SEC Considering Expansion of “Fan Funding”

I saw the excerpt below on an Inc.com composite news article on Inc.com by Allison Fass. (I have been traveling and put my WSJ on pause. WSJ is apparently where the article originated.) To read her other news bites, go to Crowd Funding Eyes Shift.

I found it interesting because I’ve written about companies fan-funding sites that help small business owners and individuals solicit and obtain donations or loans for their businesses. I consider it a viable funding alternative for start-ups and micro businesses. I think peer-to-peer lending is an even stronger viable option for entrepreneurs and small business owners. Apparently the SEC (Securities and Exchange Commission) is reviewing SEC rules that currently prohibit similar behavior to obtain equity investors. Read below for more information. If you want this rule reversed, perhaps you should write to the SEC as 150 others apparently did. Stay tuned…

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“Crowd-funding websites eye regulatory shift. The Securities and Exchange Commission is reviewing rules that prohibit social network websites from helping investors buy equity stakes in startups. While a slew of sites already help small businesses pitch and connect with people in an online network—to facilitate donations—those sites are currently restricted from allowing the purchase of equity stakes. SEC Chairman Mary Schapiro said this week a review of these “strategies” is underway and wrote that 150 organizations and individuals are behind a petition that calls for crowd-funding share issues of up to $100,000. For more on the pros and cons of this regulatory shift, read The Wall Street Journal’s coverage.”

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About Tiffany C. Wright - The Resourceful CEO

Tiffany C. Wright is the author of “The Funding Is Out There! Access the Cash You Need to Impact Your Business” and “Solving the Capital Equation: Financing Solutions for Small Businesses.” She is the founder of The Resourceful CEO, which helps owners of small/medium-sized businesses prepare their businesses for sale. Tiffany has an MBA from the Wharton School of Business, sits on non-profit boards and serves as a business mentor with the Cherie Blair Foundation.
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