While the saga of the first-time entrepreneur funding his dreams with his life savings or credit card advances or by borrowing money from family and friends is still true, it’s not the only way small businesses can find funding.

Issuing stock, specifically, over-the-counter (OTC) securities (sometimes referred to as “penny stocks”) has long been a method of securing capital for smaller companies just getting started.

Because the process a company must go through to file an initial public offering (or “IPO”) is long and expensive, it is usually out of reach for smaller, start-up businesses.

Accordingly, these businesses often elect to trade as smaller offerings on an OTC market, often with a share value of $5 or less. It’s a much easier, much faster, much cheaper, and, ultimately, more accessible way for businesses and entrepreneurs to obtain the funding they need to grow; as well, it provides an opportunity for investors to get a profitable start in trading such securities without having to make a huge investment.

In many cases, companies that find success trading as penny stocks later up-list to larger markets when their value grows — something that has happened 77 times in the past year alone.

In fact, you would undoubtedly recognize a few of the companies that started this way; Berkshire Hathaway began as a publicly traded penny stock company when Warren Buffett “reverse merged” his insurance company with a failing textile company, and — more recently — Monster Beverage Corporation started out trading on the OTC markets in 2002, but is now valued at $29 billion.

These stories represent the exception, of course, not the rule, but what is common to every penny stock company, i.e., small companies with low trading volumes, is that they present potentially massive upside opportunities for comparatively modest investments.

Yet, despite the relative ease of trading on OTC markets and the potentially large rewards that presents, there’s been huge decline in OTC trading.

In 1997, the number of small businesses that entered the marketplace using this method of raising capital was 1,576. In 2017, that number dropped to only 120, representing a decline of over 90%. And this despite a booming economy, better trading markets technology, and unemployment down to its lowest level since 1969.

You can thank the SEC for this. Thanks to the sheer amount of regulation and paperwork now required to trade on OTC markets, the costs associated with becoming a publicly traded company have increased so dramatically over the years that the price tag has become too daunting. On top of that, the SEC has embarked on a zealous enforcement campaign that while designed to police fraud (and potential money laundering) in the penny stock market has, in fact, served to curtail legitimate capital-raising efforts.

The regulations and the enforcement actions may have been well-intended, but, in actuality, they’ve put undue pressure on both entrepreneurs and investors, and have created an environment in which start-ups can’t find investors willing to put up their money with the knowledge that they may not be able to access it readily. Many brokerage firms no longer accept shares for deposit in OTC traded companies, and those that do assess a fee that can be stifling. For many financial service providers, it’s simply easier to avoid working with small businesses than to deal with the restrictive regulations and oversight that goes with it.

Politicians on both sides of the aisle have recognized this problem, which led to the creation of the Jumpstart our Business Startups (JOBS) Act. The JOBS Act was passed in 2012 in order to alleviate many of the regulations that the SEC placed on small businesses, with the hope that it would spur growth on Main Street by create more opportunities for raising capital.

Yet, even with the JOBS Act, fewer companies are bothering to begin the process of being traded as penny stocks. The supposed tsunami of new markets that SEC Commissioner Luis Aguilar predicted would be created by the JOBS Act has only been a ripple.

SEC commissioners appear to be all for “Main Street” investors — including those small “Main Street” companies that desire access to this country’s capital markets — in their press releases and speeches, while their enforcement division is simultaneously turning Main Street into cemetery grounds full of investors in shallow graves.

There’s nothing inherently wrong with some oversight; it is important and can help promote an efficient and free economy. But, if the SEC really wishes to see growth on Main Street as it claims, cutting down on regulations and creating fairer enforcement in order to open the door for liquidity from investors should be its priority.

The SEC needs to start aligning its regulatory and enforcement divisions to fit that aim, providing the same benefits to investors as provided to small businesses raising funds from those investments, and continuing to encourage investors and financial firms to participate in OTC marketplaces.

There is much more to know about the assassination of the JOBS Act and the extermination of the emerging growth company capital markets. This is not an exaggeration and is not simply an attention grabber — it is the reality of the situation for emerging growth companies in today's U.S. regulatory environment. Though the situation is dire, there are quick and reasonable steps that can be taken to reverse the current course.

Solving this, growing companies and entrepreneurs with innovative ideas can connect with the individual investors they need to make those ideas happen — without the obstacle of overly-strict regulatory oversight — fueling the economy on Main Street and around the country.

Micah Eldred is the founder and CEO of Spartan Securities, a private financial services firm based in Clearwater, Florida, that has publicly quoted over 1,000 OTC securities since its inception in 2001 and helps small companies and investors across the U.S. gain access to capital and while simultaneously facilitating shareholders’ ability to liquidate funds in the OTC Markets.