The US government has passed a new bill aimed at making it easier for businesses to access crowdfunded capital.
The US House of Representatives backed the bill, the JOBS (Jumpstart Our Business Startups) act, with a vote of 380 in favour, compared to 41 against. The bill was earlier in the week supported by the Senate, and it now awaits president Barack Obama’s approval.
Crowdfunding in the UK has become an increasingly popular way of raising raising finance, whether it be in a debt or equity capacity. However, there are still concerns about the kind of restrictions that remain in place.
Luke Lang, co-founder of UK-based equity crowdfunding platform Crowdcube, comments, ‘There needs to be more recognition of early-stage small businesses and fewer barriers to funding for small businesses in Britain.
‘The UK government should follow in the footsteps of the US government with its new crowdfunding bill that is designed to ease the regulatory burden on firms trying to raise equity finance from the general public.’
The JOBS act includes provisions to help investors avoid fraud and excessive investment losses.
Also included in the detailing is the removal of the US’ 500 shareholder rule, which means that companies with more than more than that level must publicly report financial data to the SEC.
The new act raises that limit to 1,000 and is said to give non-accredited investors an easier route to becoming shareholders in start-ups.
EquityNet, a US-based crowdfunding platform in the US, says the decision could expand the population of potential investors from 2 million to over 50 million people, and increase the amount of potentially available capital from $1 trillion to over $5 trillion.
Judd Hollas, founder and CEO of EquityNet, says, ‘We are delighted that Congress has embraced crowdfunding innovation and the economic benefits it engenders.’