Recent economical strife from the current recession has become motivation for business savvy Americans to stop looking for work and instead start their own businesses. Due to this phenomenon, new laws were implemented to advance job creation through these startup companies, just as incentives for corporations to adopt green solutions were due to expire. As an act of encouragement for those entrepreneurs to create jobs, the Obama Administration introduced the “Startup America Initiative” last year, and was passed into law as the Jumpstart Our Business Startups (JOBS) Act in April 2012. Government advocacies have now been accelerated by maintaining the belief that tax-cuts may help partially resolve the unemployment issue. This is good news for startup businesses, and can be primarily advantageous for companies looking to develop eco-friendly technologies.
Perhaps the primary motivator for job seekers who are interested in starting a business but lack initial capital to begin the process is a new section initiated by the JOBS Act that promotes crowdfunding. Aspiring to create a national framework for small businesses and entrepreneurs, the JOB Act allows motivated parties to utilize online fund raising platforms to raise funds by selling securities through an intermediary party. This means that a company can begin to sell shares for repayment and maintenance through a crowdfunding platform that is registered with the Security and Exchange Commission (SEC).
According to the official 2011 fact sheet, “SBA will commit $1 billion to those funds that invest growth capital in companies located in underserved communities. This will include investing in economically distressed areas as well as those companies in emerging sectors such as clean energy. SBA will provide up to a 2:1 match to private capital raised by these funds, partnering with private investors to target “impact” investments.” This incentive should help encourage job creation and green technology development for those considering starting a new small business, and may further implement startup businesses to counsel others in programs such as internships and other forms of education.
Additional encouragement lies in the SBA’s proposed Entrepreneurial Mentor Corps. (EMC) program. Following this initiative, startup companies are aligned with mentors experienced in the industry, a sort of professional guidance program with an emphasis on helping startups attain expertise quickly and avoid many of the usual pitfalls through training and support. According to SBA’s website, the first 100 companies to receive assistance from the EMC pilot program were startups focusing on clean energy solutions.
Finally, although the SBA does not usually give grants for starting a business that is not specifically non-profit or education oriented, they do allow grants for matching funds of a clean-technology startup business. Further credit can be obtained by companies who focus on researching possible clean-tech solutions (Form 6765). The R&D tax credit, first introduced in 1981, has been extended numerous times and now has an expiration date of 2015. Both the R&D credit and the JOBS Act have provisions for researching clean energy, which is great news for investors and potential employers of college graduates in the engineering fields.
Despite initial partisan debates over the strength of the JOBS Act in reviving the economy, and the fact that it is yet too early to distinctively cite the successes of startups under the new program, one thing is certain: If you are considering pursuing a startup business, now is the time to test the waters.
Matt Maxwell loves writing about the business world. He contributes to businessbroker.net, and is primarily interested in businesses for sale.