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Sunday, March 18, 2012 3:36:22 PM
Intersting article for businesses!
http://news.yahoo.com/bi-partisan-jobs-act-could-boost-small-business-201100497.html
Bi-partisan JOBS Act Could Boost Small Business Development, U.S. Economy
By Anthony Ventre
PostsWebsiteBy Anthony Ventre | Yahoo! Contributor Network – Fri, Mar 16, 2012This story comes from the Yahoo! Contributor Network, where individuals publish their unique perspectives on some of the world’s most popular websites. Do you have a story to tell? Become a Yahoo! contributorEmailtweetShare2Print
Pennsylvania Sen. Pat Toomey co-wrote a bill that passed the House last week by a wide margin. It's called "Jumpstart Our Business Startups" or simply, the JOBS Act. New York Democrat Chuck Schumer supported the bill in a statement on the White House web site.
Giant corporations have a variety of ways of raising money for expansion or new products. Small businesses face greater risks and therefore often have trouble raising money. Should the bill become law?
Who needs IPOs?
Initial Public Offering, or IPO, is a common term in the business communities and in many American investor households. It means that a new company can sell stock in order to get the capital needed to hire employees, build plants, and conduct business. Without investment dollars, new businesses could not withstand the period of time before they become profitable. New business development is discouraged by excessive regulatory hurdles and by lack of access to bank loans.
What are the advantages in passing the JOBS Act bill?
Small businesses are the "driving force of the economy," according to Business Wire. Increasing the number of small businesses could aid the nascent recovery and lower the unemployment rate. Small businesses do not have the kind of human or capital resources needed to complete the regulatory requirements of an Initial Public Offering of stock. The JOBS Act would shortcut and render less expensive the regulatory hurdles of startup businesses.
Why not just pass the JOBS Act bill if it creates jobs?
The Securities and Exchange Commission, headed by Mary Schapiro, thinks investors could be fleeced in Ponzi schemes run by unscrupulous companies. The SEC wants the status quo level of regulatory scrutiny for all startups. The Washington Post reported Schapiro's objections in a letter she sent to the Senate banking committee.
Why don't new businesses just borrow what they need from banks?
The failure rate of small business is high, especially in the first year, according to statistic compiled by The Big Picture. Therefore, banks don't want to put their money at risk by investing in small startup businesses which could go bankrupt.
Didn't the loans and investment crash of 2008 put the finances of the entire country in jeopardy?
Yes, it did, but small business failures were an insignificant part of that and no small businesses got bailed out with taxpayer money. The only people who could get hurt by investments in small business are private investors who provide funds in the hope of earning returns on successful companies. The risk for small businesses may be high for individual investors but the rewards can benefit the entire economy.
Who is for the bill and who is against it?
It is essentially a bi-partisan bill, promoted in the Senate by fiscal conservative Pat Toomey and by liberal New York Senator Chuck Schumer. President Obama supports it, and so do the majority of members of Congress on both sides of the aisle. Opponents of the bill are led by Senator Carl Levin and the AFL-CIO.
Is it likely the JOBS Act will be passed by the Senate?
Yes, but the issue is always the same. How much will be the bill be diluted by amendments? Even SEC chief Schapiro is not entirely opposed to the bill. One of the objections Schapiro has is to the definition of "small business" to include revenues up to a billion dollars. Senator Toomey, appearing on CNBC's Squawk Box this morning doesn't feel that the bill will be so much diluted as it could be tuned up, with definitions made clearer.
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