Senate Republicans and Democrats have joined together to introduce legislation expanding the Small Business Administration’s (SBA’s) venture capital program. The bill would increase the amount of debt the SBA could guarantee for small business investment companies (SBICs) from $3 billion to $4 billion. SBICs are privately owned fund that are licensed by the SBA. They raise private capital to go along with money borrowed from the SBA. They then invest this money in small businesses.
Other proposed legislation includes bills designed to make it easier for startups and early-stage companies to raise capital. These measures include “crowdfunding” on the Internet and letting companies raise up to $50 million in stock without registering with the Securities and Exchange Commission. These bills have been repackaged with four other measures in to the JOBS Act, which stands for Jumpstart Our Business Startups. This legislation would encourage more companies to go public by phasing in SEC regulations during the first five years after an initial public offering.
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