House OKs Small Biz Investment Bill

January 11, 2017


On Tuesday, Jan. 10, the House passed the Helping Angels Lead Our Startups (HALOS) Act (H.R. 79) 344 to 73. Introduced by House Small Business Committee Chairman Steve Chabot (R-Ohio), and supported by NSBA, the HALOS Act would ease capital access for small businesses.

Specifically, the legislation will make it easier for businesses to notify potential investors of their offerings as well as provide a statutory definition for “angel investor group.” Additionally, it would require the Securities Exchange Commission (SEC) to revise the Regulation D rules regarding general solicitation. It would allow certain entities including angel investor groups to sponsor events and where communications made on behalf of issuers would not run afoul of the prohibition on general solicitation as long as they met certain criteria. Generally, those criteria require that advertising for the event not contain information about specific offerings, that the sponsors remain neutral and that limited specified information about the offering is distributed.

“One popular way small businesses connect with angel investors is through ‘demo days,’” said Chairman Chabot (R-Ohio). “These exciting events are sponsored by universities, non-profits, local governments, or other groups, that allow entrepreneurs to showcase their products and informally meet investors and customers.”

“SEC regulations are threatening to force these events out of business by imposing unwieldy regulations dictating who is and who is not allowed to simply attend,” Chabot explained. “We must continue to work together to create an environment where our small businesses, the engines of our economy, grow and flourish. This bill is one more step in that direction.”

NSBA supports strong steps towards increasing access to capital for small businesses. Traditional sources of capital for small businesses have not returned to pre-recession levels of lending. Without adequate access to capital, small businesses cannot compete, grow and add quality jobs to the economy. NSBA has long advocated for removing barriers and finding new and efficient opportunities to capital access for small businesses. These commonsense reforms remove red tape and make sure that buyers and sellers of securities can easily get together and ensure that capital flows to America’s small businesses.