SEC to throw open the doors to everyman investing

On the heels of our launch last week of SCcrowdfund.com, which will allow businesses and non-profits to post their business ideas and projects on a public online portal to encourage people to donate (donation crowdfunding) or invest (private placement investment for those with high incomes), more good news is expected tomorrow.

At 10 am, the U.S. Securities and Exchange Commission (SEC) will hold a public meeting at which time it is anticipated that it will release proposed rules that will govern the sale of securities in businesses via crowdfunding. In 2012 Congress passed the JOBS Act that had as one of its provision legalizing businesses to solicit and receive investments of as little as $100 from all citizens through online portals popularized by donation crowdfunding firms like Kickstarter and Indiegogo. 

The South Carolina Small Business Chamber of Commerce (SCSBCC) and the American Sustainable Business Council’s (ASBC) support for security (or equity) crowdfunding dates back to 2010 when the concept was originally proposed in a petition to the SEC.  The SEC has come under pressure to promulgate regulations that will govern how security crowdfunding is carried out.  Just yesterday a group of U.S. Senators including those who were  critical to the passage of the law, including Senators Jeff Merkley and Mary Landrieu, sent a letter to the SEC calling on the agency to complete its security crowdfunding regulations.

If the SEC does release its proposed regulations tomorrow it will begin a public comment period enabling those with an interest to critique the rules and possibly influence the final regulations.  But more importantly it will give business organizations like the SCSBCC and ASBC a clearer timeline for incorporating security crowdfunding in our portal platforms.  It will truly be a revolutionary opportunity for everyday citizens to invest small amounts of money into growing their local economies by providing capital to locally-owned businesses. 

When the time comes, hopefully in 4 or 5 months, we will add security crowdfunding to our statewide portals (SCcrowdfund.com) for donation crowdfunding and private placement investment. This is exciting!

ACTION ALERT!!!

Access to Capital vote on Tuesday
Tell Graham and DeMint to do it the right way

The U.S. Senate will vote tomorrow (March 20^th) on legislation to create another path for small businesses to access capital.  The Small Business Chamber has supported the idea of allowing limited investments in small businesses with relatively low caps on total investments sought.  This is called “crowdfunding”.  In exchange for limited investment caps, the Security and Exchange Commission’s (SEC) normal requirements would be reduced to eliminate much of the cost and time for compliance that prohibits most small businesses from accessing investment capital.

However, “crowdfunding” legislation done properly is a careful balance between reducing investor risk through low investment caps and thus lowering SEC oversight.  We have worked with a bi-partisan group of Senators to achieve this balance.   Unfortunately, the U.S. House has passed and sent to the Senate legislation (JOBS Act) that includes a “crowdfunding” provision that throws this careful balance out the window and will bring the greed and fraud on Wall Street that gave us the Great Recession to Main Street investments.  

Senator Mary Landrieu of Louisiana has characterizes the vote tomorrow this way.  ““There's a right way to get capital in the hands of small businesses and a wrong way.  If we take the wrong path and fall off of a cliff, we are going to ruin our chances to get this done.” 

Please contact S.C. Senators Graham and DeMint quickly.  Below are two easy ways to do this.  Your message should be twofold:

Vote YES for cloture on Reed-Landrieu-Levin’s Substitute Amendment to the JOBS Act.

If Reed-Landrieu-Levin fails, Vote NO for cloture on the House Bill (H.R. 3606)

The first vote would substitute the Senate INVEST Act that includes our crowdfunding provision for the JOBS Act.  The latter vote will insure more debate and amendments to the JOBS Act so that we “don’t fall off of a cliff”.

Send your message to our Senators in an email letter provided by the American Sustainable Business Council.  Click here to send email.

Or call both our Senators and give the above message.

Senator Jim DeMint 
202-224-6121

Senator  Lindsey Graham 
202-224-5972

Thanks for your help.

Hope for bipartisanship and small business?

If your feet felt cold this morning, it’s because Hell has frozen over.

Last evening the U.S. House passed overwhelmingly (407-17) a piece of President Obama’s American Jobs Act.  While the Senate Republicans yesterday blocked the transportation part of the jobs bill, House Republicans and Democrats solidly supported changing Security and Exchange Commission (SEC) regulations to allow small businesses easier access to private investment. 

Last year supporters, including the South Carolina Small Business Chamber, of a concept called “crowdfunding” proposed by the Sustainable Economies Law Center lobbied the SEC for reducing strict registration requirements for small businesses to seek investors for security offerings up to $100,000 with $100 maximum per investor.    We felt that the onerous registration process was there to protect investors.  So if the maximum an investor could lose was only $100, then such requirements should also be minimal.

The SEC listened as did the Administration.   The President’s jobs bill included the general concept of responsibly reducing SEC regulatory burdens if investor risk was low.   And the SEC established an Advisory Committee on Small and Emerging Companies that had its first meeting Monday of this week.  On its agenda was the concept of “crowdfunding” as a vehicle for small businesses to better access capital.

Not waiting for the SEC, last evening the House passed H.R. 2930 with some amendments.  The bill takes our original “crowdfunding” proposal and dramatically raises the cap to $1 million on the amount of funds allowed to be generated through this process that would include internet and other forms of advertising. The cap on how much each individual investor can give was raised to $10,000. 

Small businesses following the “crowdfunding” guidelines would not have to register with the SEC.

Now this bill goes to the Senate and we’ll have to see if that body can also get over its partisan divide.  If it can, then a whole new opportunity for small businesses to meet their capital needs will become a reality.