Raising funds for acquisitions

[George B.]

Hi everyone! Hoping for some guidance on raising funds for acquisitions.

I had originally intended to try a form of “crowdfunding” to raise money for the acquisitions - for example, if the property in question costs $50,000, I *thought* I could find individuals who would consider offering a small denomination short term loan, say $5k to $10k with interest, pool the loan proceeds, acquire/repair the property, refinance, pay back the investors, rinse and repeat. However, after learning about SEC rules, it appears this may be considered a security, which would imply a lot of required compliance that I am not currently prepared to do. (By the way, if I’m not understanding that correctly I’d welcome your feedback here as well!)

Do you guys have any suggestions on how I could possibly pool small loans from people interested in my business without encroaching on SEC rules? Or do you have another suggestion entirely?

Thank you all in advance!

[Kody Thompson]

The simpliest way would be to JV. When you are talking about raising from everyone and taking small amounts that would fall under Regulation A. Reg D 506 C is only for accredited investors however you can advertise so that is a plus Rule 506 B allows you to raise from a pool of 35 contacts you know so that might be the way to go. Chat with a SEC attorney or check out their site for all the details.