A bill by U.S. Rep. Dan Meuser (R-PA) modernizing crowdfunding regulation and expanding access to capital for small businesses passed out of the House Financial Services Committee Wednesday.
In a bipartisan vote, the Amendment for Crowdfunding Capital Enhancement and Small Business Support Act (ACCESS Act), will now move to the full House. The legislation seeks to cut red tape for entrepreneurs by increasing the threshold at which they must obtain a financial statement review by a public accountant and builds in flexibility to keep pace with inflation.
“America’s entrepreneurs shouldn’t have to choose between raising the capital they need and paying accountants more than they plan to raise,” Meuser said. “The ACCESS Act updates outdated thresholds so the next great neighborhood brewery, tech start-up, or Main Street retailer can spend its first dollars on growth—not paperwork.”
Specifically, the bill raises the financial statement review threshold from $100,000 to $250,000 and gives the Securities and Exchange Commission the option to raise that figure to $400,000 when recommended by the Offices of the Investor Advocate and Small Business Capital Formation Advocate. Regulation CF, part of the JOBS Act of 2012, allows investors to back early-stage companies online. However, many start-ups remain below the current $100,000 financial-review threshold, forcing them to choose between compliance or forgoing crowdfunding, Meuser’s office said. The ACCESS Act would update the dollar amounts ensuring the rule scales with the economy while maintaining investor safeguards.
“Under Mr. Meuser’s bill, issuers using crowdfunding exemption will only be required to file financial statements to be reviewed by an independent accountant for offerings over $250,000, as opposed to that current threshold of $100,000,” Committee Chairman U.S. Rep. French Hill (R-AR) said “I commend Mr. Meuser for drafting a bill that surgically right-sizes our security laws to lessen the burdens on those small businesses raising small amounts of capital.”