The JOBS Act - Easing Small Business Startup Funding

President Obama signed the Jumpstart Business Startups Act, otherwise known as the JOBS Act, into law on April 5th. The intent of the JOBS Act is to simplify security regulations for investments in small businesses thus encouraging the increase of startup companies.

History of Legislation

The JOBS Act was first introduced by Obama as the Startup America Initiative on January 1, 2011. After a year, and a series of edits, the House of Representatives passed the bill on March 8, 2012. The bill was then sent for consideration of the Senate on March 20, 2012. The Senate approved the bill by a vote of 76-23 with an attached amendment which included further protections for investors. On March 27, the amended bill was sent back to the House and passed with a bipartisan vote of 380-41. President Obama signed the bill into law on April 5, 2012. The SEC now has a grace period of 270 days to execute additional changes.

Terms of the JOBS Act

The overall goal of the JOBS Act is to increase funding of small startup businesses through loans and initial stock offerings, allowing companies to grow faster and hire more employees.

Company growth will be supported by the removal of various restrictions on “crowd-funded” or Internet-based investments. In addition, the JOBS Act creates a new category called “emerging growth companies”. The new stock category decreases the restrictions on public stock offerings. “Emerging growth companies” with less than $1 billion dollars in annual revenue will be considered exempt from various Securities and Exchange Commission regulations.

View the full language of the Jumpstart Business Startups Act on the White House Website.

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