What does the JOBS Act actually do? Six questions answered.

House Republicans say it’s time for a jobs bill – literally. They are pushing their Jumpstart Our Business Startups (JOBS) Act as a way to help small-business owners by cutting back on regulation, easing entrepreneurs' ability to raise capital, and making modifications to investing in community banks. And here's a news flash: The bill has bipartisan support. So, what's in it?

1. What's in the JOBS Act?

Scott Applewhite/AP
House majority leader Eric Cantor of Virginia, center, leads a news conference on Capitol Hill in Washington on Feb. 28 to announce the JOBS Act (Jumpstart Our Business Startups), a legislative package aimed at helping small businesses, startups, and entrepreneurs. From left are Rep. Nan Hayworth (R) of New York, House majority whip Kevin McCarthy of California, Mr. Cantor, and House Speaker John Boehner of Ohio. J.

Six discrete bills, all tied up with a bow. Together, they would have the following impacts:

  • Raises the number of shareholders a company can have before it is forced to go public. You could call this part The Facebook Act. Facebook, among others, was growing rapidly as a private company but quickly bumped up against the 500-shareholder limit, reducing its ability to compensate employees in one of the main coins of the Silicon Valley realm: stock. The new limit would be 1,000.
  • Permits entrepreneurs to “crowd-fund” their businesses -- that is, would let small businesses raise money from large pools of small investors (limited to $10,000 or 10 percent of an investor's annual income, whichever is less).
  • Creates a new category of firms called “emerging growth companies” that would be allowed a slower accession into the Security and Exchange Commission’s full regulatory and fee structure. The idea is that if small companies have fewer fees, they can go public faster and use the money they get from the public markets to create more jobs.
  • Allows small firms to use advertisements to solicit investors, a practice previously banned by the SEC.
  • Lets companies looking to raise up to $50 million in share sales avoid SEC registration, up from the $5 million level set 20 years ago.
  • Increases the number of shareholders allowed to invest in a community bank from 500 to 2,000.
1 of 6
of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.