Crowdfunding investments for small business considered

Small businesses could seek start-up capital through new avenues under a bill heard by the Banking, Commerce and Insurance Committee Feb. 2.

Under LB226, introduced by Lincoln Sen. Colby Coash, small businesses could raise up to $2 million each year from accredited or unaccredited investors. Coash said that Nebraska currently ranks very low in access to capital for small businesses.

“[LB226] creates incredible opportunities for startup companies that otherwise do not have easy access to capital,” he said. “It allows an individual working out of his garage looking for a way to expand, to actually move forward to raise funds and meet investors.”

All projects attempting to raise money would require approval from the state Department of Banking and Finance. Individuals investing money under LB226 would receive a proportionate security stake in the company in exchange for their investment, without registration under state and federal securities laws. Unaccredited investors would not be allowed to invest more than $5,000 in a particular company.

Investors must be residents of Nebraska and would be required to sign a certificate acknowledging the potential for the complete loss of investment.

Steve Bradford of Lincoln spoke in favor of the bill. He said that it would help narrow the small business capital gap.

“Very small businesses, especially startups, have difficulty raising money,” he said. “Small businesses could raise money much more effectively if they could offer securities. [LB226] strikes a good balance between protecting investors and offering small businesses a relatively inexpensive way to raise capital.”

Ann Post, representing Lincoln Independent Business Association, also supported the bill, saying that it was a creative solution to keeping businesses in the state.

“We see entrepreneurs every day working so hard to make their idea a thriving business. This is just another tool to keep innovation and talent in Nebraska,” she said.

No one testified in opposition to the bill and the committee took no immediate action on it.