# MicroCap Small Business Investing Act of 2023

This bill makes it easier for very small businesses to raise money from investors by loosening some of the strict rules that normally apply to selling company shares. Right now, if a small company wants to sell stock to raise cash, it has to follow complicated federal regulations that were designed to protect investors but often make it too expensive and time-consuming for tiny businesses to bother with. This bill creates a simpler path for what are called "microcap" companies—basically businesses with very little market value—to sell shares to regular people without jumping through as many regulatory hoops.

The main way it does this is by expanding something called the "Regulation A" exemption, which lets companies raise money from the public without going through the full process of becoming a publicly traded company. Under this bill, microcap companies can raise more money this way and don't have to follow all the same reporting requirements as bigger companies. The idea is that these smaller businesses need access to capital to grow, hire people, and expand, but the cost of complying with securities regulations makes it nearly impossible for them to do so.

Who does this affect? Primarily small business owners who want to grow but can't afford the legal and accounting costs of traditional fundraising. It also affects regular investors who might want to invest in local or small businesses—they'd have more opportunities to do so, though with potentially less regulatory protection than they'd have with bigger, more established companies. The bill essentially bets that making it cheaper and easier for microcap companies to raise money will help them grow faster, create jobs, and stimulate economic activity, while accepting that there's a tradeoff in terms of investor protections.

MicroCap Small Business Investing Act of 2023

Hickenlooper, John W.

MicroCap Small Business Investing Act of 2023 This bill authorizes the Small Business Administration (SBA) to issue up to ten Small Business Investment Company (SBIC) licenses each year to certain applicants. An SBIC is a privately owned company, licensed and regulated by the SBA, which invests in small businesses through debt and equity. A license issued under the bill must be awarded to an applicant <ul> <li>that would otherwise be issued a license except that the management of the applicant does not satisfy certain qualification requirements such as investment experience;</li> <li>where the fund managers have a documented record of successful business experience, a record of business management success, or knowledge in the particular industry or business in which the investment strategy is being pursued; and</li> <li>that will make at least 25% of its investments in specified areas and businesses (e.g., low-income communities, businesses owned or controlled by individuals in underserved communities, and rural areas). </li> </ul> The SBA must prioritize applicants that are located in states with fewer licenses and establish a streamlined application process for those licenses.