JOBS Act intended to create small business growth passes Senate

Posted by Justin Hesser on March 23, 2012

On March 22, the United States Senate passed a bill known as the Jumpstart Our Business Startups Act (JOBS Act) that allows small business to acquire capital and go public with more ease than before.

As the economy starts to climb out of the recession and the technology industry experiences an unprecedented red shift in growth and innovation, this new legislation comes in support of that, hoping to generate more job growth for small businesses as it demystifies the processes of gaining private funding.

The JOBS Act, essentially, does three things.

First, through a relatively new concept called "crowdfunding", it increases the opportunity for equity investment. The small internet investments of crowdfunding used to be very limited, according to Reuters, but the JOBS Act removes those limitations – mostly involving the ability to crowdfund equity investments.

The Act also eases up on public disclosures. Before the JOBS Act – which still needs to go through the House of Representatives and get signed by President Obama – the SEC stated that companies with over 500 shareholders and $10 million in assets are required to follow public disclosure rules. Under the JOBS Act those numbers are increased to 2,000 shareholders.

Furthermore, the JOBS Act states that "emerging growth companies" – companies with less than $1 billion in revenue that wish to go public – are exempt from some of the Dodd-Frank rules and are required to file fewer financial reporting statements to acquire an IPO.

Across the board, the JOBS Act is being considered an excellent way for small to medium sized businesses to save money while also expanding and growing. The revenue saved by companies through the JOBS Act can be used to consult software developing companies to create a stellar website to enhance online presence for crowdfunding, or to create customized database software for better business practices.