What’s up with the JOBS Act?

Last April, a federal law was passed that could transform how small businesses raise capital: Jumpstart Our Business Startups Act, or JOBS Act for short.

The Act has a number of provisions, but the most discussed portion of the Act in the startup world has been the provision to allow for “crowdfunding,” which, among other benefits, would broaden the base of potential investors for startups and small businesses.

Presently, the existing crowdfunding sites (Kickstarter, IndieGogo) only allow for rewards or product pre-sales, or in the case of Fundable.com, allow only high net worth investors the opportunity to take an equity stake in exchange for their capital investment.

To implement the crowdfunding provision of the JOBS Act, the SEC must rework its ban (per the Securities Act of 1933) on companies selling securities to the public unless the offering is either registered with the SEC, or unless there’s an exemption available.

In the meantime, the SEC is inviting comments on the law.