On November 3rd, the House passed the Entrepreneur Access to Capital Act with overwhelming approval: 407-17. This Act would enable businesses to raise capital through crowd funding. Crowd funding is the contribution of small equity investments from many individuals.
Currently, federal and state laws governing the sales of securities restrict public solicitation of investors and limit fund-raising to sophisticated investors, or require a registration process that is cost-prohibitive for many entrepreneurs.
The Act restricts individual investments to $10,000 or ten percent of their annual income, whichever is lower. Businesses can raise up to $1 million dollars using this method without registering their securities unless they provide audited financial statements, in which case they can raise up to $2 million.
The Act includes a...