Small Business Update from Montana Senator Jon Tester

I wanted to take a minute to update you on some important things we’re doing on Capitol Hill to help small businesses in Montana.

Last week, the Senate unanimously passed an amendment to the National Defense Authorization Act that would reauthorize the Small Business Innovation Research/Small Business Technology Transfer programs for the next eight years. This is a big win for Montana. These programs stimulate technological innovation and encourage small businesses to meet federal research and development needs. But most importantly they create jobs. The bill increases the SBIR program by 1% and the STTR program by 0.3%. It will increase SBIR/STTR awards from $100,000 to $150,000 for Phase 1 and from $750,000 to $1,000,000 for Phase 2. The legislation also allows for an annual increase for inflation in order to keep research and development costs realistic.

The National Defense Authorization Act, including the reauthorization of the SBIR/STTR programs, passed the Senate overwhelmingly. Now it must be reconciled with the House of Representatives’ version of the National Defense Authorization Act. Unfortunately, the House bill does NOT include a reauthorization of the SBIR/STTR programs. I urge the House to agree to the Senate’s proposal and send it to the President to be signed into law.

Another important piece of legislation that we’re working on is my Small Company Capital Formation Act (S. 1544) which the Senate Banking Committee held a hearing on last week. This legislation would update Regulation A which provides small businesses with the ability to raise capital without having to register with the SEC — and provides those making offerings under Regulation A to "test the waters" with a public solicitation before filing with the SEC. Unfortunately, the current ceiling under this offering is $5 million — a level that has not been raised since 1992 and is considered too low to be a viable method of raising capital.

My legislation would increase this ceiling from $5 million to $50 million while adding new safeguards to protect investors by requiring audited financial statements and electronic filing of offerings. This legislation would ensure that small businesses be able to "test the waters" but increases the amount of capital that can be raised. This change will enable small businesses to raise the capital they need without jeopardizing critical investor protections. I’m pleased to report that legislation identical to mine moved through the House nearly unanimously and I look forward to working with my colleagues in the Senate to pass this bill for Montana’s small businesses.

Over the past year, I’ve heard from small business owners from all over the State of Montana about how important access to capital is to their success. At a recent hearing I held in Missoula, witnesses Dr. Robert Bargatze of Ligocyte Pharmaceuticals in Bozeman and Liz Marchi of the Frontier Angel Fund talked about the potential of startup companies in Montana to create jobs and spur economic growth. In fact, the recommendation that we take a closer look at revamping Regulation A came directly from this hearing.

Hearing directly from you about the challenges and potential solutions to the access to capital challenges in Montana will help me as we work together to address these issues. For more information on any of these issues or if you have any questions, please don’t hesitate to contact me or my staff regarding these issues (SBIR/STTR: Zach Radford, [email protected]; Capital Formation: Ali O’Donnell, [email protected]).

Sincerely,

Jon Tester
United States Senator

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