Real Crowdfunding May Soon Be Legal

Many entrepreneurs I know would be living in federal prison if current fundraising laws were strictly enforced.  But funding a small business is about to get a lot safer and easier for business owners.

Prez Obama endorsed two new crowdfunding bills (not yet law) that would end “the red tape that prevents many rapidly growing startup companies from raising much-needed capital.”

• Entrepreneur Access to Capital Act (Passed by the House 407-17)
• Small Company Capital Formation Act (Passed the House 421-1)

The first directly addresses “crowdfunding” over the internet and would allow you to sell up to $2 million of unregistered securities in a business so long as no individual puts in more than $10,000 or 10 percent of the his annual income.

The second reforms the SEC’s current “Regulation A” which exempts capital raises of $5 million in or less from SEC registration. The new bill would raise the limit to $50 million.

It’s too soon to say if or when these will become law, but entrepreneuers should immediately do two things:

1. Dust off your business plan and fire up an account at one of the many crowdfunding sites
2. Go to the web links above for each bill, vote “YES” and write a favorable comment