.S. Senate Majority Leader Harry Reid (D-NV) speaks during his news conference on the payroll tax cut extension on Capitol Hill in Washington Dec. 23, 2011. REUTERS/Yuri Gripas

U.S. Senate Majority Leader Harry Reid (D-NV) speaks during his news conference on the payroll tax cut extension on Capitol Hill in Washington Dec. 23, 2011.

Credit: Reuters/Yuri Gripas

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WASHINGTON (Reuters) - Senate majority leader Harry Reid announced plans on Tuesday to push forward legislation to spur capital formation for small businesses, an issue that has spawned a rare showing of bipartisanship.

The Nevada Democrat said the Senate Banking Committee would hold a hearing on small business growth next week and he applauded the House of Representatives for its own progress on related legislation.

The White House has also supported such legislation, as President Barack Obama and lawmakers are eager to show voters in an election year that they are helping the economy recover.

However, it may be a tough slog to move legislation to Obama's desk with the Democratic-controlled Senate and the Republican-controlled House eager to portray the other group as obstructionists.

"Too many Americans are still hurting financially or struggling to find work," Reid said in remarks delivered on the Senate floor. "And it is crucial for Congress to continue efforts to create jobs and rebuild our economy."

The House, with bipartisan support, passed four bills late last year to help small businesses spur job growth by revamping federal securities laws that some say have hindered access to capital.

One of the House measures would eliminate the ban on general solicitation that keeps privately held businesses from advertising securities sales to accredited investors.

Another would create a regulatory framework to let private businesses use "crowd-funding" - a capital raising technique where investors take small stakes in companies over the Internet.

It would allow companies to raise up to $2 million annually from investors pledging no more than $10,000, or 10 percent of their annual income.

On Tuesday, House Majority leader Eric Cantor unveiled a Jobs Act that generally packages the measures that had previously been approved by the whole House or by committees.

Cantor, at a news conference that included House Speaker John Boehner and other House Republican leaders, said the package of bills would help small businesses gain access to capital and would reduce the regulatory burden for startup businesses.

The push has encouragement from outside Congress. The U.S. Securities and Exchange Commission is considering updating its own rules to foster capital formation.

Earlier this month, an SEC advisory panel urged the agency to relax outdated rules that trigger public financial reporting for companies, but it stopped short of backing crowd-funding, citing concerns about investor protection.

Reid said the Senate measures would improve innovators' access to capital and streamline how companies sell stock through initial public offerings, or IPOs, while protecting investors.

While he did not elaborate on the bills, he noted that Senate Democrats have been working on them "for months."

Senators Jon Tester and Pat Toomey introduced a bipartisan bill in September that would broaden an exemption to allow companies to sell up to $50 million in shares without filing lengthy paperwork. Currently, businesses can only raise $5 million under the rule.

Senators Charles Schumer and Toomey also introduced a bipartisan bill in December to reduce the cost of going public for smaller companies by exempting them from certain regulatory requirements, such as hiring an outside auditor to verify internal controls.

(Reporting By Alexandra Alper and Donna Smith in Washington; Editing by Andre Grenon and Matthew Lewis)

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