More Capital = More Entrepreneurship and Faster Small Business Growth

By at 22 March, 2018, 10:15 pm

Small Business Insider

By Karen Kerrigan-

Access to capital is an enduring challenge for most small businesses at every stage of growth.  As I report below, there is positive legislative movement on Capitol Hill to ease capital access including several opportunities to send legislation to President Trump’s desk this year.

Capital access is a 2018 policy priority for SBE Council (you can read the specifics of our policy agenda here.)  Our challenge is to keep the issue elevated and on the front burner for congressional action.  There are many competing policy priorities in the mix on Capitol Hill, which means we have our work cut out for us over the next several months.  Thankfully, entrepreneurs and small businesses have great champions in Congress and we are optimistic about bills being signed into law in 2018.

The Latest Action on Capitol Hill

The U.S. Senate passed the “Economic Growth, Regulatory Relief and Consumer Protection Act” on March 15, a bipartisan bill that eases excessive regulation on small and regional banks. The bill passed 67-31.

SBE Council supported the legislation as the practical changes to Dodd-Frank will boost small businesses lending and the health of America’s community banks. (Read my Op-ed in The Hill on these changes.)

Small business lending has yet to return to pre-recession levels and relieving small and regional banks of inappropriate regulation will free up capital that can be deployed to Main Street businesses.

The bill now heads to the House, which passed a financial regulatory reform bill last year (H.R. 10 – see SBE Council’s support letter here). This bill is different from the Senate-passed legislation, but the goals of the two bills are the same – to provide more capital to entrepreneurs and Main Street businesses.

House Financial Services Committee Chairman Jeb Hensarling (R-TX) wants to improve the Senate-passed bill to make it bicameral, more pro-growth, and even more bipartisan. He would like to include some of the big bipartisan bills that have already passed the House on suspension (that means there was no opposition) or with large bipartisan support.

SBE Council strongly supports Chairman Hensarling in this effort and we have identified ten capital access bills that meet his criteria. These bills will strengthen capital formation and the capital markets for small business. Again, most of these bills are listed in SBE Council’s access to capital policy priority list. Look for more SBE Council updates on this soon!

Small Business Committees Advance Capital Access Bills

On March 15, both the House and Senate Small Business Committees passed the Small Business 7(a) Lending Oversight Reform Act. This bipartisan, bicameral legislation will increase the Small Business Administration’s (SBA) oversight authority over the 7(a) loan program.

“The 7(a) Loan Program remains one of the SBA’s most significant because it fills an important gap for small business owners in need of capital who may be struggling to get it otherwise. Our legislation will allow the SBA to keep a closer watch on the program to make sure it is running effectively, while also continuing to run at a zero cost to taxpayers. The fact that both the House and Senate, and both sides of the aisle, are supporting this legislation is a testament to how critical it is to help the small business owner succeed and grow,” said House Small Business Committee Chairman Steve Chabot (R-Ohio).

“The unanimous passage of this bill from both committees underscores how important the 7(a) program, and the capital it provides, is to our nation’s small business owners,” said Senator Jim Risch (R-ID), Chairman of the Senate Committee on Small Business and Entrepreneurship. “This bill will ensure SBA has the tools it needs to oversee this growing program, provide lenders with needed clarity, and make sure entrepreneurs and small business owners have access to funds they would otherwise not be able to obtain.”

“When it comes to helping entrepreneurs secure reliable capital, the 7(a) program is a linchpin in the small business economy,” said Ranking House Small Business Committee Member Nydia M. Velázquez (D-NY).

Read more about the legislation here.

The House Small Business Committee also advanced other key bills supported by SBE Council.  In addition, on March 15, the full House passed the Regulation A+ Improvement Act (H.R. 4263) by a vote of 246-170. The bill increases the amount that can be raised via Reg A from $50 million to $75 million. SBE Council strongly supports this legislation.

NWBC Report on Access to Capital

The National Women’s Business Council (NWBC) published a new report about the current state of financing for women entrepreneurs. There continues to be disparities between men and women-owned firms at each stage of business growth.

However, as noted within the report, one area that appears to be closing the “access gap” is crowdfunding.  I have consistently pointed this out during testimony before Congress and in public speaking engagements. When SBE Council led the effort to make equity and debt-based crowdfunding legal, we argued that this would be one of the most important outcomes – that is, democratizing access to capital.

Read the media release to NWBC’s report here. On March 28, NWBC’s public meeting will focus on: Accelerating Access to Capital – Crowdfunding as a Solution to Fund HER Business. Learn more about the event here.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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