A bipartisan bill designed to modernize crowdfunding regulations and expand access to capital for small businesses advanced out of the U.S. House Financial Services Committee, potentially paving the way for significant changes to Regulation Crowdfunding (Reg CF) requirements.
The legislation is one of many proposed by the House Financial Services Committee, which aims to improve access to capital for smaller firms and entrepreneurs, as well as create opportunities for smaller investors.
Known as the Amendment for Crowdfunding Capital Enhancement and Small Business Support Act (ACCESS Act or HR 3645), the legislation was introduced by Representative Dan Meuser (R-PA) and aims to reduce regulatory hurdles that prevent early-stage businesses from leveraging online crowdfunding platforms.
The bill received support from both Republican and Democratic committee members and will now be considered by the full House of Representatives. The vote on the amendment was 51 for and zero against.
At the heart of the bill is a proposal to raise the financial reporting threshold that triggers an independent accountant review.
Currently, businesses using Reg CF to raise more than $100,000 must provide financial statements reviewed by a certified public accountant—an expense that can often exceed the capital they are seeking. In effect, investors in a Reg CF offering will immediately see much of their funds consumed by what many deem as an unnecessary expense.
The ACCESS Act would increase this threshold to $500,000. The original language had set the hurdle amount lower at $250,000.
This would help small enterprises scale their fundraising strategies without being immediately subject to disproportionate compliance costs.
Proponents argue that current rules disincentivize the use of crowdfunding among startups, especially those seeking small amounts of capital.
By streamlining requirements and lowering financial barriers, the bill aims to make it easier for entrepreneurs to invest in growth, job creation, and innovation.
Startups and smaller firms frequently seek funding under $500,000. Some of these firms have no or minimal operating history, and thus, demanding a full audit provides little value for an investor, $500,000. It makes more sense for these firms to dedicate as much capital as they can to executing on their vision, giving all investors a chance for a return.
The legislation also aligns with broader administration efforts to encourage entrepreneurship and support small businesses, as they are key drivers of wealth and job creation. With Republicans in control of the House, the narrative has shifted from one of undermining capital formation and focusing on social issues and investor protection to one of support for smaller businesses and investors.
There are other bills in the queue that will assist smaller firms as well as smaller investors. There is a push to update the definition of the Accredited Investor as the current rule is deemed to be discriminatory. The Improving Crowdfunding Opportunities Act aims to increase the funding cap on Reg CF from the current $5 million to $10 million.