By Ken Thomas of the Associated Press
WASHINGTON -- President Barack Obama signed bipartisan jobs legislation Thursday that will help small businesses and make it easier for startups to raise capital.
"When their ideas take root, we get inventions that can change the way we live," Obama said in the Rose Garden, flanked by lawmakers and entrepreneurs. "And when their businesses take off, more people become employed."Some Democrats as well as regulators, however, raised concerns that the JOBS Act, or Jumpstart Our Business Start-ups, softened investment protections enacted after the dot.com excesses and Wall Street meltdowns and the changes could lead to fraud and abuse.
Speaking to an invited audience that included entrepreneurs — including South Floridians Albert Santalo, founder, president and CEO of CareCloud; and Zalmi Duchman, founder and CEO of The Fresh Diet — Obama indicated that he’s aware of those concerns and has directed top officials to "keep a close eye" on how it goes into effect.
The main part of the bill would phase in Securities and Exchange Commission regulations over a five-year period to let smaller companies go public sooner. Firms that have annual gross revenues of less than $1 billion would enjoy this "emerging growth company" status.
Both Duchman, whose North Miami-based company delivers healthy, gourmet meals nationwide, and Santalo said the bill would benefit South Florida because greater access to capital could ultimately bring more jobs to the region. Both also said they would consider an IPO.
"We certainly look at an IPO as a realistic possibility for CareCloud. This new legislation would allow us to do it sooner," said Santalo, whose three-year-old Miami-based company provides cloud-based practice management, electronic health record and medical billing software and services for medical groups.
(See Santalo's Q&A with the Starting Gate here. And here is a PBS NewsHour video interview with Santalo)
The bill combines a number of bipartisan bills that exempt newer companies from SEC reporting rules in order to reduce costs and red tape. Another provision facilitates the practice of "crowd-funding" in which the Internet is used to solicit a large number of smaller investors.
Sara Hanks, a securities attorney and co-founder of CrowdCheck, a company aimed at helping startups, said the crowd-funding element will help make it easier for small companies to access capital but warned it will be up to investors and entrepreneurs "to protect themselves from deals that are too good to be true."The legislation removes SEC regulations preventing small businesses from using ads advertisements to attract investors. It also raises from 500 to 2,000 the number of shareholders a company or community bank can have before it must register with the SEC, a provision Duchman said could be beneficial.
"I believe this JOBS Act is a game-changer for small business in South Florida and around the nation," said Duchman, who launched his company using credit-card debt in 2006.
Nancy Dahlberg of the Miami Herald contributed to this report.