Press Room

9/16/2013

EquityNet Featured in AMEX Open Forum

Below is an article by Open Forum entitled "How Business Financing Will Change Forever On September 23".

How Business Financing Will Change Forever On September 23
By: Mark Henricks, AMEX Open Forum
September 16, 2013

New rules called for by the JOBS Act promise to open financing floodgates for small firms.

Business owners can advertise products, services, job openings, hours of operation, addresses and, if comes to it, going-out-of-business sales. What they haven’t been able to do, at least since the days of the Great Depression, is advertise that they’re looking for investors to finance growth.
That’s about to change.

On September 23, the 80-year-old ban on advertising to investors set forth by the Securities Act of 1933 will go away, as called for in last year’s JOBS Act. What this means is that startups and other small businesses will now be able to publicly solicit investors for funds to grow.

The change could be particularly significant for businesses that are having trouble getting financing through banks, but don’t need enough money to interest angel and venture capitalists, who are typically looking for multimillion-dollar deals.

“This is a paradigm change for those who need $50,000 or $100,000 or $200,000,” says Judd Hollas, founder and CEO of EquityNet, a Fayetteville, Arkansas-based business plan software and equity crowdfunding platform. Hollas says companies operating in low-tech service and manufacturing fields, which also tend to be overlooked by venture and angel backers, may be prime beneficiaries.

That’s what the JOBS Act was supposed to do: Make it easier for entrepreneurs to get money to expand their operations, product lines and markets, and hire more employees. Hollas anticipates that it will work as planned. Many studies of business failure cite lack of adequate capital as the leading cause of failure, he notes. “If you can open up capital for business, you can address the number-one cause of failure,” he says.