Senators Jon Tester (D-Mont.) and Pat Toomey (R-Pa.) have introduced legislation cutting regulatory burdens on small businesses and expanding their access to much-needed capital. The bipartisan Small Company Capital Formation Act makes it easier for small startup companies to raise capital through public offerings by amending SEC Regulation A to allow companies to sell up to $50 million in shares without filing lengthy paperwork. Currently, businesses can only raise $5 million under Regulation A-a limit many businesses consider insufficient. The regulation has not been changed in nearly 20 year. The legislation will also improve the transparency of these offerings, providing investors with access to additional information. Sen. Tester, chairman of the Senate Economic Policy Subcommittee of the Senate Banking Committee, and Sen. Toomey, a member of the Senate Banking Committee, have been working on the Small Company Capital Formation Act for many months after hearing from constituents about the potential of startup companies to create jobs and spur economic growth. The Small Company Capital Formation Act will ease the regulatory burden on small businesses by making it easier for start-ups and small companies to go public, Sen. Toomey said. "In our struggling economy, quicker entry into the market will allow smaller companies to access capital at an earlier stage in their growth. By encouraging small businesses to expand, the Small Company Capital Formation Act will allow these companies to be competitive, hire new workers, and create badly needed jobs." The Small Company Capital Formation Act is supported by the New York Stock Exchange. There is a companion Small Company Capital Formation Act in the House sponsored by Rep. David Schweikert (R-AZ) which, in addition to raising the Regulation A cap to $50 million, would also require the SEC to re-examine the threshold every two years and report to Congress on decisions regarding the adjustment to the threshold.
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