Tag Archives: Access to Capital

Access to Capital for Small Business Key Focus in the House Passed JOBS Act 3.0

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In a rare display of bipartisanship, the House of Representatives passed the JOBS and Investor Confidence Act of 2018, known as the JOBS Act 3.0 by a 406-4 vote.  The legislation, which was the result of an agreement between House Financial Services Committee Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA), includes a package of 32 bills which improve investment, capital formation and lending, with a specific focus on helping small business.

This important legislation includes provisions which ease securities laws to help small businesses attract investors and go public.  Some of the highlights of the legislation, include:

  • The Helping Angels Lead Our Startups (HALOS) Act (H.R. 79) addresses an important issue regarding when a business may make a pitch to potential investors without breaking securities laws.  The legislation would define an “angel investor group” and modify SEC regulations to allow entrepreneurs seeking investment to make presentations to prospective investors at events sponsored by angel investor and venture capital groups, nonprofit organizations, universities, etc.
  • The Fair Investment Opportunities for Professional Experts Act (H.R. 1585) would update the definition of accredited investor so those who do not have a high income or high net worth but do have the education and job experience to evaluate investment risks and merits can participate via investments in the growth of promising companies.
  • The Investing in Main Street Act (H.R. 2364) increases the percentage a financial institution or federal savings association can invest in a small business investment company (SBIC) from 5 percent to 15 percent.

For a full list of bills included in the JOBS Act 3.0, click here.

President Trump Signs Bill to Improve SBA 7(a) Loan Program

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President Trump signed into law a bill to strengthen the Small Business Administration’s (SBA) oversight of its loan programs and increase maximum lending authority. Championed in the Senate by Sens. Jim Risch (R-Idaho) and Jeanne Shaheen (D-N.H.) and in the House by Reps. Steve Chabot (R-Ohio) and Nydia Velazquez (D-N.Y.), the Small Business 7(a) Lending Oversight Reform Act, will strengthen and improve one of the core SBA loan programs responsible for providing access to capital to entrepreneurs.

In FY2017, the 7(a) program supported more than $25.44 billion combined across 62,430 loans. According to the SBA, 7(a) lending to women-owned businesses (both majority and minority-owned) grew in total dollar and volume in FY2017, exceeding $7.5 billion which is an increase of $298 million from FY2016.

The law will help the SBA increase efficiency of the (7)a Loan program and expand its reach by strengthening the SBA’s Office of Credit Risk Management which manages the loan program, enhancing the SBA’s lender oversight review process, providing the SBA Administrator with flexibility to increase the program’s maximum lending authority should it be reached, and requiring the SBA to perform a full annual risk analysis of the program.

Seven Small Business Bills Approved by the House of Representatives

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This month, the House voted to pass seven of nine small business bills under suspension of the rules— a procedure used to quickly pass non-controversial bills. The seven bills that passed:

  • Small Business Development Center Cyber Training Act (H.R. 3170):  The Small Business Administration would offer cybersecurity and related planning assistance. The bill would require the SBA to train Small Business Development Center employees in counseling small businesses on cybersecurity questions.
  • Change Order Transparency for Federal Contractors Act (H.R. 4754):  Small business contractors and subcontractors seeking bids for federal construction projects would receive improved information from agencies including performance data and policies on change orders.
  • Women’s Business Centers Improvements Act (H.R. 1680):  The Office of Women’s Business Ownership’s responsibilities would be modified and it would be authorized to make larger grants to women’s business centers.
  • Small Business Development Centers Improvement Act (H.R. 1702): The SBA’s Small Business Development Center grant program would be modified and given new reporting requirements.
  • Spurring Business in Communities Act (H.R. 4111):  The creation of new Small Business Investment Companies in underserved states would be promoted under this bill.
  • Main Street Employee Ownership Act (H.R. 5236):  Employee cooperatives would become eligible for loans backed by the Small Business Administration. The bill would also allow loans to be made to a small business to facilitate employees’ purchase of the firm. The measure also would require additional agency outreach to promote employee purchase of companies.
  • Small Business 7(a) Lending Oversight Reform Act (H.R. 4743):  The Small Business Administration’s Office of Credit Risk Management would be codified and given new oversight responsibilities for the 7(a) program.

The two bills that did not pass were Small Business Advanced Cybersecurity Enhancements Act (H.R. 4668), which would create a central small business cybersecurity assistance unit and small business cybersecurity assistance units in each small business development center, and the SCORE for Small Business Act (H.R. 1700), reauthorizing the SCORE program.

Growth Accelerator Fund Competition

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The SBA’s Growth Accelerator Fund Competition is open for applications and ready to award successful incubators and growth accelerators with cash prizes. This competition, which awards the most innovative and promising small business accelerators and incubators, was announced by the Small Business Administration this morning. These prizes will give the winning organizations additional capital and ultimately assist promising start-ups and entrepreneurs.

For more details on the competition, including competition rules and eligibility, please see the SBA’s announcement. Applications are due by June 3, 2016 and can be submitted through Challenge.gov.

Join Us In Celebrating National Small Business Week 2016

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It’s that time of year again and National Small Business Week starts this week May 1-6! As a partner and supporter, WIPP is excited to share with you some of this weeks live and online events:

Live Event Locations

 

Webinars

Monday

  • Taking the Mystery out of Voluntary Benefits
  • The Decline of Magstripe Cards—and What That Means for Your Business

Tuesday

  • Cloud, Mobile, and Social: Great Apps and Services That Will Grow Your Business

Wednesday

  • Access to Capital and Business Loans: Best Practices

Thursday

  • Tips for Getting Your Business Financially Fit

Click here to learn more and to register for these webinars.

 

To view recent news/press releases and learn how to share with your networks, click here.

We hope that you can join us this week!

Access to Angel Investors Just Got Easier

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By: Jake Clabaugh, WIPP Government Relations

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Seeking to clear up a gray area triggering securities registration, the House of Representatives passed The Helping Angels Lead Our Startups (HALOS) Act pushed by Small Business Committee Chair Steve Chabot (R-OH).

Pitch events or demo days are common methods for business owners to showcase their companies and products to a room full of investors. Right now, there is confusion about whether these events are allowed because the Securities and Exchange Commission’s rules prohibit “general solicitations.” The HALOS Act would clarify that pitch events hosted by angel investors are not general solicitations and do not require securities registration – a complex and expensive process for both angel investors and companies seeking investment.

Angel investment is particularly important for women-owned businesses. Recent data indicates that one in four angel-backed companies are led by women. The number of women-led companies receiving angel investments has increased by 234% in just the last decade. Since women-owned businesses receive only 4% of conventional small business loan dollars, it is vital to cultivate other sources of capital.

This bill will now move onto the Senate for consideration. WIPP will continue to engage Members of Congress on access to capital issues. An additional recommendation in WIPP’s access to capital platform, Breaking the Bank, urges Congress to incentivize angel investments with tax credits.

 

 

Entrepreneurs Win at House Small Business Committee Markup

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By: Jake Clabaugh, WIPP Government Relations

32cc090e-78c0-46b6-8130-e810a45a4029WIPP’s access to capital platform, Breaking the Bank, continues to gain traction in Congress as two more priorities cleared the House Small Business Committee during this morning’s markup. The Commercializing on Small Business Innovation Act provides much needed improvements to the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These programs provide funding for small businesses to innovate through research and development partnerships with federal agencies. WIPP’s platform advocates for a public-private partnership to accelerate the commercialization of technologies developed through the SBIR & STTR programs and the bill passed today does just that. The Commercialization Assistance Pilot Program will allow small businesses to receive additional funding to assist entrepreneurs with bringing their products to market after completing the program.

Women’s Business Centers (WBCs) are an invaluable resource for the 10 million women entrepreneurs in the country who annually contribute $1.4 trillion to the nation’s economy. Legislation to reauthorize this program, the Women’s Small Business Ownership Act of 2015, was cleared by the Senate Committee on Small Business last fall and now the House Committee has followed suit. The Developing the Next Generation of Small Businesses Act of 2016 provides much needed updates to the WBC program including expanding annual authorized funding to $21.75 million and increasing the grants available to centers that provide training and counseling to entrepreneurs.

We would like to thank Chair Steve Chabot (R-OH), Ranking Member Nydia Velazquez (D-NY), and Representative Judy Chu (D-CA) for prioritizing women entrepreneurs and passing both pieces legislation with bipartisan, unanimous votes.

 

 

 

Venture Capital Pool Opens for Women Entrepreneurs

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By: Jake Clabaugh, WIPP Government Relations

VCIf you are an entrepreneur seeking capital, the path to venture funding could be getting a little easier. Earlier this month, the House Financial Services Committee took action on two bills that make venture investments more attainable for entrepreneurs – The Helping Angels Lead Our Startups (HALOS) Act and the Main Street Growth Act. As women entrepreneurs only receive 7% of venture dollars, improving access to venture capital is a top priority in the women’s business community.

Due to ambiguities in the law, pitch events or demo days that are sponsored by angel investors may or may not be legal. Yet, these events are a great opportunity for entrepreneurs to get themselves – and their products – in front of a room full of potential investors. The HALOS Act makes this easier by clarifying this ambiguity. Currently, the Securities and Exchange Commission (SEC) prohibits “general advertising” and “general solicitation,” but the HALOS act would clarify that these events are permitted for groups of angel investors and not subject to the prohibition on general solicitations. The bill’s sponsor, House Small Business Committee Chair Steve Chabot (R-OH), remarked, “clarifying the law to give entrepreneurs and investors more certainty and opportunity is a step in the right direction.”

To further incentivize investment, The Main Street Growth Act (H.R. 4638) will create securities exchanges specifically for venture capital investments. Existing stock exchanges could create a new tier to specialize in venture capital investments or entirely new exchanges could be established. These securities exchanges will bring together buyers and sellers of venture capital and create a more liquid market, which will incentivize investors to support startups.

While no single policy change or piece of legislation will break down the barriers that prevent women entrepreneurs from accessing capital, these incremental improvements show that Congress is committed to leveling the playing field for women entrepreneurs. WIPP’s access to capital platform, Breaking the Bank, continues to gain traction with legislators and WIPP is dedicated to growing women entrepreneurs’ share of venture capital funding.

Business Issues Highlighted in WE Decide 2016

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By: Ann Sullivan, WIPP’s Chief Advocate

WE-Decide-2016_editedIs it just me or are the candidates ignoring economic issues that are business women’s bread and butter? The election so far has largely centered on social issues and impossible promises such as free college. What about taxes, healthcare costs, employee issues, access to capital and access to markets? And what about a positive message? Business owners are optimists – if they didn’t believe America was great, they wouldn’t take the risk of investing in a business. Someone out there thinks America is still the land of opportunity—to the tune of 10 million women business owners.

In all my years of working with Congress and Administrations, Republican or Democrat, WIPP has always taken the view that women who are business owners are influencers in their communities and a trusted source of information. Their focus is on results, sensible regulations and an investment in small businesses. Therefore, they have the obligation and privilege to make a difference in elections and policy platforms.

Hence, the launch of WE Decide 2016, a collaboration with Personal BlackBox (PBB). WIPP has provided a platform for women entrepreneurs to have their voices heard during the 2016 elections. WE Decide 2016 engages women business owners and women entrepreneurs to focus our message. The opinions shared through this initiative will culminate in a policy platform, which will be shared with the candidates at both national conventions.

WE Decide 2016 utilizes an interactive online platform to conduct polling and outreach to women business owners on the issues that affect our lives and businesses everyday. Through quick polls and issue surveys, we will be able to ascertain women business owners’ views in a timely manner and we will share the results with the media.

What makes WE Decide 2016 different from all the other avenues to share your opinion? Thanks to our partner, Personal BlackBox, WE Decide 2016 gives women control of their personal data and a safe place to express opinions privately with peers. Unlike current Presidential polls run by CNN, the DNC and RNC and even Facebook, the information you share with WE Decide 2016 will never be sold to anyone.

So, let’s get started. First step: go to WE Decide 2016 and register. We need an initial number of 1000 registrants to do credible polls. Step Two: ask all of your friends and networks to join the effort. Since we are 10 million strong and an economic force, women business owners are in a unique position to shape the conversation around issues and approaches that resonate with us.

Act now. Our businesses and our future depend on it.

SEC Finalizes Equity Crowdfunding Rules Opening the Door to Additional Capital for Small Businesses

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crowdfundingCrowdfunding is not new to businesses.  You have likely seen or participated in campaigns to help companies bring their idea to market or to grow their business.  In return for a small investment, you receive a product, gift or service in exchange.  This is known as rewards-based crowdfunding, which began to become a viable avenue for raising funds for businesses in 2009 with the launch of a number of crowdfunding platforms like Kickstarter and Indiegogo.

With new rules from the SEC, crowdfunding is now getting an upgrade.  Equity crowdfunding allows a business to seek capital from a diverse group of investors through a “funding portal” and provides investors with an equity stake or stock in the business. Crowdfunding transactions are exempt from the complex and expensive securities registration process. These transactions could be a simpler equity financing option for small businesses; however, the total costs that small firms will incur from a crowdfunding offering are still unclear.

The Securities and Exchange Commission (SEC), who oversees the process, issued a long-awaited final rule on equity crowdfunding that will be effective January 29, 2016.  Highlights of the new requirement include:

  • Small businesses can raise up to $1 million in a twelve-month period and must disclose:
    • Financial statements
    • How the proceeds from the offering will be used
    • Corporate officers and directors
  • Limits the amount an investor can spend to:
    • Greater of $2,000 or 5% of their annual income or net worth (whichever is less) if both are below $100,000
    • 10% of their annual income or net worth (whichever is less) if both are equal to or more than $100,000
    • A total of $100,000 aggregate investments during a 12-month period
  • Requires funding portals to register with the Financial Industry Regulatory authority (FINRA) and:
    • Provide educational materials on how the funding portal operates
    • Disclose how the portal is compensated
    • Provide disclosures from the offering business

WIPP has been a strong advocate for finalized crowdfunding rules, having included the priority in the recently issued Access to Capital Platform. The SEC’s rule will allow small businesses to raise capital through investment without triggering federal securities laws and registration requirements.

For more information, please see SEC Chair Mary Jo White’s statement on Crowdfunding regulation.

Additional resources: