Key Takeaways
- Financing allows businesses to scale faster, more feasibly, and with more flexibility.
- Throughout the COVID-19 pandemic, financial institutions were an essential facilitator of emergency funding for businesses.
- Financial regulations give clear rules of the road for businesses so they can serve their customers, innovate new products and services, and create robust and efficient capital markets to help drive the economy.
Businesses thrive and succeed when financial regulations both protect consumers and allow for competitive capital markets. When applied fairly and properly, these regulations give clear rules of the road for businesses so they can serve their customers, innovate new products and services, and create robust and efficient capital markets to help drive the economy.
In this guide, we’ll discuss sources of financing, how financial regulations impact both small businesses and corporations, and more.
Sources of financing
Financing fuels the engine that helps businesses grow. Whether through reinvestment, a loan, or outside funding via venture capital or an Initial Public Offering (IPO), every business uses some form of financing to operate.
Using multiple sources of financing allows a business to scale faster, more feasibly, and with more flexibility. Companies can find financing through equity investors, banks, public funds, suppliers, credit cards, private investments, and more.
Government regulators
There are a myriad of federal regulators to protect consumers and the overall financial system. These regulators and their various jurisdictions can be difficult to navigate.
The Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) have individual responsibilities for regulating the banking sector. The National Credit Union Administration (NCUA) regulates federally-insured credit unions.
The Securities and Exchange Commission (SEC) is the primary market regulator and is charged with protecting investors including through its oversight of public companies. The Commodity Futures Trading Commission (CFTC) regulates derivatives markets.
The Consumer Financial Protection Bureau (CFPB) regulates consumer financial products like mortgages, credit cards, and automotive loans. The Treasury Department also has various important functions for the financial markets including supporting the enforcement of anti-money laundering rules.
Businesses must adapt their operations and practices to comply with these laws, but they don’t have to do it alone. There are many organizations that help businesses, especially small ones with few resources, navigate financial regulations and meet them effectively.
The role and responsibility of financial institutions
Banks, credit unions, and other financial firms are the key to helping businesses get the financial support they need to grow in today’s economy. During the COVID-19 crisis, businesses that needed emergency assistance were able to access government aid to gain financing through the Paycheck Protection Program (PPP) loan funded by the CARES Act. Throughout the COVID-19 pandemic, financial institutions were an essential facilitator of emergency funding — more than 5,000 U.S. financial institutions approved nearly 11 million loans totaling in excess of $780 billion since the PPP launched in April 2020.
Small and large banks alike have also played a key role in helping minority-owned businesses get access to financing. Whether through providing capital, affordable housing, improved banking access for minority-owned businesses, and a more diverse, inclusive workforce in the financial sector, banks have pledged to support Asian, Black, Latinx, and other underserved communities.
For more information on business finance and corresponding regulations, visit the U.S. Chamber of Commerce’s Financial Regulation page and the Center for Capital Markets.
