Senate Follows House in Introducing Bill to Help Small Businesses Raise Capital
The Senate is set to come out with its version of legislation to help small businesses raise capital, paralleling a measure that cleared the House in a somewhat different form last week by a large bipartisan margin.
Senate Majority Leader Harry Reid, D-Nev., said Monday he planned to work with his Republican counterpart, Sen. Mitch McConnell of Kentucky, “to finalize a path forward” on the legislation, which primarily relaxes Securities and Exchange Commission regulations to make it easier for small businesses and startups to attract investors.
Both Republicans and Democrats are eager to show that Congress is capable of coming together on legislation to boost the economy and promote job growth, and President Barack Obama supported the House bill which passed on a 390-23 vote.
It remained to be seen whether Senate changes to the House version, expected to be introduced as early as Tuesday, would bog down the legislation in partisan battles. The main difference is that the Senate bill would also give new legislative authority to the Export-Import Bank, an independent agency that assists U.S. companies trying to sell abroad with financing. Inclusion of the Ex-Im Bank could be a sticking point for some conservatives.
No date has been set for the package to reach the Senate floor for debate.
The House packages six bills that eases the way for small businesses to raise money and go public without being burdened by costly SEC regulations. The Senate version takes up three of those bills, in slightly different forms.
One would create a new emerging growth companies classification that phases in certain SEC regulations over a five-year period, reducing the costs of going public. Companies could retain this status for five years or until they exceed $1 billion in annual gross revenue. The Senate bill is sponsored by Sen. Charles Schumer, D-N.Y., and Patrick Toomey, R-Pa.
The second bill, sponsored by Sen. Jon Tester, D-Mont., raises from $5 million to $50 million the ceiling for shares a private company can sell as part of a public offering before having to register with the SEC. The $5 million threshold was set in 1992 and small businesses say it is too low to make going public worthwhile.
The third, introduced by Oregon Democrat Jeff Merkley, removes SEC restrictions on “crowdfunding,” the raising of capital from a larger pool of small-scale investors who are not necessarily classified as “accredited” by the SEC.