Small businesses could seek startup capital through new avenues under a bill advanced from general file May 14.
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 Nebraska ranks 35th in access to capital, leaving many entrepreneurs with no means of realizing their dreams and contributing to the state’s economy. Crowdfunding—raising capital via an Internet portal—can significantly broaden access to startup funds, he said.
“Crowdfunding is a way to spur innovation,” Coash said.
A Banking, Commerce and Insurance Committee amendment, adopted 25-0, made numerous technical changes and replaced the bill.
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.
Gothenburg Sen. Matt Williams supported the bill and the amendment. Williams said that as a banker he had seen many individuals with creative ideas who were unable to obtain traditional business loans.
“This [bill] opens up the opportunity for them to obtain a level of financing to move forward and bring an idea to the table,” he said.
LB226 advanced from general file 33-0.