National JOBS Act Unable To Save Small Businesses or the Budding Entrepreneur

The industry weighs in on the new JOBS Act and determines its effectiveness for businesses over the past two years.

Following the economic crisis of 2008-2009, it appears that the U.S. economy is finally on the path to financial recovery. In what seems to be an act of good faith, the Jumpstart Our Business Startups Act—commonly referred to as the JOBS Act—was signed into law April 5, 2012 in an effort to assist small businesses by lessening certain regulatory restrictions and facilitating the access to capital.

In further development to the JOBS Act, Title II of the legislation went into effect September 2013 allowing public companies to announce the intention to raise capital, thus opening the door to crowdfunding and peer-to-peer lending. According to Chris Tyrell, chair of CFIRA aka Crowdfund Intermediary Regulatory Advocates, an advocacy group "in the first seven months of operation, over $100 billion in private offerings used some part of Title II."

Although it is evident that the JOBS Act is a bold step forward in supporting emerging-growth companies and boosting life into the economy, the harsh reality is it may not be enough. The following are the top three reasons why, even with the JOBS Act, more is needed for small business owners to get up and running and to stay afloat.

1. Excessive Red Tape
With the JOBS Act comes the burden of red tape, which proves costly and tedious for small businesses. In a recent interview, AOL Co-founder Steve Case claims that the JOBS Act is indeed working, but that the government still needs to do considerably more to help entrepreneurs. Per an Entrepreneur Magazine study, even with the JOBS Act in place, startups and brokers are still subject to excessive and costly regulatory procedures and compliance, due in part to the new sources of funding that are now available.

2. Insufficient Funding
Even with more avenues for funding, like crowdfunding, there is still no guarantee that a small business will have enough to cover costs. Wall Street Journal reporter Alex Davidson states, “Many banks reacted to the financial crisis by tightening their standards, driving entrepreneurs toward other sources of financing, such as alternative lenders and crowdfunding. Now, despite the slow but steady recovery, it’s still tough for many small firms to get a traditional loan.”

3. Mismanagement of Funds
The U.S. Small Business Administration - SBA recently reported a record number of small business loans for the year 2014, lending out over $19 billion through the organization’s 7a loan program. According to a Reuters report, U.S. Small Business borrowing is at its highest in 7 ½ years. However, as recent as five years ago, the SBA reported that small business failure rates were as high as 12%.

James Lamont, owner of Lamont Financial Services in Novato, California has worked very closely with small business owners over the years and has found a stronger business foundation and effective asset management to be essential in order to maximize one’s chances of success.

“The JOBS Act has created opportunities for a new breed entrepreneur, but in order for a small business to be successful and attain longevity, this Act is not enough.” says Lamont. “Now more than ever the business owner has to have a true strategy to deal with the volatile nature of small businesses while gaining exposure to alternative investments, if suitable to your particular situation, which are not related to the stock market. A proper plan is also needed to protect against the threats that plague the business owner such as taxes, interest rates and operation costs.”

The key to providing adequate support to small businesses therefore appears to lie not only in the development of new laws like the JOBS Act, but also in the offering of more affordable solutions and the creation of more programs to help the small business owner fully benefit from the many resources being offered.


James Lamont is a Registered Representative offering securities and advisory services through Independent Financial Group LLC, a registered Broker-Dealer and Investment Advisor.  Member FINRA/SIPC.  Lamont Financial Services is not a subsidiary of Independent Financial Group.  Office of Supervisory Jurisdiction located at 12671 High Bluff Drive Suite 200, San Diego CA 92130.

Contact Info:
Name: James Lamont, ChFC®, CLU®
Email: Send Email
Organization: Lamont Financial Services
Phone: 415-883-5200

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Release ID: 69280