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Crowdfunding…help for small business financing?

February 8, 2012 Finance

Crowdfunding…help for small business financing? Doug Jones

I will admit it…until recently I had not focused on the progress of the proposed “crowdfunding” legislation in Washington.  Maybe the message was drowned out by all of the noise related to government shutdowns, default, gridlock, primary ads and other negative stories.

Crowdfunding, which MacMillandictionary.com defines as “use of the web or another online tool to get a group of people to finance a particular project” has been touted as a way for early stage companies to get funding.  Unfortunately, US Securities laws dating from the 1930’s make it very difficult to do this legally. 

In December, the House overwhelmingly passed a bill that would have eased some of these restrictions, recognizing that the world has changed since the 30’s.  In the Senate, however, two different crowdfunding bills have become stuck in committee.  In general terms, the Senate seems concerned about the potential for fraud without adequate government regulation.  (Interesting.  We all know how successful the massive banking regulatory infrastructure failed to prevent the most recent financial crisis…)

Here is an excellent article on the crowdfunding situation by Scott Edward Walker on Forbes.com.   The Steve Case quote at the end of the article says it all!

Doug Jones is a Director with Fahrenheit Finance, where he works with small and mid-sized businesses on financial and accounting issues.  He can be reached at djones@fahrenheitfinance.com

 

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