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SMALL BUSINESS INFORMATION CENTER |
Small businesses generate 2/3 of all new jobs in the United States, and are responsible for over 1/2 of this nation's total economic output. In order to grow and expand (and generate even more jobs), small businesses need to secure capital financing. One of the ways small businesses can raise necessary capital is by issuing securities, which are offered for sale to investors--either through public offerings or private placements. The Securities Department believes that compliance with various state and federal securities regulations should not be so difficult as to impede the ability of smaller firms to generate the capital they need for growth and development. Yet small business owners often voice frustration with process of seeking capital through the equity markets, and market access has appeared to be especially troublesome for owners of small innovation and high-technology based businesses. Accordingly, the Department established this "Small Business Information Center" as a point-of-contact for small issuers and various intermediary organizations. Through this Center, Department staff are available to explain the various financing options available for smaller firms and to describe the processes required for a small firm securities offering. Staff are available for pre-filing conferences and to answer any questions small business owners may have about the process. |
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Small Company Offering Registration The SEC, through Regulation A permits unregistered public-offerings of up to $5 million by a small business in a 12-month period. To complement the SEC's Reg. A, the states sought to develop a simplified, streamlined disclosure document for small businesses -- and ultimately, produced SCOR. The Department approved SCOR for use in Illinois in 1996. Testing the Waters The SEC approved a "testing the waters" process for Reg. A offerings in 1992. Under Testing the Waters, a small business may solicit indications of interest from potential purchasers prior to the preparation and filing of a full offering circular. The Department approved Testing the Waters in Illinois in 1997, but only for issuers intending to utilize Rule 504 of Regulation A at the federal level. ULOE (Uniform Limited Offering Exemption) The SEC, through Regulation D. has attempted to streamline requirements applicable to private offers and sales of securities. The states, then, developed ULOE as the state-level equivalent of Reg. D. The Department approved ULOE in Illinois in 1996. Accommodating Internet "Offers" In 1996, the Department adopted a Rule that redefined what constitutes an "offer" of securities in Illinois; the Department believed the Rule change was necessary in light of the increasing number of Internet postings that include securities offerings. The Rule change will particularly benefit small businesses that may wish to use the Internet to help publicize/sell their securities to prospective purchasers. Midwest Regional Review Midwest Regional Review. Beginning March 1, 1997 Illinois joined with securities regulators in Indiana, Iowa, Kansas, Michigan, Missouri, and Wisconsin to implement a "Regional Review Program" for small, multi-state offerings since that time 3 additional states,Nebraska, North Dakota and South Dakota have joined. The ten participating states have adopted cooperative, reciprocal (disclosure) standards for small stock/securities offerings and small businesses. One state will act as lead state to communicate with the others in the region. Once an offering has been approved for registration it will be registered in any of the other 6 states in which the application was simultaneously filed. ACE-Net (Angel Capital Electronic Network) In 1996, Illinois joined with other state securities regulators and the U.S. Small Business Administration to develop a venture capital Internet site to assist small businesses -- the Angel Capital Electronic Network. Essentially, ACE-Net is an electronically connected bulletin board system run by participating universities and non-profit entities for the purpose of listing small corporate offerings. The electronic bulletin boards allow accredited investors to access a listing of small corporate stock offerings (Reg. A and Reg. D, Rule 504) and to download offering circulars. Forms and Fees In 1996, the Department cut small business examination and filing fees in half -- and the Department is working to eliminate all unnecessary paperwork submittals. Forms and Publications Sites of Interest These links are provided as a convenience for the public and do not imply Secretary of State sponsorship or approval of any of the sites. When you access one of these sites, you are leaving the Secretary of State's Website.
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