A Mississippi crowdfunding bill will be enacted soon, after the state got tired of waiting for the SEC to issue federal rules for crowdfunding under the JOBS Act. The Governor decided to use his statutory authority and create a vehicle for it, designed for Mississippi residents. The bill will become a reality in about a month, he said in an interview.
Congress passed the JOBS Act in April 2012, but the SEC will not issue rules at the soonest until October, three and one-half years after the President signed the legislation. The Governor has said that the Dodd-Frank Act, which tightened lending standards after 2008, has made it more difficult to obtain capital for businesses who cannot use the traditional channels such as banks.
Mississippi is a poor state especially in terms of small business capital. The Governor said “We have this gap between somebody having an idea and the [ability] to start a business.”
The Secretary of State’s office will hold a seminar on starting a business using Mississippi crowdfunding on April 29, to present and overview of how crowdfunding can benefit both businesses and resident who are investors.
Step 1 requires a business to go online and form a limited liability corporation (LLC). The form asks for personal information, including if the applicant has ever been convicted of a felony. Also required are a completed business plan and financial data. After the application has been received, the office will reply within five business days.
Step 2 after verification that the application has been filled out correctly, the business is be able to ask for funding anywhere in the world.
Step 3 requires that an escrow account must be opened with a Mississippi-based bank. Rules of each Mississippi crowdfunding campaign are that at least 50 % of the targeted amount must be funneled into the account before any money will is released to the business. If 50 % of the targeted amount is not reached within one year, all money will be returned to investors.