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    Illinois Intrastate Equity Crowdfunding

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    Access to capital remains a challenge for small businesses in Illinois. In response, Illinois passed intrastate equity crowdfunding legislation in 2015 allowing Illinois companies to raise up to $1 million from Illinois residents by selling ownership stakes. The law became effective in 2016. Intrastate crowdfunding opens up new sources of capital previously unavailable to entrepreneurs and small businesses in Illinois.

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    Illinois Intrastate Equity Crowdfunding

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    garyst11
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    Access to capital remains a challenge for small businesses in Illinois. In response, Illinois passed intrastate equity crowdfunding legislation in 2015 allowing Illinois companies to raise up to $1 million from Illinois residents by selling ownership stakes. The law became effective in 2016. Intrastate crowdfunding opens up new sources of capital previously unavailable to entrepreneurs and small businesses in Illinois.

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    Real Estate Crowdfunding

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    Access to capital remains a challenge for small businesses in Illinois. In response, Illinois passed intrastate equity crowdfunding legislation in 2015 allowing Illinois companies to raise up to $1 million from Illinois residents by selling ownership stakes. The law became effective in 2016. Intrastate crowdfunding opens up new sources of capital previously unavailable to entrepreneurs and small businesses in Illinois.

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    24 views2 pages

    Illinois Intrastate Equity Crowdfunding

    Uploaded by

    garyst11
    Access to capital remains a challenge for small businesses in Illinois. In response, Illinois passed intrastate equity crowdfunding legislation in 2015 allowing Illinois companies to raise up to $1 million from Illinois residents by selling ownership stakes. The law became effective in 2016. Intrastate crowdfunding opens up new sources of capital previously unavailable to entrepreneurs and small businesses in Illinois.

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    HOME

    Illinois Law

    Crowdfunding Portals

    Media & Education

    IllinoisIntrastateEquity
    Crowdfunding
    AccesstocapitalremainsahugechallengeforsmallbusinessesandentrepreneursinIllinois.Forthatreason,
    theSmallBusinessAdvocacyCouncilandourcoalitionpartnersdrovelegislationtobringintrastateequity
    crowdfundingtoIllinois.ChampionedbyRepresentativeCarolSenteandSenatorTomCullerton,theIllinois
    HouseandSenateunanimouslypassedintrastateequitycrowdfundinglegislationinMay2015.Governor
    BruceRaunersignedthebillintolawonJuly29th,2015.ThelawbecameeffectiveonJanuary1st,2016.

    Illinois'intrastatecrowdfundinglegislationwasdraftedbyAnthonyJ.Zeoliwhomaintainsanactive
    databaseofallactiveandproposedintrastatecrowdfundingexemptionlaws,aswellascomparitave
    summariesofeach.

    FrequentlyAskedQuestions:

    Whatiscrowdfunding?
    Crowdfundingisthepracticeoffundingaprojectorventurebyraisingsmallamountsofmoneyfromalarge
    numberofpeople,mostcommonlyviatheInternet.Therearefourmaintypesofcrowdfundingcampaigns:
    DonationbasedcampaignsRewardsbasedcampaignsDebtbasedcampaignsandEquitybased
    campaigns.Unliketheotherformsofcrowdfunding,debtandequitycrowdfundingcampaignsare
    investments.Peoplecontributetodebtandequitycrowdfundingcampaignsexpectingtogettheirmoney
    backaswellassometypeofreturnontheirinvestmentfortheirmoneyratherthanatshirtorsomeother
    reward.

    Whatisintrastatecrowdfunding?
    Intrastatecrowdfundingsimplyreferstodebtorequitycrowdfundingthatoccurssolelywithinasingle
    state.

    Illinoisintrastateequitycrowdfundingexemptionhighlights
    ThelawallowsIllinoiscompaniestoraisecapitalfromIllinoisresidentsinexchangeforanownership
    interestinthecompany.Unlikeotheravailablemethodsofcrowdfundedinvestmentsthatarelimitedonlyto
    accreditedinvestors,thelawallowsanyIllinoisresidenttoinvest.Thiskindofcrowdfundingopensupa
    hugenewpoolofcapitalthatwaspreviouslynotavailableforentrepreneursandsmallbusinesses.

    Moneycanalsoberaisedasdebt.Illinoisresidentsloanmoneytothecompanywiththeexpectationofbeing
    repaid,plusinterest.

    Whatareaccreditedinvestors?
    Individualswithanetworthofatleastonemilliondollars,notincludingtheirhomes,orhaveincomeatleast
    $200,000eachyearforthelasttwoyearsand$300,000ormoreifmarried.

    HowmuchcapitalcanIraise?
    Companiestoraiseupto$1millionina12monthperiodfromthepublicwithoutauditedfinancialsupto$4
    millionina12monthperiodwithauditedfinancials.

    HowmuchmoneycanIinvestinacompany?
    Investorsarecappedat$5,000percompanyperyear.

    Howdoesonegetstarted?
    Businesseshavetogothroughintrastatecrowdfundingportalstosetuptheircrowdfundingcampaigns.All
    crowdfundingmustbedoneonlinethroughthesestateregisteredportals.First,crowdfundingcampaigns
    requireasignificantamountofworkonbehalfofthebusinesspostingthecampaign.Thisincludes
    everythingfrompreparingofferingmaterials,tocompilingfinancialinformation,tocreatingmarketing
    materials(particularlysocialmediatypesofmarketingmaterials/videos)thatwillhelpgenerateinterestin
    thecampaign.

    Costtocompleteanoffering
    Thecostsvarybutareestimatedat710%oftheproposedamounttoberaised(includesestimatedcostof
    preparingofferingmaterials,marketingexpenses,andportalfees).

    Whattypesofprojectscanbefundedthroughintrastateequitycrowdfunding?
    Anythingfrombusinessstartupsandexpansionstorealestatepurchases.

    Whatarethebenefitsofequitycrowdfunding?

    More

    Theprimarybenefitisgivingtheentrepreneuraccesstosourcesofcapitalthattheymightotherwisenever
    haveaccessto.Forexistingsmallbusinesses,crowdfundingfillsthecapitalgapcreatedbytraditional
    lending.Similarly,forentrepreneurs,crowdfundingprovidesaviablesource(andinmanyinstancetheonly
    viablesource)ofstartupcapital.

    Whataretherisksinvolvedwithequitycrowdfunding?
    Peoplecontributetoequitycrowdfundingcampaignsexpectingtogettheirmoneybackaswellassometype
    ofreturnontheirinvestment.Likeanyinvestment,theriskwillbethatthecompanyraisingthefundswill
    notbesuccessfulandthecontributorwilllosesomeoralloftheircontributedfunds(andanypotential
    returntheywereexpecting).

    Howcancrowdfundingbenefitstateandlocaleconomies?
    AccordingtothedatacollectedbyFundable.com:

    In2014alone,crowdfundingwilladd270,000jobsandinject$65,000,000,000intotheworldwide
    economy.
    Crowdfundingcompaniescreate1newjobforevery$37,702invested/donated.
    Every$1investedincrowdfundingstartupsleadsto$6.36inrevenue.Atthecurrentgrowthrate,
    crowdfundingwillcontribute$500billioninfundingperyearby2020andwillcreate2.2millionnew
    jobsby2020.
    Buildbrandloyaltyforbusinessesandasenseofcommunity.

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