A crowdfunding bill that would permit North Carolina startups and small businesses to publicly solicit investments from the public — including over the Internet — won the endorsement of a state Senate committee.
The bill, H.B. 680, which last year was overwhelmingly passed by the House, moves to the Senate Finance Committee after winning the backing of the Senate Commerce Committee by a voice vote on Wednesday. None of the committee members spoke against the bill.
The bill is similar to the crowdfunding provisions in the federal JumpStart Our Business Startups Act, which became law in April 2012 but has yet to be fully implemented by the Securities and Exchange Commission.
“The bill before you has been used as a model in 14 or 15 other states,” Rep. Tom Murry, a Morrisville Republican and a bill sponsor, told his fellow lawmakers. “Crowdfunding has taken the nation by storm.”
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The bill would enable businesses to raise up to $1 million a year from investors who could invest up to $2,000 each. The fund-raising cap would rise to $2 million a year for businesses that have audited financials.
Accredited investors — wealthy individuals who have an annual income of at least $200,000 or a net worth of $1 million — wouldn’t face a $2,000 cap on their investments.
The president and CEO of the N.C. Technology Association, Brooks Raiford, praised the bill in a letter to the co-chairs of the Senate Finance Committee.
“North Carolina has a reputation as a technology center and a great place to start a business, and the N.C. Jobs Act will make it even better,” Raiford wrote.
Mark Easley, a Triangle angel investor and advisor to startups who has been promoting the bill, viewed the Finance Committee vote endorsement as an important litmus test.
“This is absolutely going to become a law,” Easley said. “I don’t see any major issues.
The bill endorsed by the Senate, however, contains a new section designed to boost loans to small businesses in the state’s rural and distressed counties that wasn’t considered by the House.
That new section, inserted into the bill on Wednesday, builds upon the federal New Markets Tax Credit Program that Congress established in 2000.
The bill would provide a tax credit to insurance companies that bankroll Community Development Entities that provide loans of up to $7 million each to small businesses in distressed and rural counties. To receive the tax credit, the investment pool would have to total $208.3 million.
Fourteen states have passed similar measures, said Sen. Rick Gunn, R-Burlington.