Having Trouble With Your Business’ Finances?

Empowering SMEs (Issue 050)

Crowd Sourced Funding Equity Raising might be able to help your business.

For the last twelve months private companies have been able to utilise the Crowd Sourced Funding Equity Raising sections within the Corporations Act to raise up to $5 million every twelve months from the public.

By 31 October 2019, 55 companies had taken advantage of the amendments to the Corporations Act to raise $39.9 million shareholders capital direct from the public.

Each of these companies has issued ordinary shares in their companies to their new shareholders.

The 55 companies participate in a wide range of business activities – in fact 37 different industry tags apply to these companies – thus confirming that virtually any type of company can raise capital utilising the Crowd Sourced Funding Equity Raising Regulations.

Whilst the company directors have duties and responsibilities that are specified in the Corporations Act, the directors were able to finance their company’s operations without having to borrow money from banks and other financial institutions thus avoiding having to mortgage assets, issue personal guarantees and make monthly repayments of principal and interest.

The flip side is that a percentage of the company has been allocated to the investors who acquired those shares who will receive their share of any dividends that the directors declare and their share of any takeover offers made for the company.

But the real benefit in this financing revolution for small business and medium sized enterprises (companies with turnovers up to $25 million can utilise Crowd Sourced Funding Equity Raising) is that the directors can get on with running the business without continually worrying about how they are personally going to fund the company’s operations by mortgaging their own assets or borrowing from friends and relatives.

If you have a good business and have realistic targets for the future and a commitment to work hard for the benefit of all shareholders you might be able to raise capital from the public via Crowd Sourced Funding Equity Raising.

ESS Small Business has developed an 8 point checklist to assist company directors and shareholders to determine the company’s potential eligibility to participate in Crowd Sourced Funding Equity Raising:

Phase 1 – Legal Requirements – Can you answer “yes” to these questions?

  1. Is your company a small unlisted public company or a small / medium sized propriety limited company?
  2. Was your company’s group turnover for the previous twelve months less than $25 million?
  3. Is the group assets value for your company and associated entities less than $25 million?
  4. Can you confirm that the company is not listed on a Stock Exchange anywhere in the world?
  5. Can you confirm that to the company is not listed in an official list of a financial market?

Phase 2 – Do you identify with any of the following possibilities?

  1. Are the directors interested in expanding the company’s operations?
  2. Are the directors interesting in purchasing another business?
  3. Has the company developed a new product, process, technology, organisational or management methodology or undertaken a significant amount of research and development and:
    • Expenditure in the last twelve months for the company was over $1 million?
    • Income in the last twelve months for the company was over $200,000?

In which case the company is not eligible to be classified as an Early-Stage Innovation Company (and therefore the company’s directors may be interested in the company being classified as a potential applicant as a Crowd Sourced Funding Equity Raising Company).

If you are being able to answer “yes” to questions 1 to 5 and you believe that you have an interest in one of the questions 6, 7 or 8 your company is potentially qualified to be considering using Crowd Sourced Funding Equity Raising to raise capital direct from the public of up to $5 million in a twelve month period.

If you would like to access the summary of the capital raising attributed to each individual Crowd Sourced Funding Intermediary and the summaries identifying the capital raised by the individual companies working with each Intermediary and the 37 industry tags that relate to these companies please visit www.esssmallbusiness.com.au/crowd sourced funding learn more.

Want to know more about the most significant financing opportunity for small business and medium sized enterprises released in the last 35 years then why not accept our invitation to attend the FREE WEBINAR being presented by ESS Small Business on Tuesday, 19 November 2019 at 11:30am AEST / 12:30pm AEDT.  Click here to register.

If you have any additional questions relative to Crowd Sourced Funding Equity Raising or any of the other services provided by ESS Small Business for small and medium-sized enterprises please send me an email: peter@essbiztools.com.au or telephone me on 1800 232 088.

Have a great day!

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Episode 50 - Having Trouble With Your Business’ Finances?

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