MONTGOMERY, Ala. (AP) — Alabamians are being given a new way to raise money to start small businesses.
Gov. Robert Bentley’s press secretary, Yasamie August, said he signed legislation Tuesday that was sponsored by Republican Sen. Arthur Orr of Decatur and supported by the Alabama Securities Commission.
The new law allows someone trying to start a small business in Alabama to use social media and advertising to find small investors who live in the state. The “crowd funding” is limited to raising $1 million, and it is restricted to Alabama businesses and investors because of federal regulations. The investments are capped at $5,000 for most people to limit risk. The process comes with less cost and less regulation than larger business investments, but the Securities Commission still plays a role.
Orr said entrepreneurs trying to start small businesses face a tough credit market, but the law allows them to use social media and other modern technology to attract small investors.
“This legislation should serve as a vehicle to enhance the ability of small businesses to succeed in Alabama,” he said Tuesday.
Orr’s bill won final approval in the Legislature on April 1 and cleared both the House and Senate without a negative vote.
When the Legislature passed the bill, Securities Commission Director Joe Borg said, “While investment in startup businesses has risk, the potential rewards in promoting new businesses and job formation in our local communities are invaluable.”
April 8, 2014