SEC just made crowdfunding the best way for small businesses to get capital and survive

After facing multiple setbacks, small entrepreneurs may have just gotten their biggest break yet.

The Securities and Exchange Commission has recently announced some new guidelines on regulation crowdfunding that could prove to be a gamechanger for many struggling small businesses across the country.

On May 4, the SEC said that it will temporarily ease restrictions to regulation crowdfunding in a bid to provide small entrepreneurs a faster means to raise funding for their business.

This gesture from the government agency recognizes the significance of crowdfunding platforms like TruCrowd and Fundanna in providing immediate capital for small businesses.

So, what did the SEC actually change?

Begin with less hassle

Previously, launching a regulation crowdfunding offering required issuers to submit self-certified financial documents. Given the current situation, processing such requirements is expected to cause a significant delay in getting the crowdfunding campaign starter.

Under SEC’s temporary rules, issuers may now freely launch their own crowdfunding campaigns even without the independent auditor review requirement of financial statements. This greatly improves the time it takes to launch, allowing issuers to raise money much sooner than ever before.

Use raised capital sooner

Issuers were originally restricted to disburse funds until the funding campaign had been live for at least 21 days. At these times when capital is needed to be readily available, this could force delays in important payments, renovation costs, additional manpower, etc.

This restriction has also been lifted allowing issuers to disburse and close on investments in a matter of days, even as the campaign is ongoing.

Raise more capital

One of the biggest changes the SEC revealed last week was the significant increase in the amount an issuer can raise with self-certified financials. Before the update, the maximum a small business can raise was $107, 000. While the amount can already help a struggling business operate for a few months, extra capital could do wonders especially if the lockdown gets extended.

Since businesses can now raise up to $250,000 in crowdfunding, this shall give them the leverage to build a stronger foundation moving forward.

Start immediately

With the lifting of the restrictions related to reporting requirements, the approval and processing of crowdfunding listings are now significantly accelerated.

What would normally take crowdfunding platforms weeks to set up a funding campaign for an issuer, would now only take days.

Temporary rules, lasting effect

It is quite refreshing to find that the SEC is stepping in to offer a new lease on life for many small businesses just as the U.S. government struggles to provide.ample support.

The Coronavirus Aid, Relief, and Economic Security Act, may have sounded really good on paper, but it had numerous shortages when it finally came out. As the stimulus package created confusion upon implementation, small businesses were left in dire need of financial support.

In the end, the two multi-billion dollar stimulus packages largely failed to reach the small businesses they were supposed to be supporting.

In a statement, SEC Chairman Jay Clayton noted: “In the current environment, many established small businesses are facing challenges accessing urgently needed capital in a timely and cost-effective manner.”

SEC’s statement further noted that a company only needs to provide clear disclosure to investors about the fact that it’s using the money to support itself and pay COVID-related expenses to be able to benefit from the temporary rules. As stressed earlier, this relaxation of the rules is by no means temporary and would expire on Aug. 31, 2020.

Perfect timing

These temporary rules add perfectly to Keep The Light On, a campaign by TruCrowd Inc. (TCI), and its digital marketing agency partner, TruCrowd Services (TCS) that aims to help small businesses survive the current crisis.

The initiative will let selected small and “angel” businesses have the option to secure capital between $10,000 and $250,000 in the form of a micro-loan via a loan-based crowdfunding campaign or to raise money via an equity crowdfunding campaign.

Under #Keepthelighton, TruCrowd INC provides qualified businesses with the platform to launch their crowdfunding campaign while TruCrowd Services will engage the brand’s audience with a comprehensive marketing strategy to support a successful raise. #Keepthelighton offers all these services and more at zero upfront fees for qualified businesses.