New Crowdfunding Rules Help Black Businesses Access Up To $1 Million In Seed Money

Starting May 16th, it will be easier for startups to bring a wider pool of new investors into the fold under new federal rules.

Access to capital for black business owners will significantly change, since small firms and startups can now solicit anyone, regardless of their location or wealth status. So, a store owner could potentially offer ownership stakes to his or her most supportive customers or loyal clients.

Essentially, non-accredited investors or individuals with a net worth or annual income of less than $100,000 can put up cash in startups under the new rules, which make up Title III of the JOBS Act. They can invest $2,000 or 5% of their annual income or net worth, whichever is less. Companies can now raise up to $1 million across state lines without prior approval from the Securities and Exchange Commission.

[Related: Black Businesses To Have More Access To Capital]

“Historically, small and emerging companies did not have access to traditional capital-raising methods such as bank debt, angel financing, or venture capital funding. We believe that every startup should have the opportunity to grow,” notes StartEngine Capital L.L.C. Executive Chairman and Co-founder Howard Marks. “StartEngine provides an alternative way to finance. With Regulation Crowdfunding going into effect, access to capital through equity crowdfunding will be groundbreaking and will allow for faster innovation and growth for privately-owned businesses of all sizes, especially smaller and early stage companies, he adds.

An equity funding portal, StartEngine has been registered with the SEC and approved for membership by the Financial Industry Regulatory Authority. StartEngine connects early-stage and growing companies seeking capital with investors seeking new investment opportunities. With this approval, StartEngine can operate as a funding portal for offerings under Regulation Crowdfunding and begin posting security offerings.

Regulation Crowdfunding was created pursuant to Title III of the Jumpstart Our Business Startups Act (known as the JOBS Act) of 2012,which established an exemption from the securities registration requirements of the Securities Act of 1933 for companies to raise up to $1 million within a 12-month period. These offerings must be conducted by a funding portal, like StartEngine, or broker-dealer that is registered with the SEC and a member of FINRA.

Related Story: 10 Things Black People Need To Know About Crowdfunding

“The SEC was mandated to regulate crowdfunding, and it did so in a way that allows us to serve up-and-coming business owners and help them meet their capital needs,” said StartEngine CEO and Co-founder Ron Miller. “There are thousands if not millions of investors interested in investing in companies getting off the ground. Regulation Crowdfunding enables our funding portal to help these companies connect with investors to grow their businesses.”

StartEngine was selected as one of the finalists to participate in the Washington, DC Crowdfunding Demo Day on Capitol Hill demonstrating Miller’s leadership and innovation in the industry. StartEngine reportedly has more than 50,000 registered users with one company raising more than $16.9 million on the site.