Yesterday, Small Business California Board member Lee Petillon , Lori Kammerer, our Government Relations person, and I met with Senator Price’s staff and representatives of the Consumer Attorneys of California regarding putting forth legislation that would help small businesses obtain capital.
Currently, the issuer of a private investment must have a pre-existing personal relationship with each prospective investor. This may be supplied by a registered broker dealer acting as the issuer’s agent. Small businesses do not have these contacts. They also do not have the size or track record to attract a registered broker dealer to arrange the offering. Thus, they are effectively prevented from legitimately raising any equity capital. This affects all small businesses but is particularly acute with minority and women owned businesses.
Our proposed legislation would provide for an exemption for issuer’s of these investments if the investors are accredited investors. This is defined as those with a new worth of $1 or individual incomes of $250,000 for individuals or $300,000 for households. We believe this would address the issue of access to capital for many small businesses. Clearly under current conditions banks, VCs, angel capital, etc are not meeting the needs of small businesses looking for $100,000 to $1 million.
This legislation will not be easy to pass should it get introduced. We will need your help. Will you help us get this passed? If you are a member of an association will your association help? We need to start getting our support in place. If you have questions let me know.
Small Business California
2311 Taraval Street
San Francisco, CA 94116