U.S. Rep Robert Hurt, R-5th District, introduced legislation this past week that aims to help small businesses access capital and ultimately, preserve jobs.
The bipartisan “Small Business Capital Access and Job Preservation Act,” or H.R. 1082, would reduce government regulations on private equity firms as implemented by the new Dodd-Frank law, according to a news release.
“In order to get people back to work and put the 5th District and our nation on a sustainable economic track, it is critical that we continue to remove these kinds of onerous regulations that tie up capital, add uncertainty to the marketplace and hinder our economic recovery,” Hurt said in a prepared statement.
Hurt, a member of the Financial Services Committee, introduced the bill after the committee received testimony on how private investment funds provide capital to struggling and growing companies.
The Dodd-Frank law requires private equity firms to register with the U.S. Securities and Exchange Commission, but Hurt called this a “costly and excessive regulation” because he said these firms do not pose a systemic risk to the financial system.
In the 5th District, companies backed by private equity employ more than 1,500 people, the release stated.
Diane Arnold, director of the Longwood Small Business Development Center in Danville, said via email taking the burden off of private equity firms allows them to focus on investing and helping the business community.
“Currently, the money supply is extremely tight given our massive debt so loans are more difficult to acquire and take longer to process,” Arnold said via email.
Private equity funds are a great source of money for already established companies grappling with survival or growing pains, Arnold explained. Usually, private equity firms look to invest in companies with yearly revenues of several million dollars with the intent of helping them reach new levels of growth.
Private equity firms also assist companies with improving operations and management of capital, she added.
Arnold said reducing unnecessary government regulations would help a business reduce expenses, adding to its bottom line, which could help the business invest in itself or hire people.
Most people who come into the Longwood Small Business Development Center underestimate business expenses, she said.
“The government regulates every aspect of a business and the paperwork involved is burdensome as is the liability issue at every turn,” Arnold said.
Arnold would also like federal legislators to consider tort reform to help the medical and manufacturing sectors, where insurance is a large expense.
For more information, visit hurt.house.gov or call Hurt’s Washington office at (202) 225-4711 or the Danville office at (434) 791-2596.