U.S. Reps. Patrick McHenry (R-NC) and Tom Emmer (R-MN) introduced legislation that would create a new exemption to help small businesses access capital to create jobs and rebuild from the impact of COVID-19.
The Small Entrepreneurs’ Empowerment and Development (SEED) Act of 2021, H.R. 5458, introduced on Sept. 30, would create a new, permanent micro-offering exemption free of mandated disclosures or offering filings to allow broader access to capital for emerging entrepreneurs and small businesses. Through this bill, job creators would be permitted to raise up to $250,000 in a year without these regulatory burdens.
“A thriving Main Street is critical to our economic recovery,” McHenry, ranking member on the House Financial Services Committee, said. “Our bill will not only help our small businesses rebuild after bearing the brunt of COVID-19, but also create more jobs in their communities. This simple and streamlined micro-offering exemption will reduce barriers to capital formation for these entrepreneurs, many of which need different financing options than what is provided by traditional banks.”
The bill would be particularly beneficial for women and minority entrepreneurs, who disproportionately face barriers to accessing traditional financing options, the lawmakers said. The bill maintains investor protections, including the antifraud provisions of the federal securities laws. The exemption would be especially helpful for those small businesses rebuilding following the coronavirus, they added.
“Small business owners and entrepreneurs are the backbone of our society, and responsible for more than half of new jobs created each year,” Emmer, the top Republican on the Subcommittee on Oversight and Investigations, said. “Unfortunately, they’ve suffered due to lockdowns and forced closures during the COVID-19 pandemic. However, even before the public health crisis, government regulations tied their hands, making it difficult to startup or expand.”