SEC Business Financing Rules Under Close Scrutiny

SEC Business Financing Rules Under Close Scrutiny

Financing is a top-focus consideration of many Arizona business entrepreneurs.

And that is for obvious reasons, of course. If you are the brains behind a fledgling small business or new start-up venture, you’re likely thinking about the money that is necessary to help transform your ideas into reality.

And that means financing.

Access to capital can be a bit of a slippery slope for many business owners. Some lenders just aren’t interested. Others may have tightly limited funds, charge exorbitant interest rates or generally impose a number of unsatisfactory conditions on money that is loaned.

One source of business capital for entrepreneurs that has garnered a fair bit of front-page news recently is a mechanism called equity crowdfunding. A recent article on the concept notes that this financing scheme is quite simply “the exchange of a piece of a company for cash.”

Crowdfunding is centrally about so-called “unaccredited” investors, as opposed to highly sophisticated investors such as proven venture capitalists and banks.

The U.S. Securities and Exchange Commission recently announced new rules on crowdfunding that ease restrictions on lending and borrowing, the idea being to expand capital markets.

Crowdfunding can be attractive for both small investors and start-ups, notwithstanding that it has a few warning bells attached to it for both sides. Historically, regulators have worried about unsophisticated investors sinking their money into new ventures without properly vetting them beforehand. And companies have long chafed under the difficulty of raising adequate capital via the unaccredited investor route, given the number of federal restrictions that have surrounded it.

Although the new SEC rules greatly loosen those restrictions, crowdfunding remains far from a unanimously acclaimed funding vehicle. One of the SEC commissioners who voted against the recently announced financing tweaks cites high risks and concerns for business principals based on what he says are “many traps … hidden in the regulations.” New exactions, he notes, “will spook many small businesses from pursuing crowdfunding.”

Financing is always a vitally important element for any business, whether it is needed to help procure commercial real estate, purchase assets, restructure debt or for myriad other business-related purposes.

An Arizona business principal with questions or concerns regarding financing or any other aspect of company development can obtain candid counsel and diligent legal representation from a proven Maricopa County business and commercial law attorney.

Call Cook & Price, PLC today at 480-407-4440 or email us through this website.

2017-09-28T05:44:18-07:00 December 1st, 2015|Categories: Commercial Real Estate|Tags: |

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