JOBS Act and Equity CrowdFunding

Posted by Leroy D. Weaver on July 31, 2015

Jobs Act

Thanks to the JOBS Act and Equity CrowdFunding, the barriers that many people face when it comes to investments and funding their small businesses are now a thing of the past. As recently as three years ago, the public advertising of fundraising was allowed according to the JOBS Act. However, a very tiny proportion of the population was going to be able to benefit from it in the first place, since only wealthy accredited investors could hope to participate. As such, even many wealthy people were going to be shut out of this new measure. The poor and the middle class had no hope of making money in this way.

Beginning a small business is never easy for anyone. People need to be able to think of business ideas and business plans in the beginning, which isn’t always going to be a possibility. The state of the market is going to influence the success and the formulation of all business ideas, and the state of the market is often outside of the control of most people. However, the people who have great business ideas and solid business plans are going to face additional challenges along the way, because businesses aren’t going to be able to get off the ground without the proper amounts of funding.

Obama with JOBS Act

Some people will simply try to apply for small business loans from the bank, but banks have a lot of firm guidelines that warn against giving to a large number of potential loan applicants. The people who are considered high-risk applicants in any way are usually going to be declined. Many of the poor and middle class people who are trying to get ahead by starting their own businesses are going to be in the high-risk category regardless of the strength of their business plans, since banks prefer to invest in proven entities. Plenty of people are going to lose out on the opportunity to start their own businesses on this basis alone.

Naturally, many tech-savvy modern people are simply going to wonder why they can’t just use crowdfunding to get their small businesses off the ground. Indeed, crowdfunding is a very viable option for the people who are starting small businesses today. The recent changes to the JOBS Act have opened up crowdfunding opportunities to more people. Many people have great business ideas that other people are going to recognize as great business ideas. They should be able to get those people to fund their businesses, rather than relying on a bank that is going to be largely indifferent to everything that they do or everything that they want.

The whole idea behind crowdfunding is that the public gets the entertainment that they want and the businesses that they want, as well as the entertainers and the business-people that they want. There’s a beautiful symbiosis that can emerge that way, which is not going to be the case using the old economic model. The new version of the JOBS Act was created partly in recognition of this fact.

Filed under Crowdfunding