U.S. Rep. Tom Emmer’s (R-MN) Micro Offering Safe Harbor Act on Thursday passed the House of Representatives, a measure that helps small businesses grow by raising limited amounts of capital while ensuring they are not breaking financial regulations.
Small business owners remain challenged by a lack of access to capital, with just 69 percent of small firms reporting they were able to get adequate financing, according to a 2016 survey from the National Small Business Association.
Emmer’s bill would amend the Securities Act of 1933 to exempt certain micro-offerings from state regulation of securities offerings. Emmer also offered an amendment to boost anti-fraud provisions and protect investors from bad actors’ attempts to defraud them.
H.R. 2201, Emmer’s second bill passed during this Congress, garnered support from U.S. Rep. Sean Duffy (R-WI).
“Small business owners and entrepreneurs are the backbone of our society, and responsible for more than half of new jobs created each year. Unfortunately, for far too long, government regulations have tied their hands making it difficult to startup or expand,” Emmer said.
“This legislation clarifies existing law so that small businesses and startups have more ways to access capital which is so vital to their success, getting them one step closer to achieving the American Dream,” said Emmer, a member of the House Financial Services Committee.
H.R. 2201 defines what qualifies under the Securities Act as a non-public offering. It would require that three simultaneous criteria would have to be satisfied to trigger a security-offering safe-harbor exemption: a pre-existing owner-purchaser relationship; 35 or fewer purchasers, to the best of the issuer’s knowledge; and an offering amount not in excess of $500,000, according to Emmer’s office.
Duffy commended Emmer’s legislation in remarks on the House floor, noting the measure gives clarity to what constitutes a non-public offering.
“This is simple. It is straightforward, it is common sense, and it supports everything we say we support, which is small businesses, and I think this is a great piece of legislation,” said Duffy, who also is a member of the Financial Services Committee.
“Let’s not play partisanship with the smallest businesses in our communities, the ones that we both agree create jobs,” Duffy added.
The U.S. Chamber of Commerce, the National Federation of Independent Businesses, the National Small Business Association, and other groups have endorsed H.R. 2201.