There have been many attempts by lawmakers and regulators in recent years to improve the ways in which small businesses can operate, and now Republicans in the U.S. House of Representatives are once again working on another bill that will serve as something of a boost for owners when it comes to raising capital.
Even in the current economic climate, in which slow, steady steps forward have become the norm, it has often been difficult for many small business to obtain the kind of financing they may need to expand their companies' reach or increase hiring, but now lawmakers are trying once again to improve those chances, according to a report from Politico. Many provisions of the Jumpstart Our Business Startups (JOBS) Act have not even gone into effect yet, but House GOP members are now working on a second version that they hope will do more to provide small businesses with the capital they want.
It seems as though the reason the original bill has yet to go completely into effect is that the Securities and Exchange Commission has been unable to implement it as fully as it was intended, the report said. To that end, Mary Jo White, who was recently sworn in as the chair of the SEC, says that properly instituting the rule is going to be one of her top priorities.
That, however, probably provides little relief to small business owners now, which is likely what led lawmakers to consider what they are already calling the JOBS Act 2.0, the report said. The specifics of the bill are not yet totally clear, given that it has not even passed committee yet, but one might allow more investment from third parties (instead of lenders), through something known as "tick size" rules. This aspect of the potential law in particular seems to have more support among lawmakers putting the bill together. And it should be noted, also, that despite the fact that Republicans are putting the bill together, Democrats across the aisle widely supported the original version of the bill.
Why is this bill important?
In general, the ability of small businesses to raise capital is often vital to their expansion efforts, and sometimes just to get through situations that they otherwise could not afford to handle on their own, the report said. For this reason, and because JOBS Act 1.0 is stalling somewhat in its implementation, lawmakers say this law will hopefully help to bridge some of the gaps that remain.
"First you have the ability of … raising capital for your business, and that's what we helped facilitate with 1.0," House Capital Markets Subcommittee Chairman Scott Garrett, a New Jersey Republican who is lead the effort to create JOBS Act 2.0, told the site. "Now, the next development for any business from there is actually having the ability to … trade your stocks."
Garrett further noted that while the many provisions of the original JOBS Act were well-intentioned and may likely do some good, it will not be helpful to current owners if the government waits for every aspect of the bill to go into effect, the report said. The sooner they can push through more legislation to help ease owners' ability to obtain financing of any kind, the better off the small business sector will likely be.
In the meantime, owners should consider ways in which they can free up some money without seeking outside help, such as by examining the costs for their small business insurance policies. This might be able to help them determine whether they're paying too much for general liability insurance and other types of policies they may need, and also begin the process of finding more affordable alternatives.