On Friday, U.S. Rep. Dan Meuser (R-PA) introduced legislation that seeks to increase the crowdfunding exemption so small businesses and startups have more access to capital.
The legislation, the Amendment for Crowdfunding Capital Enhancement and Small-business Support (ACCESS) Act, would increase the exemption from $100,000 to $250,000. Regulation Crowdfunding, or Reg CF, allows small businesses and startups to raise money by selling small amounts of their equity or debt to the general public.
Currently, issuers using the crowdfunding exemption must file financial statements reviewed by independent public accountants when the offering is over $100,000. Meuser’s office said the requirement can be cost-prohibitive for small businesses and startups because the average cost to file the statements is around $10,000.
“Access to capital remains one of the greatest challenges facing small businesses,” Meuser said. “By raising the crowdfunding exemption, we can provide entrepreneurs with a cost-effective method to raise capital and grow new businesses across the country. This legislation is a win for small businesses and keeps America as a competitive destination for small business growth and development.”
Meuser’s bill would increase the exemption to $250,000, a level adopted by the Securities and Exchange Commission during the COVID-19 pandemic. Meuser’s office said the increased levels during that time period did not hinder the crowdfunding program’s ability to work as designed, and that a higher threshold could support small businesses without compromising investor protection.
The bill is cosponsored by U.S. Reps. Bill Huizenga (R-MI), Pete Sessions (R-TX) and Zach Nunn (R-IA).