H.R. 2930 -- Entrepreneur Access to Capital Act
The bill amends the Securities Act of 1933, by agreeing to let entrepreneurs use crowdfunding online, but only allows up to $2 million a year in total accumulated raised money to be directly taken from individuals. Once it has exceeded the $2 million limit, entrepreneurs have to register the individual who has invested in their cause/business with the SEC (U.S. Securities and Exchange Commission)
Even if less than $2 million is raised, the fundraising completion must be filed with the SEC. This is not supposed to be free money, so to make sure, there is no ill use of the money raised, entrepreneurs are to provide investors with financial statements to quality for the $2 million cap, otherwise, he/she is capped at $1 million. Individual investments are capped at $10,000 or 10% of their income, depending on which amount is less.
H.R. 2930 specifically amends the “Requirements with Respect to Certain Small Transactions” (Section 4A of the Securities Act), by allowing entrepreneurs to not have to go through registration with the SEC for certain crowdfunded securities.
A few important details:
The bill amends the Securities Act of 1933, by agreeing to let entrepreneurs use crowdfunding online, but only allows up to $2 million a year in total accumulated raised money to be directly taken from individuals. Once it has exceeded the $2 million limit, entrepreneurs have to register the individual who has invested in their cause/business with the SEC (U.S. Securities and Exchange Commission)
Even if less than $2 million is raised, the fundraising completion must be filed with the SEC. This is not supposed to be free money, so to make sure, there is no ill use of the money raised, entrepreneurs are to provide investors with financial statements to quality for the $2 million cap, otherwise, he/she is capped at $1 million. Individual investments are capped at $10,000 or 10% of their income, depending on which amount is less.
H.R. 2930 specifically amends the “Requirements with Respect to Certain Small Transactions” (Section 4A of the Securities Act), by allowing entrepreneurs to not have to go through registration with the SEC for certain crowdfunded securities.
A few important details:
- Background checks are required.
- Funds acquired through online fundraising cannot be resold for a year, unless the shareholder is a prestigious entrepreneur or broker.
- The funding caps can be changed since the caps are issued by the Consumer Price Index for all Urban Consumers,
- Entrepreneur and broker must have some sort of 3rd party cash management system to avoid dealing with money themselves and using it for ill purposes.
- Entrepreneur and broker must raise at least 60% of their goal amount to receive possession of the funds, this way entrepreneurs do not collect money for a project they cannot afford to finish.
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