SEC Chairman Offers Hand to Small Businesses : Securities: Richard C. Breeden proposes letting cash-hungry firms issue stocks to reduce their dependence on bank financing.

The nation’s top securities regulator unveiled a broad package of proposals Tuesday intended to make it easier and less costly for cash-hungry small businesses to raise money.

Many of the nation’s nearly 20 million small businesses--which employ more than half the private-sector work force and produce 50% of the nation’s goods and services--have been caught in the “credit crunch” that has made it tough for companies to obtain bank loans.

The plan outlined by Securities and Exchange Commission Chairman Richard C. Breeden is intended to permit small companies to whittle down their dependence on bank financing and instead issue stocks and other securities considered less risky.

To save money, small companies would be permitted to use simpler forms when they register securities offerings with the SEC and when they disclose financial data to the public. Investors would also face fewer restrictions when reselling the stocks of such companies. And Breeden wants to spur mutual funds to plow more of the billions of dollars they control into small-company shares.

“Of all the sectors that require investment, the financing of America’s small businesses is especially critical,” Breeden said at a National Press Club lunch. “This challenge represents no less than the financing of our economic future.”

Breeden has singled out his small-business initiative as a top priority for 1992. It comes as many small companies find themselves in financial hot water because of the economic slump and crippling amounts of debt.

The SEC’s four commissioners, who must approve the plan, will consider the proposals at an early March meeting. Among the proposals:

* Simplify the forms that small companies are required to fill out and lower the standards for qualifying to use the easier--and cheaper--disclosure documents.

* Make it easier for mutual funds to invest in smaller companies whose stock generally is not widely traded.

* Allow loans to small businesses to be pooled, packaged and traded like securities, as is done with home mortgages.

* Consider legislation that would create a new class of venture capital fund. It would be exempt from registration as a mutual fund so long as its investors are “highly sophisticated individuals” or institutions like pension funds and insurance companies.

Breeden also wants to seek public comment on a plan to allow a new type of fund under which investors could cash in shares less frequently than the current daily requirement. He said this would enable funds to be created that would focus on emerging small companies.

Small-business officials applauded the proposals.

“This would be good help for small businesses. It would help them get the capital they need,” said Ronald Frano, executive director of the American Small Businesses Assn.

“People are reluctant to invest in small businesses.”