What Entrepreneurs need to know about the JOBS Act
The entire future of American economy depends on its ability to create jobs for the people; there are numerous reasons why there are not enough jobs in the market. The advancement in technology has lead to the need of fewer men in the field. Some of the jobs have been sourced to low income countries where labor is cheap and the same task can be done in fewer bucks. New jobs are not being created mainly because banks are unwilling to lend money to businesses and entrepreneurs; the businesses are in turn not hiring because there is a lot of uncertainty about the future and the current regulations are pretty strict.
In the middle of all these, the JOBS Act can be seen as both a blessing and a curse. It is bound to bring in some positive change in the economy but it is still uncertain how the businesses will act with the changing economic environment after the elections. The JOBS Act can be considered as a ray of hope in a dark tunnel through which our economy is passing; the pathway created by this act can open doors for new and better opportunities for the people of the country.
An entrepreneur needs funds to start up and run a business; these funds can be generated through borrowing from family, friends, banks or even investors. The investors can either act as part of a group or they can look for business opportunities on individual basis in the hope of making money. The main path through which the interest of the investors is captured and their pool of money is tapped is through the arena of private placement. At present, there are regulations in the security law that allow new as well as running businesses to raise money through private offering rather than the public offerings i.e. through the IPO.
However, the JOBS Act makes life easier for businessmen by losing the regulations of raising funds. There is an exemption in section D of the act that states that if you do not want to register your securities with the SEC and go through the large amount of paper work; you are allowed to do so if you have some investors with an accredited status. The JOBS Act allows advertisement or general solicitation of these kind of offerings; it gives a relief to the businessmen by finishing the cause that investors need to have a pre existing relationship with the investor in order to raise finds.
Role of Entrepreneurs in Job Creation
The expected role of the JOBS Act is to make it easier for the entrepreneurs to reach out to the general public and stimulate the potential of their business and thus put the American economy back on the track of growth and success. The rules and regulations in this regard are still being drawn, so it is a little early to say how well the JOBS Act can be in reaching the target.
Apart from this, the word “accredited” investor still needs a proper definition and set of rules to qualify. The businessmen who do not want to register with SEC need to have investors who have a substantial net growth rate and who are well experienced and knowledge about the field in which they are making the investment. This is a good thing as it will ensure minimal wastage of resources at all levels.
The JOBS Act has gone a long way to ease the conditions of raising money for the businessmen. It is now the responsibility of the businessmen to play their role in creation of employment for the general public so that the American economy is able to come out of this vicious cycle of unemployment and inflation.