Support Letter for H.R. 6127: Unlocking Capital for Small Businesses Act

By at 10 September, 2018, 12:23 pm

The Honorable Ted Budd

United States House of Representatives

Washington, D.C.  20036

Dear Congressman Budd:

On behalf of the Small Business & Entrepreneurship Council (SBE Council), thank you for introducing the “Unlocking Capital for Small Businesses Act,” H.R. 6127.  SBE Council strongly supports this legislation, which has long been needed to provide clarity on a regulatory issue that has created confusion and barriers for entrepreneurs who need to access startup or growth capital.

Individuals – that is, finders – who help entrepreneurs identify potential investors offer a valuable service that is far, far simpler than the services performed by broker-dealers. So regulating this activity in the same way makes little sense, and hurts the ability of Main Street entrepreneurs to access the capital they need to create or scale businesses.

H.R. 6127 addresses uncertainty created by the Securities and Exchange Commission (SEC) nearly twenty years ago by establishing a regulatory safe harbor that exempts finders from having to register as broker-dealers, and also adopts a lighter regulatory approach for private placement brokers. The scaled approach more appropriately regulates the various players’ activities, and in turn would reduce costs for small businesses while opening opportunities to connect with potential investors.

Merely introducing an entrepreneur to a potential investor and receiving a “finder’s fee” if that connection has a positive outcome should not require the same regulatory regime as more complex dealings such as holding investor funds or securities, recommending the purchase of specific securities, and participating materially in negotiations between issuers and investors. Again, H.R. 6127 achieves regulatory balance by providing a framework that matches the scope of work performed for the issuer.

Finders are very important to entrepreneurs who often do not have access to “accredited investors.” Enabling finders to more productively use their networks to help entrepreneurs with their capital needs not only benefits the entrepreneur, but also the broader economy and the many communities and regions of the country where capital is scarce.

Entrepreneurship is the U.S. remains historically weak, and potential business owners need an ecosystem that encourages their risk-taking. Access to capital is a critical part of that ecosystem and your bill would provide a needed boost. Given stronger growth in the economy, H.R. 6127 would also help business owners take advantage of growth opportunities by helping them meet their capital needs for expansion.

Thank you for your leadership Congressman Budd, and please let SBE Council know how we can help you advance H.R. 6127 through the U.S. House and into law.


Karen Kerrigan, President & CEO

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