U.S. President Barack Obama on Thursday signed the Jumpstart Our Business Startups (JOBS) Act into law, which would encourage startups and support the nation`s small companies by loosening financial regulation against them, according to Xinhua.

The bipartisan legislation, aiming to drive the economic recovery and job creation, would allow Main Street small businesses and high-growth firms to raise capital from investors more efficiently.

Under the JOBS Act, firms achieving annual gross revenues of less than 1 billion U.S. dollars would enjoy an incubator period of up to five years. During this period, there is no disclosure and auditing requirements for qualifying companies, which would let they go public sooner by reducing costs and red tape.

In addition, in the practice of "crowd-funding", startups and small businesses would be allowed to raise money from smaller investors through web-based platforms.

The bill also removed Securities and Exchange Commission regulations preventing small firms from using advertisements to lure investors.

Obama highly praised the bill on Thursday, saying it was a " useful and important" step toward removing barriers to job creation.

However, some critics considered the bill as a step backwards to financial regulation reform, adding it would reduce the government`s protection to investors.