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New laws aim to help the small business owner obtain funds

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One of the most important things that many new businesses require is investment funding to start operations. The new laws regarding securities have been designed to make it easier for closely-held businesses in Massachusetts and elsewhere to obtain startup funding from investors. The Jumpstart Our Business Startups Act (JOBS) aims to loosen restrictions on the ability of a small business owner to obtain investment funding.

The law allows businesses to obtain investments from individuals earning less than $200,000 per year and with a net worth of less than $1 million. Before the recent law was passed, companies could only sell shares to accredited investors who exceeded the specified earnings and net worth levels. Many financial experts believe the new laws will result in increased investments in commercial property programs.

Previously, in order for a company to solicit investment funds, it was required to first obtain the permission of the U.S. Securities and Exchange Commission (SEC). It took one company nine months to obtain the first SEC-qualified offer because it began soliciting investment funds prior to the passing of the JOBS Act. Had the new laws been in place, this would have only taken the company one day to accomplish.

With the new laws, a small business owner in Massachusetts may be looking to take advantage of the new ease of starting up a business. However, there will still be some rules and regulations which must be followed. This will require careful research of laws applicable to the type of business the entrepreneur is looking to open. The entrepreneur should make sure his or her business plan ensures compliance with these laws.

Source: Bloomberg, "Crowdfunding Property Deals on Horizon With U.S. JOBS Act," Max Raskin, Jan. 17, 2013

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