Measure Will Enable Individuals To Invest In State’s Small Businesses
On Wednesday Illinois Governor Bruce Rauner signed HB 3429 into law. The measure, first proposed in February and passed by a unanimous vote in the state House and Senate in May, will enable Illinois companies to receive “investments in exchange for equity through crowdfunding platforms,” the Chicago Tribune reports. Under the legislation, “nonaccredited investors with a net worth less than $1 million who make less than $200,000 per year” will be able to spend up to $5,000 per year per company. Crowd-funding attorney Anthony Zeoli said the law’s passage may generate “a lot of activity,” adding, “I’ve already had maybe 10 companies reach out to me. We’ll have to vet those, of course.” He touted crowdfunding as “a better way to raise money without totally giving away your company,” compared to traditional venture capital deals, where VC firms seek “more established companies,” or “demand larger equity stakes” from newer startups.
What Happens Next
The legislation will take effect Jan. 1, 2016 across Illinois.
What This Means For Small Businesses
Small business owners across the Chicago area may benefit from the passage and implementation of legislation to allow businesses to raise equity through crowdfunding. Those businesses that currently don’t have easily-accessibly funds via traditional avenues such as small business loans offered through banks could in particular benefit from this legislation, as they might be able to draw from a more diverse pool of lenders. As the Chicago Tribune reports, State Rep. Carol Sente (D-Vernon Hills), who first filed the bill, said, the law is likely to “improve Illinois’ reputation as unfriendly to small businesses.”
Additional Reading
NFIB previously examined different crowdfunding sites that could be used by small businesses.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
