People’s VC

For the last 80 years, obtaining capital to start, grow, or expand a privately held business has been challenging for entrepreneurs and business owners. The reason for this challenge has been the limited forms of capital formation available to these businesses.

Banks have long been a well known source of capital. However, commercial bank financing can be difficult to obtain for many bussinesses, because they don’t qualify for the banks’ required standards to receive financing. Banks are collateral-based lenders, and typically will finance a commercial loan if there is deemed adequate collateral to foreclose upon should the business fail to repay its loan obligations. Many business owners either simply don’t have this collateral to offer up, or may not be willing to risk their family’s financial shelter to start or grow their business.

So can anything be done in order to help small businesses?

The JOBS Act of 2102 was enacted to address the capital constraints of businesses by providing a new mechanism for these businesses to receive funding through Securities-based, or Equity based Crowdfunding.

Title III of the JOBS Act, also known as the “Crowdfunding Act,” radically loosens the regulations stated above, allowing businesses of all kinds to raise funds from ALL AMERICANS – rather than just Accredited Investors.

The new law also removes the “pre-existing” relations restriction, meaning that anyone, anywhere in the country can invest in and suport a business they find interesting. In other words, the general public can invest.