Small business financing is one of the greatest hurdles any entrepreneur must face.
In 2015, we discussed a number of ways that entrepreneurs can raise the capital needed to get their companies off the ground and help them grow. We also highlighted several new laws, such as the Securities and Exchange Commission’s new equity crowdfunding rules, that is intended to benefit small business financing. In case you missed any of the posts, below is a brief recap:
SEC Crowdfunding Rules On October 30, 2015, the Securities and Exchange Commission (SEC) adopted final rules to implement equity crowdfunding under Title III of the Jumpstart Our Business Startups Act (JOBS Act). The much-anticipated rules are expected to be a game changer for startups and small businesses because it will allow them to raise money through smaller investments from a large number of people.
State-level crowdfunding While awaiting the SEC rules, more than 20 states legalized some form of equity crowdfunding at the local level. Most regulations allow entrepreneurs to solicit financing from investors who reside in the same state, subject to certain caps. Now that it has finalized its crowdfunding regulations, the SEC also proposed new rules intended to help facilitate intrastate and regional securities offerings.
Friends and Family When founders tap their own resources, friends and family can be a welcome source of capital for new ventures having difficulty securing loans or venture capital funds. Startups can often raise $50,000 to $500,000 and more through this type of financing. However, friends and family financing is not without its pitfalls, including the failure to formalize the arrangement.
Online Lending Online lending is set to outpace more traditional financing methods. In 2015, 80 percent of small-business owners went online first to search for a loan, according to the latest statistics. While the Internet can help connect companies with lenders, as with more traditional loans, it is still imperative for small businesses to do their research.
Regulation A+ Regulation A+, which took effect on June 29, 2015, is intended to provide small businesses with greater access to capital by expanding a little used exemption to SEC registration. Under the new regulations, businesses will be able to offer and sell up to $50 million of securities in a 12-month period, so long as they meet certain eligibility, disclosure and reporting requirements.
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
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Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
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