A leading organization that represents entrepreneurs and small business owners expressed frustration with the dawdling pace of Jumpstart Our Business Start Up Act (JOBS Act) implementation by the Securities and Exchange Commission (SEC). The JOBS Act was signed by President Barack Obama one year ago today. The SEC has not issued one rule to implement this important law that will improve capital access for entrepreneurs. Small Business & Entrepreneurship Council (SBE Council) President & CEO Karen Kerrigan , who was at the bill signing ceremony and whose group helped to spark the legislation and lead it to passage, said the SEC’s performance in missing key deadlines is inexcusable.
“The SEC is undermining this important capital formation initiative that was supported by an overwhelming majority in Congress. Entrepreneurs and high-potential businesses that can bring our nation back to robust levels of job creation and growth are being undermined. There really is no excuse for the SEC’s lack of progress,” said Kerrigan.
Among other changes to outdated securities laws, the JOBS Act makes debt and equity-based crowdfunding legal. In late February, SBE Council led a daylong series of briefings in Washington to update White House officials, Capitol Hill staff and the SEC on the state of the industry and the investor protections that have been built out within this transparent marketplace for accessing capital. Crowdfunding experts and entrepreneurs also made it clear that access to capital remains a critical issue for small business owners.
“While lending standards have eased some, according to the latest Fed senior loan officer survey, getting credit remains a difficult task for small businesses. For good measure, it’s worth noting that venture capital investment took a notable dip in 2012. Access to financing remains the biggest hurdle for most entrepreneurs, which makes crowdfunding a critical option in the marketplace,” noted SBE Council Chief Economist Raymond Keating .
At her U.S. Senate nomination hearings for SEC Chair last month, Mary Jo White pledged to make JOBS Act implementation a priority once she steps into her new role. The Senate Banking Committee overwhelmingly approved her nomination, and the full Senate is expected to vote following their return next week.
“We hope Mary Jo White will move quickly to dislodge the proposed rules. After all, these are still proposals open to public comment. Our international competitors are going with our ideas in the crowdfunding space and are now moving ahead of us,” said Kerrigan.
She noted that Italy passed a bill in the fall of 2012, and has already issued it first rulemakings this week. The UK approved a crowdfunding platform, and debt-based crowdfunding is up and running as well.