PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Small Business Advocate Applauds SEC Improvements to Crowdfunding to Fuel Capital Formation and Access

By at 5 May, 2020, 11:34 am

NEWS

For Immediate Release

Washington, D.C. – On May 4, the Securities and Exchange Commission (SEC) announced conditional relief for small businesses that allows existing firms to leverage Regulation Crowdfunding more effectively and with greater ease. According to Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, the SEC action will provide small businesses with another option to raise needed capital during this uncertain and challenging COVID-19 economic period.

“The federal government is limited in terms of the money it can appropriate in support of programs like the Paycheck Protection Program (PPP) and economic injury loans, but there is massive need in the small business community. That is why it is important for federal regulators, Congress and the agencies to review reforms and changes that will help to spur and encourage private capital investment. The SEC’s temporary rules will lower burdens and expedite the offering process for small businesses, which will help many entrepreneurs in this time of great need,” said SBE Council president & CEO Karen Kerrigan.

According to the SEC:

“The temporary rules are intended to expedite the offering process for smaller, previously established companies directly or indirectly affected by COVID-19 that are seeking to meet their funding needs through the offer and sale of securities pursuant to Regulation Crowdfunding.” 

“The temporary rules provide flexibility for issuers that meet certain eligibility criteria to assess interest in a Regulation Crowdfunding offering prior to preparation of full offering materials, and then once launched, to close such an offering and have access to funds sooner than would be possible in the absence of the temporary relief.  The temporary rules also provide an exemption from certain financial statement review requirements for issuers offering more than $107,000 but not more than $250,000 in securities in reliance on Regulation Crowdfunding within a 12-month period.”

As noted by Kerrigan, the SEC released a proposal on March 4 that makes important improvements to Regulation Crowdfunding, and this current recent action in response to the COVID-19 crisis demonstrates the Commission’s openness and willingness to hear from small businesses and act on common sense reforms:

“I applaud Chairman Jay Clayton and all commissioners for being thoughtful and responsive to the capital needs of small businesses. Regulation Crowdfunding has worked for many startups and small businesses, and making this rule change during this challenging period will give entrepreneurs more options for meeting their capital needs.”


SBE Council’s COVID-19 Small Business Resource Center

Contact:  
Karen Kerrigan, SBE Council president & CEO
e-mail: kkerrigan@sbecouncil.org  

SBE Council is nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 25 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org @SBECouncil

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