Crowdfunding Bills For Closely-Held Firms Receive House Panel Backing

A raft of measures aimed at loosening Securities and Exchange Commission rules for closely-held firms has received a U.S. House panel backing. The bills chiefly seek to re-adjust the funding cap for closely-held firms, as well as remove other negative regulatory restrictions on start-ups and small businesses.

Currently, Securities and Exchange Commission regulations demand that closely-held firms go public if their shareholders exceed the 500 limit.

Backed by the House Financial Services Committee, four of the bills garnered bipartisan support and were approved. Should the bills sail through, one bill will remove restrictions to allow closely-held firms to have upwards of 1,000 shareholders without necessarily going public. The bills are now awaiting debate by the full House.

These bills all address small businesses. You have to have capital for job creation.
Representative Spencer Bachus, Chairman of the Panel and Alabama Republican 

The move follows post-2008 credit crisis mitigative measures that saw the House pass legislation to further tighten lending standards. These, together with other inhibitive regulatory requirements, have greatly affected start-ups and small businesses. House Republicans hope the bills will help small businesses and start-ups overcome these regulatory impediments and raise funding.

Another approved bill seeks to lift restrictions that ban closely-held firms from seeking funding from accredited investors. Through a voice vote, the House approved measures that will allow banks to remain closely-held until they attain 2,000 shareholders. They will also be allowed to crowdfund up to $1 million, down from $5 million.

It has become increasingly difficult to access credit in today’s marketplace. We hear this regularly from small businesses in our districts.
Representative Patrick McHenry, A North Carolina Republican

President Barack Obama’s pledge in September that the government would reduce the bureaucratic red tape impeding small business growth galvanized bipartisan support for the bills.