Financing Small Business

The House Financial Services Committee held a hearing today on legislation to increase the exemption on Regulation A filings from $5 million to $30 million – a move NYSE Euronext believes would help entrepreneurs and small business owners access the capital they need to expand and create jobs.   Under Regulation A, small companies can offer shares to the investing public without incurring the expense or meeting the regulatory burden required for larger businesses under full registration with the SEC. 

NYSE Euronext’s Executive Vice President Scott Cutler testified in favor of the bill and said it would provide an alternative to traditional bank or late stage venture capital financing for small businesses looking to break through to the next level: 

“Increasing the SEC’s Regulation A exemption from $5 million to $30 million would open capital markets to more entrepreneurs – a vital step toward fueling America’s most vigorous job-creation machine.  Oftentimes, the greatest acceleration in job growth occurs after a company’s initial public offering – in fact, the National Venture Capital Association reports that 92 percent of all job growth within publicly traded companies occurs after the company’s IPO.”

Cutler told the Committee that when Pixar released the first Toy Story movie, the company employed fewer than 100 people.  Going public provided the financing to help Pixar grow from a small animator into a major motion picture studio.  By the time the company released Toy Story 3 last summer, the number of jobs at Pixar had grown more than eight-fold.

Many small businesses across the American economy today are struggling to find capital.  A record 41 percent of small business owners cannot get adequate financing, according to the most recent data of the National Small Business Association – up from 22 percent in 2008.