Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comAuthor: Dan Brecher|June 22, 2021
While capital formation has always been challenging for small businesses, the COVID-19 pandemic has made it even more difficult to secure funding. As the economy recovers, funding opportunities are expected to increase, although it is unclear how quickly they will return to pre-pandemic levels.
The Securities and Exchange Commission (SEC) continues to prioritize efforts to improve access to capital, particularly for small businesses. In recent weeks, SEC Commissioners have provided their recommendations for helping small businesses seeking to raise money.
Commissioner Hester M. Peirce addressed capital formation in her remarks at the 40th Annual Government-Business Forum on Small Business Capital Formation. She made the following recommendations:
In her remarks at a meeting of the Small Business Capital Formation Advisory Committee, Commissioner Allison Herren Lee addressed how to improve access to capital for underrepresented founders and investors. She emphasized that the SEC needs to evaluate how it assesses the effects of its rulemaking on underrepresented and marginalized communities. She specifically raised the following questions:
Are there likely to be disproportionate costs to certain segments of our population from our policymaking? How can we best ensure that the benefits of our rules will indeed flow through to these communities? If we do undertake specific policy initiatives, for instance, to increase access to capital for women- and minority-owned businesses, how do we analyze whether our policy choices will have the intended effect?
Lee discussed steps that the SEC should take to incorporate diversity considerations into its policymaking. “The first is incorporating our Office of Minority and Women Inclusion into our rulemaking process to help ensure that we’re leveraging all of our expertise on these topics,” she said. “The second is incorporating into our economic analysis an assessment of the costs and benefits of our rules on different segments of the population.”
Lee also called on the SEC to formally incorporate an assessment of the distributional consequences of its rulemaking into its economic analysis. “The idea that agencies should be incorporating distributional analysis into their rulemaking is not new, but it is an idea whose time has come,” she said. “When we look only at the overall costs and benefits of our regulation, we do a disservice to communities that have been overlooked and marginalized, and we miss opportunities to better calibrate our rulemaking to achieve the desired effects.”
Capital formation will become increasingly important as we dig out from the economic slowdown caused by the COVID-19 pandemic. Entrepreneurs who finally had time to flesh out a great idea and turn it into a business plan will be looking to move forward. Additionally, small businesses that weathered the pandemic will finally be looking to grow their operations rather than reign them in.
At Scarinci Hollenbeck, our business attorneys are experienced in helping businesses of all sizes secure capital. While we will be closely monitoring the SEC’s moves around capital formation, we can also help businesses take advantage of the options that are already available.
If you have questions or if you would like to discuss the matter further, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Counsel
212-286-0747 dbrecher@sh-law.comWhile capital formation has always been challenging for small businesses, the COVID-19 pandemic has made it even more difficult to secure funding. As the economy recovers, funding opportunities are expected to increase, although it is unclear how quickly they will return to pre-pandemic levels.
The Securities and Exchange Commission (SEC) continues to prioritize efforts to improve access to capital, particularly for small businesses. In recent weeks, SEC Commissioners have provided their recommendations for helping small businesses seeking to raise money.
Commissioner Hester M. Peirce addressed capital formation in her remarks at the 40th Annual Government-Business Forum on Small Business Capital Formation. She made the following recommendations:
In her remarks at a meeting of the Small Business Capital Formation Advisory Committee, Commissioner Allison Herren Lee addressed how to improve access to capital for underrepresented founders and investors. She emphasized that the SEC needs to evaluate how it assesses the effects of its rulemaking on underrepresented and marginalized communities. She specifically raised the following questions:
Are there likely to be disproportionate costs to certain segments of our population from our policymaking? How can we best ensure that the benefits of our rules will indeed flow through to these communities? If we do undertake specific policy initiatives, for instance, to increase access to capital for women- and minority-owned businesses, how do we analyze whether our policy choices will have the intended effect?
Lee discussed steps that the SEC should take to incorporate diversity considerations into its policymaking. “The first is incorporating our Office of Minority and Women Inclusion into our rulemaking process to help ensure that we’re leveraging all of our expertise on these topics,” she said. “The second is incorporating into our economic analysis an assessment of the costs and benefits of our rules on different segments of the population.”
Lee also called on the SEC to formally incorporate an assessment of the distributional consequences of its rulemaking into its economic analysis. “The idea that agencies should be incorporating distributional analysis into their rulemaking is not new, but it is an idea whose time has come,” she said. “When we look only at the overall costs and benefits of our regulation, we do a disservice to communities that have been overlooked and marginalized, and we miss opportunities to better calibrate our rulemaking to achieve the desired effects.”
Capital formation will become increasingly important as we dig out from the economic slowdown caused by the COVID-19 pandemic. Entrepreneurs who finally had time to flesh out a great idea and turn it into a business plan will be looking to move forward. Additionally, small businesses that weathered the pandemic will finally be looking to grow their operations rather than reign them in.
At Scarinci Hollenbeck, our business attorneys are experienced in helping businesses of all sizes secure capital. While we will be closely monitoring the SEC’s moves around capital formation, we can also help businesses take advantage of the options that are already available.
If you have questions or if you would like to discuss the matter further, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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