JOBS Act, Ex-Im Reauth Topic of Hill Debates

March 14, 2012

Two critical pieces of legislation have been the center of debate on Capitol Hill in recent weeks, which could greatly bolster small-business access to capital. First, the House-passed Jumpstart Our Business Startups Act (JOBS Act) would expand and make more affordable small businesses’ ability to raise capital and second, lawmakers on both sides of the Capitol are evaluating the best way forward on reauthorizing the U.S. Export-Import Bank (Ex-Im Bank).

Although there has been discussion on combining the two proposals, Senate Majority Leader Harry Reid (D-Nev.) has said that the bills may end up going to the Senate floor on two separate votes. President Barack Obama has registered support both for reauthorizing and increasing the lending limit for Ex-Im Bank as well as the House JOBS Act.

Immediately prior to press-time, NSBA has learned that the Ex-Im reauthorization language will, in fact, be offered as an amendment during debate which would be a four-year reauthorization with an increased lending cap of $140 Billion–something NSBA supports.

Additional late-breaking news indicates that the debate process in the Senate could allow for open amendments, essentially setting few limitations on the number of amendments to be offered. This open process could serve to delay the final vote on the overall package, however.

Ex-Im reauthorization was not included in the House JOBS Act that passed last week, however. Reid (D-Nev.) has said reauthorizing the Ex-Im Bank is critical, but had previously expressed hesitation on its potential to hold up the Senate’s small-business capital access legislation.

Ex-Im Bank Reauthorization

NSBA, working with its international trade arm, the Small Business Exporters Association has been actively lobbying Congress for a long-term reauthorization of Ex-Im Bank that includes an increase to its lending cap.

Ex-Im Bank, a self-sustaining federal agency, is the official export credit agency (ECA) of the U.S. It helps finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workforce, primarily in circumstances when alternative financing is not available.

Unfortunately, Congress failed to enact a long-term reauthorization by Sept. 30 2011 when its renewable charter expired and has since enacted a short-term extension. The current extension is set to expire at the end of May, 2012 and includes no increase in its lending cap which could cause major stoppages in new lending and support to small businesses when we need it most.

Draft legislation was circulated last week by House Leadership that would reauthorize the Ex-Im Bank’s charter on terms that differ significantly from a pre-conference deal struck with the Senate in December. The draft bill would reauthorize the Bank’s charter for one year with a credit exposure cap of $113 billion, while the largely aligned House and Senate measures that were the basis of the pre-conference deal provide for a four-year reauthorization and would raise the current credit exposure cap from $100 billion to $135 billion.

These and other differences could point to potential difficulties in reconciling lawmakers’ views on how to move forward. Some kind of agreement must be reached within the next few weeks to avoid a program shut-down due to the bank reaching its $100 billion lending limit.


Small-Business Capital Access Legislation

Last week, the House overwhelmingly (390:29) approved the NSBA-supported bipartisan JOBS Act which would promote and facilitate entrepreneurship and new business formation by making it much easier to raise capital and get new ideas off the ground by providing certain exemptions from the more restrictive requirements of U.S. securities law.

Soon, the Senate is expected to follow suit when Majority Leader Reid introduces the Senate’s version of a small-business capital access bill. The JOBS Act includes, and the Senate bill is expected to include a version of the following NSBA-supported measures:

  • Reopening American Capital Markets to Emerging Growth Companies Act of 2011 (S. 1933), which would make it easier for small and medium-sized companies to raise money through capital markets by reducing the costs associated with going public and phasing in certain regulatory obligations over time.
  • Small Company Capital Formation Act of 2011 (S. 1544), which would effectively amend Regulation A by increasing the aggregate offering amount of all securities sold within the prior 12-month period to $50 million. The bill further provides that the securities may be offered and sold publicly and that the securities shall not be restricted securities within the meaning of the Federal securities laws.
  • Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure (CROWDFUND) Act of2011 (S. 1970), which would, among other things, create a crowdfunding exemption to SEC Securities Act registration requirements. Note: A revised version of the CROWDFUND Act was introduced yesterday (3/13/12).

Initially, there were key differences between the House crowdfunding measure as included in the JOBS Act and the provisions contained in the original CROWDFUND Act (S. 1970), specifically the per-investor limits and the preemption of blue sky laws. However, the revised CROWDFUND Act appears to appropriately address those concerns, though the House language still provides the best scenario for small businesses wishing to raise capital over the internet.

Among other provisions, the House language would permit small businesses and entrepreneurs to raise up to $2 million compared to the Senate CROWDFUND Act’s $ 1 million threshold.

Also included in the discussion on the Senate bill is the potential inclusion of two bills from the Senate Small Business Committee, which would increase the statutory lending cap on small business investment company loan limits, and another, to be determined, proposal.

That said, the conversation continues to change on an hourly basis. NSBA will continue to provide updates on this critical issue.

Please click here to send your Senators a letter urging their support of these two critical capital programs TODAY!