Senate Votes to Move Ahead on Small Business Bill

"This bill would allow companies to advertise virtually unregulated stock offerings on television or on billboards," said Sen. Carl Levin, D-Mich. He said the House bill would let large companies with many shareholders avoid regulation by the Securities and Exchange Commission.

The head of the SEC, Mary Schapiro, has written Congress listing concerns about how the bill could open up investments to possible fraud and abuse. The chairman of the House Financial Services Committee, Rep. Spencer Bachus, R-Ala., has said the bill contains strong investor protections and that Senate Democratic objections were part of a "cynical campaign strategy of running against a so-called do-nothing Congress."

The centerpiece of the bill is a measure to reduce the costs of companies seeking to go public by phasing in over five years SEC regulations that apply to what are categorized as "emerging growth companies." That status would be in effect for companies with annual gross revenue of less than $1 billion.

The measure would remove SEC regulations preventing small businesses from using advertisements to solicit investors, raise from 500 to 2,000 the number of shareholders a company or community bank can have before it must register with the SEC, and allow smaller companies to sell up to $50 million in shares, compared with $5 million now, without filing some SEC paperwork.

It also encourages the practice of "crowdfunding," where the Internet is used to raise capital from a large number of smaller investors. The measure limits individual contributions to $10,000 or 10 percent of the investor's annual income.

Senate Democrats who sought to amend the crowdfunding provision said that without changes the practice could lead to fly-by-night schemes to attract vulnerable investors to risky or deceptive ventures.

The rejection of the amendment to extend and expand the life of the Ex-Im Bank also angered Democrats, who said that without the bank U.S. companies would lose a crucial means of financing overseas sales. The bank's authority expires on May 31, and before that it will hit its lending limit of $100 billion. The Democratic proposal would have extended that authority for four years and raised the lending limit to $140 billion.

McConnell said Republicans were willing to take up the bank's fate in separate legislation. While supported by most major business groups, the bank is opposed by conservative groups such as the Club for Growth.