Residents of New Mexico who are planning to start small businesses or expand existing ones are set to get a new online financing alternative once the state approves the new version of its proposed crowdfunding regulations. It is anticipated that the new regulations will be released this summer or during early fall. The new regulations will impose some limitations on developers who are offering a business venture and on investors who want to put their money on those investments. Such limitations were not included in the earlier versions of the crowdfunding rules.
The proposed rules articulate that investors cannot contribute more than 10 percent of their net worth to a business venture that has been advertised. Developers also cannot raise over $2.5M in their first round offering. They are however allowed to raise money for subsequent offerings, but these offerings must first be approved by the Securities Division of the state.
If the proposed crowdfunding rules are passed, New Mexico will join the other 25 states that have already approved crowdfunding regulations.
Crowdfunding is the practice of raising funds from two or more people over the internet towards a common project. This method is currently not legal in New Mexico. If the proposed crowdfunding rules are passed, New Mexico will join the other 25 states that have already approved crowdfunding regulations. This will be a big bonus for those who want to start or expand their businesses. Various sectors, such as real estate, are expected to benefit largely from these regulations, and local companies will have a chance to raise capital more easily and quickly.
The state will be responsible for approving crowdfunding platforms that will be used only for intrastate transactions. State regulators will be monitoring the platforms, and developers will be required to post details about their offerings and respond to public questions about their business strategies. Additionally, investors will be allowed to shop for deals and invest in those that they deem worthy of their money.
Crowdfunding has the potential of raising millions of dollars in New Mexico and promoting various developments in the region. For example, if the regulations are passed, it will be easier for the residents to create a real estate development project, list it on a crowdfunding platform and lure locals to invest in it. Such projects will in turn develop the entire state. Once the regulations are published, opinions from the public will be collected and the necessary amendments made before being officially passed into law.