Bussiness Law Posts

Raising Capital For Rhode Island Businesses Under The New Crowdfunding Rules

By Attorney Michael Richards

Raising capital can be a company’s biggest challenge. Historically, federal securities laws only allowed companies to sell shares of stock in a company if the offering was registered with the Securities and Exchange Commission or if the sale of stock fell within a specified exemption from registration.

As registration with the SEC is rarely practical for early-stage companies, companies have relied on exemptions from registration – namely, restricting the offering to ‘accredited investors’, individuals with a net worth exceeding $1,000,000.00 or annual income exceeding $200,000.00.

But beginning on Monday, May 16, 2016, new “Regulation Crowdfunding” goes into effect that allows businesses for the first time to raise capital by selling shares to non-accredited investors.

For growing companies in need of capital, this is a revolutionary new way to raise critical funds needed to launch a new business or expand an existing business into new markets.

For non-accredited investors, this is the first time they can invest on the ground floor – not the Initial Public Offering after the rapid growth phase of a business is long past.

If you have any questions about raising capital for your Rhode Island business, we encourage you to call us. To learn more about the new “Regulation Crowdfunding” going into effect, have a look at the Wall Street Journal article, New Rules Give Startups Access to Main Street Investors.

Things to Consider When Buying a Small Business: Saving Money and Checking Cash Flow

You have numerous things to consider when buying a small business, even though buying an existing business has considerable opportunity. In the present, you’re ultimately saving money not having to start a small business from scratch, especially when a building already exists. The only thing you have to worry about is the future. And what those possible issues are can be scoped out by looking at the existing business’s past.

Cash Flow Issues

Study the financial past of the small business you’re buying and make sure they’ve maintained consistent cash flow. If they have, it means they don’t have lingering debts that could haunt you down the road once you start pulling in profit. Sometimes those debts can be hidden, so be sure to do a thorough financial investigation.

If you find out cash flow was consistent, it helps paint a slightly better picture about your next worry: A consistent customer base. [Read more…]

Newport Business Lawyers

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