How Congress Can Improve Access to Capital for Small Businesses

Business owners and entrepreneurs know that the most innovative idea is not enough to be successful. Without healthy access to capital the best business idea will fail. That’s why it’s so important for Congress to enact policies that create an environment in which entrepreneurs can easily raise the money necessary to start and grow their business.

One of the main hurdles any business owner faces is the steady stream of banking and financial regulation flowing from Washington, D.C., especially from the Securities and Exchange Commission (SEC).

Small to medium size companies looking to access public capital markets or “go public” must comply with voluminous SEC rules and regulations. The SEC estimates the initial regulatory compliance cost for a company to go public at $2.5 million up front followed by $1.5 million per year. For many small businesses the cost is simply too great.

That’s why Rep. Patrick McHenry’s (R-NC) Fix Crowdfunding Act (H.R. 4855) is so important. The Fix Crowdfunding Act would empower small firms and entrepreneurs to crowdfund up to $5 million for their business without registering with the SEC and dealing with the litany of regulations that entails.

This bill would provide a huge boom for many small businesses looking to grow and expand, but don’t have enough capital to do so. It would also empower “main street” investors to grow their own wealth while helping entrepreneurs reach their dreams. The bill passed the House Financial Services Committee last month with bi-partisan support and stands a good chance of passage on the House floor.

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