Capital Sources Through Crowdfunding May Be The Way For New Businesses, Say Report
The Entrepreneur Access to Capital Act is helping those with startups a way to get funds from fresh capital sources:
Right now, all sorts of nonprofit causes and entertainment projects can receive cash donations from ordinary people through crowdfunding websites such as IndieGoGo.com, KickStarter.com, and RocketHub.com. But because of securities laws intended to prevent fraud, for-profit businesses aren’t legally allowed to raise funds from large numbers of donors to finance their ventures without first registering with the Securities and Exchange Commission or complying with restrictive SEC regulations.
That’s soon to change with the Entrepreneur Access to Capital Act, designed to help startups tap sources of capital other than bank loans, venture capitalists, and angel funds. “Given the dire need for investments in startup and high-growth companies, lawmakers have been pushing to allow individuals to make $1,000 to $10,000 contributions in new or existing companies,” says Thomas “Danny” Boston, member of the Black Enterprise Board of Economists.
The practice of crowdfunding appears to provide a reasonable way around this barrier, Boston says.…
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