House passes Expanding Access to Capital Act

The U.S. House of Representatives passed legislation last week that seeks to help small businesses and entrepreneurs gain better access to capital to grow their businesses.

The Expanding Access to Capital Act. (H.R. 2799) is sponsored by Rep. Patrick McHenry (R-NC), chair of the House Financial Services Committee.

“Across the country, entrepreneurs with a new idea, or seeking to grow their business, are struggling to access affordable capital,” McHenry said. “The Expanding Access to Capital Act addresses this and more by alleviating the unique challenges faced by job creators and their investors who live outside major financial hubs. This legislation builds on the success of the bipartisan JOBS Act of 2012 and will benefit Americans from all walks of life—whether they’re saving for retirement or launching a startup. I’m proud House Republicans advanced H.R. 2799 to provide more people with the opportunity to achieve their American dream.”

The bill includes several Republican amendments, which were adopted with bipartisan support. The amendments include one by Rep. Mike Lawler (R-NY), which clarifies the definition of “general solicitation” and “angel investor” for purposes of the federal securities laws to ensure that startups can discuss their products and business plans at certain events, known as “demo days.”

Also, Rep. Bill Huizenga (R-MI) sponsored an amendment that directs the Securities and Exchange Commission (SEC) to promulgate rules with respect to the electronic delivery of certain required disclosures to investors.

In addition, Rep. Frank Lucas (R-OK) bolted on an amendment that would 403(b) plans to invest in collective investment trusts (CITs) and insurance contracts that currently may be invested in by comparable retirement plans, such as 401(k)s.

Finally, Rep. Ann Wagner (R-MO) made an amendment to allow a closed-end investment company, an entity that invests in securities using money raised in its initial public offering, to invest its assets in securities issued by private funds.

“The Expanding Access to Capital Act will be a catalyst for America’s economic growth by encouraging young companies to go and stay public, while also modernizing the definition of a venture capital fund, particularly in terms of capital formation and early-stage liquidity through the DEAL Act,” National Venture Capital Association (NVCA) President and CEO Bobby Franklin said.

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