Syndication Question - SEC Needed?

[Daniel Karbownik]

I am pretty clear on the need to follow SEC rules for a syndication.  However I can't find any information anywhere on smaller deals that might not warrant the cost of an SEC filing.  For example, I'm looking to buy something relatively small - around $1.5m - $2m.  My plan (in my head, anyway) is to raise 25%-30% equity from a few different high-net-worth individuals, then go to a bank for a commercial loan for the rest.  Is this something that would require getting the SEC involved?  I'm sure smaller deals like this happen all the time, but I can't see how it justifies the cost of the SEC filing.  How would one go about doing this?

[Brian Burke]

The SEC doesn't "get involved" in any syndication, unless something went horribly wrong and investors filed a complaint--then you can be sure that they'll be involved, and you'll wish you weren't involved!

Having said that, any time you raise money from passive investors, you are selling a security and you have to comply with the securities laws.  There is no "small size" exemption.  You will have to comply with the securities act for the deal scenario you described.  This also isn't a do-it-yourself project...you need the help of a securities attorney and you should plan on $10K to $25K to set everything up properly.  When you think about it, $25K on a $2 million deal shouldn't be the straw that breaks the camel's back.