Small Business RULES in Illinois: HB3791 and HB2946

We are all well aware that the majority of job growth and economic activity are driven by small business. From the Wall Street Journal to the New York Time to CNBC, all have ran story after story confirming that small business is the engine that drives economic growth.

One state that has, for the most part, been left behind in the growth of small innovative businesses is Illinois. Budget issues and folks leaving our state have hampered small business growth. What can be done?

Recently we are see legislative changes that have the potential to make a dramatic improvement in this negative phenomenon. In May of 2016, Illinois unanimously passed the Illinois Intrastate Offering Exemption (Illinois Investment Crowdfunding Law HB 3429). State Representative Carol Sente filed the bill written by, Freeborn Peters partner / attorney, Anthony Zeoli supported by the SBAC and (state registered and regulated) Illinois intrastate crowdfunding portal VestLo.com. This major accomplishment now appears to be only the beginning in the move to once again make Illinois the leader in small business growth.

Two new Bills have been introduced to the State Legislature by Carol Sente and the team involved in last years victory. In late October, 2017 the SEC updated Rule 147 (Intrastate Investment Exemption) allowing for improved conditions for Intrastate crowdfunding, by creating Rule 147A. The original rule 147 allowed for some 29 states to enact laws allowing local businesses to raise funds from its neighbor (state residents) without the onerous (and expensive) regulation of the Federal government. Working directly with state regulators, in most cases the individual states, Secretary of State Securities division. The updated rules require the states to amend the current Intrastate crowdfunding laws to take advantage of these positive changes to the federal update.

Illinois, under Carol Sente’s leadership, has taken the lead by filing bill HB 3791 on Feb. 10th, 2017. Among other things, this amendment will allow for companies formed in states other than Illinois (ie. Delaware) who operate and employ in Illinois to raise growth capital under the Illinois Investment crowdfunding law. The new bill which enables for the rules under the new 147A, will also allow companies to receive local investment when complying with one of the 3 requirements (80/80/80 rule) that allow companies to meet the intrastate exemption. Rather than being required to have 80% of revenue, 80% of employees and 80% of use of funds within the state. Now an Illinois small business will only need to meet ONE of these 3 requirements rather than all 3. Yet another advantage of enacting HB 3791 is the ability for small business to use General Solicitation, meaning although investment must come from Illinois residents, companies can advertise their offering without fear of losing the exemption when social medial or other means take the advertisement beyond state lines.

BUT WAIT… There’s MORE (much, much more)

Launched in 2011, the State of Illinois passed the Illinois Angel Tax credit (25% of Angel investments) enabling for $10,000,000 in state tax credits for investors in qualified investment in qualified Illinois based businesses. That law expired effective Dec. 31, 2016.

In a potentially revolutionary move, Rep. Carol Sente along with State Representative Elgie R. Sims, Jr. and Representative Emanuel Chris Welch have filed a bill (HB 2946) to re-instate and IMPROVE the Angel Investment Tax credit to $20,000,000 and run through 2021.
Why is this revolutionary??
Bill HB 2946 allows (and encourages) investment in Illinois business from not only accredited Angel Investors but from ordinary unaccredited Illinois residents!!
Qualifying investment opportunities are required to set aside 25% of the investment to unaccredited investors through the Illinois Investment Crowdfunding law. This encourages Angel investors to “slice off a piece” of their vetted investments allowing participation to regular citizens through a registered Illinois Intrastate Investment Crowdfunding Portal. The new bill also loosens the requirements for businesses eligible for the Illinois Angel Tax credit to extend beyond Technology companies to include wholesale, retail, hospitality and more. If enacted this Illinois law will be the 1st of its type in the United States, modeled after the run-away success of the equity crowdfunding tax credit in the United Kingdom. Small business investment exploded in the UK following enactment of their small business investment tax credit.

This law would help to fulfill the vision of VestLo, Anthony Zeoli and the Small Business Advocacy Council by encouraging Angel Investors and Angel groups to include Illinois residents of average means to participate in the types of small business private investments that have the potential to create real wealth and growth in Illinois.

We encourage EVERY Illinois resident to contact your local State Representative, State Senator and Governor Rauner to support these incredible bills to become the Law. They have the potential to truly impact the economy and job growth in Illinois.

Disclaimer: The author of this article is neither an Accountant or and Attorney. Illinois Business owners and Investors are encouraged to speak with a licensed Attorney and/or CPA before filing for this type of Tax credit / Tax incentive when available.

 

 

 

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Crowdfunding for Illinois Businesses Now Up and Running

 

FOR IMMEDIATE RELEASE

 

Crowdfunding for Illinois Businesses Now Up and Running

Innovative program helps entrepreneurs, local communities

 

CHICAGO January 17, 2017 – Three Chicago-area business owners were profiled today as the first entrepreneurs to be raising money under the new Illinois intrastate equity crowdfunding law. The businesses are using this capital to create jobs, re-invest in the local community and generate potential revenue for investors. Three businesses: Native Sons of Chicago (https://www.facebook.com/NativeSonsChicago/) CrossTown Fitness( http://crosstownfitness.com/ )and CardFrenzy (http://www.mycardfrenzy.com/ )are raising capital through the new crowdfunding portal www.vestlo.com. These entrepreneurs, along with the Small Business Advocacy Council, 1871, a state representative who supported the bill and the Chicago attorney from Freeborn & Peters LLP who authored it, gathered at the 1871 offices at The Merchandise Mart to spotlight innovation in Illinois.

 

“The team at VestLo couldn’t be more excited to have first mover advantage leveraging the Illinois Investment crowdfunding law,” said Howard Orloff, co-founder of VestLo. “We aim to enable businesses, people and communities who have historically been under-served by traditional financing to raise the capital they need to continue to grow and hire in Illinois.”

 

The new Illinois intrastate crowdfunding law (HB3429) allows Illinois businesses to raise up to $4 million in capital from Illinois investors, one of the highest intrastate crowdfunding allowances in the country and higher than the federal cap of $1 million. This new way of accessing capital is having a positive impact on the economy and local communities. In addition, Illinois residents now have the ability to diversify their investment portfolios in local trust. These small business investments have exponential power to drive our local economy, while generating potential investment returns for investors.

 

“Intrastate equity crowdfunding provides small business owners and entrepreneurs the opportunity to raise money through a large number of people in their communities,” said Elliot Richardson, founder and CEO of the Small Business Advocacy Council. “Intrastate crowdfunding will help spark the Illinois economy and create jobs throughout the state.”

 

Also speaking at the event were Howard Tullman, CEO of 1871, and Rep. Carol Sente (D-59th) who sponsored the legislation.

 

“As the author of the Illinois intrastate crowdfunding law I cannot express how thrilled I am to see it finally being used. It took longer than expected to get here, but Illinois intrastate crowdfunding is already looking like it will be a game changer for Illinois companies like NativeSons, CrossTown Fitness and CardFrenzy, who are looking to find the funding necessary to grow and get to that next level,” said Anthony J. Zeoli, a partner in the Corporate Practice Group at Freeborn & Peters LLP. “While this is truly a monumental step, this is only the first offering and there are several others expected to be released in 2017.” Mr. Zeoli is also the author of the Crowdfunding Legal Hub Blog. For more information on the Corporate Practice Group at Freeborn & Peters LLP, visit http://www.freeborn.com/practice-area/corporate.

 

For more information on Illinois intrastate crowdfunding, visit http://VestLo.com and http://www.smallbusinessadvocacycouncil.org/.

 

 

MEDIA CONTACTS: Ryan Tolley, SBAC

 

Work: 312.548.8608 ext. 701 or cell: 336-503-2301

ryan@sbacil.org

 

Jennifer McGuffin, Culloton Strategies

Cell: 630-842-8143

jm@cullotonstrategies.com

 

ABOUT SMALL BUSINESS ADVOCACY COUNCIL

The Small Business Advocacy Council (SBAC) is a non-partisan, member driven organization that promotes the success of small business through political advocacy, support services and educational programs. The SBAC was established in 2010 and represents nearly 1,000 businesses in the Chicagoland area. http://www.smallbusinessadvocacycouncil.org/

ABOUT VESTLO, LLC

VestLo is a FinTech company based in Chicago that is committed to the concept of investing locally. We believe individual customers, neighbors and communities can come together to support local businesses through crowdfunding the investment needed to operate or expand their business. Investing locally will benefit local communities and boost our local economy. Investors see the return on their investment through improvements in their community and potential investment gains. VestLo has two offices in Chicago including a satellite office in 1871, the startup hub of the Midwest. https://vestlo.com/

ABOUT FREEBORN & PETERS LLP

Freeborn & Peters LLP is a full-service law firm, headquartered in Chicago, with international capabilities. Freeborn is always looking ahead and seeking to find better ways to serve its clients. It takes a proactive approach to ensure its clients are more informed, prepared and able to achieve greater success – not just now, but also in the future. While the firm serves clients across a very broad range of sectors, it has also pioneered an interdisciplinary approach that serves the specific needs of targeted industries, including credit unions, food, healthcare, transportation, private equity and venture capital, and insurance and reinsurance.

Freeborn is a firm that genuinely lives up to its core values of integrity, caring, effectiveness, teamwork, and commitment, and embodies them through high standards of client service and responsive action. Its lawyers build close and lasting relationships with clients and are driven to help them achieve their legal and business objectives. For more information, please visit www.freeborn.com

ABOUT 1871

1871 is the home of almost 500 early-stage, high-growth digital startups. Located in The Merchandise Mart, this 130,000 square foot facility is also the headquarters of nationally recognized accelerators Techstars Chicago and the Good Food Business Accelerator; impact investing fund Impact Engine; half a dozen industry-specific incubators in key areas such as real estate, education technology, food and financial technology; several emerging tech talent schools (Fullstack Academy, Actualize, Future Founders, Designation and Evolve Security Academy), and the state’s leading technology advocate, the Illinois Science and Technology Coalition. It is the second home to Chicago-based VCs, Pritzker Group Venture Capital, MATH Venture Partners, Hyde Park Angels, OCA Ventures, OurCrowd and Chicago Ventures, as well as satellite offices for DePaul University, Northwestern University, University of Illinois, University of Chicago, Loyola University Chicago, Illinois Institute of Technology and DeVry. 1871 has fast become recognized as the hub for the city’s entrepreneurial/technology ecosystem and has been featured in Inc. Magazine, TechCrunch, The Wall Street Journal, The New York Times, Chicago Tribune and Crain’s Chicago Business among other top media. 1871 is the flagship project of the Chicagoland Entrepreneurial Center.

 

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Huge Step for “Invest Local Illinois”

In the instant gratification mindset of today, it’s often a challenge to remember that real change takes time. No where is this truer than in the highly regulated world of finance. Around 18 months ago the state of Illinois passed perhaps the most business and investor friendly Intrastate Investment crowdfunding law in the country. Those rules went in to effect on January 1, 2016 and since that day people have been anxiously waiting to see a local small business utilize these rules to raise growth capital.

Well…. The wait is over!!

cardfrenzy-logo

Cardfrenzy, a retail chain of card and gift shops has listed an offering with Illinois registered investment portal VestLo. Cardfrenzy working to raise up to $500,000 from its customers and neighbors to fund the growth of its franchise program operations.

Investment in the Cardfrenzy Franchise program is exclusively for Illinois residents. You can view the the offering here:

https://vestlo.com/deal/cardfrenzy-franchising-program

Always remember that investing comes with risk. Especially when looking at investments in small privately held companies. Please be sure to review all the documents and financials prior to making any investment. It is an investors responsibility to do their own due-diligence. We never offer investment advice but we LOVE the idea of Illinois citizens supporting Illinois businesses.

 

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Illinois Equity Crowdfunding is now available

Originally posted at Crowdfunding-Website-Reviews the applications and final rules for both issuers and portals has now become available. The most dynamic intrastate crowdfunding rule in the nation is now effective. All needed rules and regulations have been provided by the Illinois Secretary of State and Issuers are lining up to take advantage of this new capital raising tool.

UPDATE #3: The long awaited final rules and applications from the Illinois Secretary of State have finally arrives. One portal, VestLo, has announced that they have submitted their application to act as an Illinois Intrastate Equity Portal through this press release. We have been rather surprised that the local Chicago news has not yet written on this exciting new development. The Portal and Issuer applications can be found on the Secretary of States website. You can find all Illinois Equity Crowdfunding Forms. To go directly to the issuer registration form, it can be found here. With Illinois companies having the ability to raise $4mm vs the federal crowdfunding laws being limited to $1mm raise. The Illinois law has come big advantages over the JOBS Act. Our expectation is for the Illinois law to be the proof that intrastate will be a real option for businesses based in Chicago and around the State.

UPDATE #2: Looks like we can expect the administrative rules, portal application and issuer application to be released by the Illinois Secretary of State by April 1st, 2016. We are expecting 3-4 portals to be applying to the state under HB 3429 (Illinois INTRASTATE OFFERINGS EXEMPTION aka The Illinois Investment Crowdfunding law) on the 1st day the application is made available. There appears to be more excitement surrounding the Illinois law than we have found in any of the other 29 states with intrastate crowdfunding has been enacted. Portals have already begun marketing efforts to attract both issuing companies and Illinois investors. A few of these portals seem to include truCrowd (also operating in Texas), VestLo and a couple more portals that have asked us to “keep things quiet” until the final rules are released.

UPDATE: Illinois HB 3429 – Illinois Equity Crowdfunding has passed both the State House and Senate unanimously as of May 20, 2015. The bill is on its way to Governor Bruce Rauner to be signed in to law. We have total confidence that our business friendly governor will have no reservations signing this bill and helping to expedite its implementation. The Illinois intrastate equity crowdfunding bill is the most aggressive attempt of any state bill to encourage the invest-local movement.
Check back often for updates on this exciting new time for Illinois small business and investors as we will be following this very closely. More Info

Investing in Distinct Chicago Neighborhoods

Introduction:

Chicago is a fantastic city with a unique blend of culture, arts, and tradition. You can witness the most modern technological advances as well as the links to ancient history as well. Chicago is home to around 77 neighborhoods comprising of about 51 communities. The heart and soul of Chicago resides in them. You can divide Chicago into four geographical areas as follows.

  • North Chicago
  • West Chicago
  • Downtown Chicago
  • South Chicago

We shall explore about ten great Chicago neighborhoods locations. We shall discover the historical sites as well as attraction encompassing art, culture, nightlife, and shopping.

  • Bucktown / Wicker Park:

This sounds like a very odd name for a modern neighborhood. Today, this place is one of the most modern and trendy neighborhood in the whole of Chicago. However, in the early days, goats used to graze aplenty. This is how this place got the name. The buck is a male goat. Polish immigrants used to rear these male and female goats in the early part of the nineteenth century. It is around the last quarter of the twentieth century that Bucktown evolved as an artistic community. The area has fantastic infrastructure with more than two million homes scattered around the neighborhood. Today the higher rents in Bucktown are pushing people down south into the Wicker Park area.

 

  • Gold Coast / Old Town:

Stunning lake views characterize this area and separate them from the others. This is a high-priced community area with several houses touching millions. This place has some of the oldest styles of Chicago mansions where people can experience intentional living and share humongous space. This area is famous for its nightspots, good food, as well proximity to the lakes and business districts. The most renowned location in this area is the Oak Street running through the heart of an area, the “Viagra Triangle.” Here you can see elderly men having a great time with young women in their twenties.

  • Hyde Park:

There can be no doubt in anyone’s mind that the most famous resident of this area is the present United States President, Barack Obama. The area is also home to several prestigious universities and institutions such as the University of Chicago. This University has churned out 87 Nobel laureates. This makes it one of the most prestigious Chicago neighborhoods.

 

  • Lincoln Park:

 

About two centuries ago, this area was full of swamps and forests. Today, this is one of the most fashionable areas in Chicago. This is one of the best places to start a family. There are a number of good schools as well as colleges in the vicinity. The greatest advantage of this place is that you do not require a car to move around the place. This is because of scarce parking space. You can find DePaul University’s largest as well as the oldest campus here in Lincoln Park. This is the headquarters of the ultimate resale shop, Millionaire Rejects.

 

  • River North:

 

Until very recently people referred to this area as a slum. However, real estate developer, Albert Friedman changed the landscape by leasing out the buildings to art galleries, and other agencies such as photographers. Today you can find the area has more than 100 art galleries in a cluster. This area boasts of the world’s largest commercial building, Merchandise Mart. This area also houses the world’s tallest residential skyscraper, Trump Tower built by Donald Trump. The transformation from a slum to one of best Chicago neighborhoods is fantastic.

 

  • Roscoe Village:

 

In the late nineteenth century, German and Swedish workers settled here. They developed a great industrial township. The Great Depression saw the downfall on innumerable industrial units and slowed down the development. However, the real estate activities picked up in the latter half of the twentieth century. This area is famous for being in close proximity to The Loop. However, this area has retained the rustic charm of a village. You can find numerous antique stores in this area.

 

  • South Loop:

This place is home to some of the top tourist locations today. However, in the early part of the twentieth century, this area was the hotbed of brothels, saloons, and pawnbrokers. Today, you can find luxury high-rise apartments all over the area. This area is famous for its proximity to Lake Michigan. This is a fast developing area and the favorite of the young working professional. This makes it one of the upcoming Chicago neighborhoods.

 

  • Streeterville:

This is a developing neighborhood. Real estate values are now very high in this area. The old buildings have given way to new high-rises with more than the usual amenities. Most of the complexes have banks, clubs, convenience stores, as well as hotels. You can find parking cost to be very heavy in this neighborhood at $ 250 a month. This would make renting out taxis much cheaper.

 

  • West Loop:

This area is home to Oprah Winfrey’s Harpo Studios Empire. Initially, a warehouse district, this area is now home to contemporary lofts, mid-rises, and art galleries. You may not find buildings more than seven stories high in this area. In comparison with other areas, parking is quite cheap here. Hence, people prefer this area to others. You can find the Whitney M Young Magnet High school here. One of its most famous students is the First Lady of the US, Michelle Obama. You should not miss the Randolph Street Market in this area.

 

  • Ukrainian Village:

You can find a rich blend of German, Polish, and Ukrainian culture in this village, just south of Wicker Park. Though today, most of the people are not of Ukrainian lineage, you can find some of the best Ukrainian food in the area. You can still hear some people speak in the Ukrainian language here. This is a middle class locality with a three-bedroom condominium available for $ 350,000. You can also find some old Victorian era houses in the area. You can find communities living here for decades.

 

Conclusion:

You have seen ten Chicago neighborhoods with a unique blend of culture and history. Today, the areas have seen tremendous development. However, they have still maintained the traditional look in places.

Marketing Local Businesses Online

Location based marketing is one the biggest trends for digital marketers across the globe in 2016. In fact, it’s high on the agenda for most marketers as 77% state it’s an important focus for them this year. Even if you don’t sell a product or service online, location based marketing is an incredibly important channel for promoting your business, especially with the rise of mobile technology.

Today’s article will help you understand what location based marketing is, how to use it to promote your physical location and examples of relevant location based marketing campaigns.

 

What is location based marketing?

This is essentially where you can use geographic based data to specifically target potential customers and promote a message tailored to their physical location. Generally, this data is collated from a user’s GPS signal using mobile technology.

Promotion technique 1 – online check ins:

Social media channels such as Facebook allow consumers to check in and tag your business via their profile, sharing the fact that they’ve visited your restaurant or bar. This creates social proof and word of mouth marketing via social media, as an online check in acts as a strong personal recommendation.

However, you really need to offer an incentive to encourage people to do this. It could be a discount, a fun prize or an exclusive reward. Whatever you decide, make sure it truly engages your customers and appeals to them.

 

Promotion technique 2 – location based beacon technology:

If you’re a retailer, this fact may completely change the way you think about location based marketing – timely in store messages can cause a consumer to be 20 times more likely to make a purchase. With the use of in store beacon technology, users can receive alerts and notifications as they walk past certain areas of your shop. This could include updates about special offers, new product lines or events happening nearby.

This allows you to deliver incredibly targeted messages, delivering useful information to your consumers straight to their personal mobile device. You can influence their behaviour once they’re in store, increasing their likelihood to purchase and more importantly, your levels of sales.

 

Promotion technique 3 – Google Places:

This is a simple but very effective location based marketing tool. When users are visiting search engines such as Google, there are certain terms that deliver location based results. So they could be online searching for their nearest Italian restaurant for example and they’re delivered a list of the closest pizza takeaways.

On your part, you can just register for a ‘Google My Business’ page and customers can easily find you via Google Search, Maps and Google +. Location based search optimization provides customers with your phone number, location and directions, so they can easily find and contact your business.

As you can see, there’s a whole host of location based marketing techniques that are effective when marketing your physical store. This is one the most exciting marketing technologies and will continue to develop. If you have any questions, please feel free to get in touch and we’ll be happy to help.

What is the Illinois Equity Crowdfunding Law

Have you heard of the Illinois Intrastate Crowdfunding Law? If you’re a small or medium sized business in Illinois, it may be a great opportunity to grow your capital. Recently approved by the House and the Senate unanimously, signed in to law by the governor this is an exciting announcement for entrepreneurs, investors and venture capitalists.

In today’s article we’ll discuss what the Illinois Intrastate Crowdfunding Law is, what the Bill means for SME’s and how you can use it as an opportunity for your business.

What is the Illinois Intrastate Crowdfunding Law?

This Bill essentially allows businesses in Illinois to actively solicit crowdfunded capital from local residents, in exchange for equity in their business. The maximum allowed investment from each investor is $5,000, whilst a company can raise $1 million in a year, with the potential for $4 million if they provide a financial statement for investors.

This differs substantially from popular existing crowdfunding websites like Kickstarter because the capital they raise is no longer from ‘accredited investors’, it can be from anyone who lives in Illinois. Illinois residents also receive debt/equity from the company they invest in, which isn’t usually the case with traditional crowdfunding websites.

What the Law means for SME’s & precautions

If you’re a business owner and you’re looking for investment, this is truly a great opportunity for you. This Bill could give you access to millions of dollars of new capital, growing your business via local residents who are passionate about entrepreneurialism in Illinois.

It is important however to understand that there should be some element of caution with this Bill. Investors may have expectations in terms of influencing how the business is run or returns on their investment. Businesses should also ensure they are complying to the Bill’s legislative requirements before soliciting local residents.

Additionally, if you are soliciting investment from local residents, you may have to disclose certain elements of your businesses’ performance and financial data. If you do this, understand that as you’re approaching local residents they are members are of the general public and therefore your competitors or other key stakeholders may also find out. Subsequently, only disclose information regarding your company that you are comfortable about being public.

How you can use the Law as an opportunity for your business

This may be a better alternative than receiving investment via a huge funding firm because you’re giving ownership to potential customers who can offer insight, feedback and new ideas. They’re passionate about living in the state, they want to see their local area invested in and they can now have a vital role in the growth of Illinois. It’s essentially empowering local residents to make a difference and improve the state of Illinois, whilst investing in a business they love, creating a sense of public spirit.

Summary:

As you can see, the Bill is a great opportunity for SMEs in Illinois to gain investment from potential customers passionate about developing their local area. If you have any questions about the legislation, please feel free to ask and we’ll be happy to help. Receive a FREE Guide on Illinois Equity Crowdfunding – Here

Illinois Intrastate Investment Crowdfunding

On Jan. 1st 2016 the Illinois equity crowdfunding law became effective. In a state with a reputation for being unfriendly to business and overprotective of its citizens, Illinois legislators passed the most aggressive intrastate crowdfunding law in the country. Title III of the Jobs Act which legalized investment crowdfunding limits companies to raising $1mm in a 12 month period and has strict limits on the amounts that both accredited and unaccredited investors can invest. In some cases limiting investors to $2,500 in aggregate (all investments) in a 12 month period. The Illinois crowdfunding law allows companies registered and operating  in Illinois to raise up to $4mm a year. Illinois residents who are unaccredited can invest up to $5,000 per deal while accredited investors have no limit to the amount in which they can fund offering companies.

Although the Illinois law became effective on January 1st, companies and investors have been waiting for the Illinois Secretary of State to release the administrative rules and applications for capital raises to being. The delay does not come without a potential payoff. The Secretary of State will have the ability to update the rules and regulations within the law as they gauge what is needed to allow this new market to flourish. We are excited to announce that we fully expect the rules to be released by April 1st.

As we await these rules we are beginning to find news stories and landing pages for Illinois crowdfunding portals. Portals are the mandatory internet intermediaries that must host any Illinois company looking to raise capital using the crowdfunding exemption (which operated under federal rule 147). So far we have come across many developers offering to create internet portals including crowdforce and crowdfundconnect. We have seen that truCrowd (who also operated an intrastate portal in Texas) say they will be entering the market and VestLo who will be operating a custom created Illinois portal operating out of 1871 (famous Chicago startup co-working space). VestLo will be working with the author of the Illinois crowdfunding law, attorney Anthony Zeoli and Axia Law, one of the leading law firms for Chicago based tech startups.

We are very excited to watch this new fundraising mechanism put to use in Illinois as it will quickly become the most powerful tool in the Invest Local Illinois movement. The law (Illinois HB 3429)is designed to allow and encourage investment in local communities by the customers who frequent the businesses looking to raise capital and grow.

Presentation explaining the Illinois equity crowdfunding law.

Sign-up for more information on Illinois Equity Crowdfunding

Many Ways to Support Local Business

There are a lot of ways to invest in the modern world. Many people opt to invest in big name companies on the stock market. With recent trends towards shopping local and growing local though this doesn’t make since. Why would you invest local in Illinois? Almost every city and even state has businesses that could use investors.

One of the biggest reasons to invest local is that you are helping out your own economy. The changes that your investments made can be both seen and experienced firsthand. As people start to invest in their own cities they will start to see an overall improvement in quality of life. Streets become safer and businesses can grow.

Think about all of the local businesses you go to. If you think about it almost every small business has areas they need funds in order to improve. Your contribution can make that business better so they can afford to pay their employees more, offer lower prices, expand if they need to, or even upgrade to meet modern times.

How Can You Invest?

There are a variety of different ways that you can invest in your community. Each type has its own benefits for you and the business. Here are some of the ways that you can invest.

Loans

Loans come in a variety of forms, large and small for example. They also come with different repayment terms. Some lenders dictate how the loan should be applied, for example, they might say it is for upgrading your storefront.

Common Stocks

Common stocks are what most people think of stocks. When you invest in common stock it gives you partial ownership in the business and a level of control. The only difference in this case is that you are owning part of a local business.

Preferred Stocks

These stocks are more up the street of people who want to earn returns but don’t want to spend the time controlling a part of the business. Preferred stocks give you regular returns but offer no control or voting power over the business.

Royalties

Royalties is essentially the process of earning money based on the sales of a business. The amount of money you earn can be statically based on business or can be changed based off of the season and the level of business being done.

Pre-Sales

Pre-sales is when you get a portion of the advanced sale of goods. Sometimes this will even be for more than the amount that you originally invested.

Who Can Invest?

While the ideal answer would be anyone can invest, the time has not arrived when just anyone can invest in local businesses. The Security Exchange Commission has established a set of rules that determine who can invest in local businesses and how. These criteria are different depending on what type of investment you are talking about.

These rules for investing were not originally set up to limit investors. They were set up to protect investors. The federal government put these rules into effect when it noticed that people were starting to fall for investment scams. They prevent people from just falling into a pit of lost money.

There are some exceptions to the rules for investing. The most important and biggest exemption is the friends and family exemption. This allows most people to ask their friends and family for money for businesses or projects. There are still a few regulations for this exemption but it gives people wide latitude.

Accredited investors also have an exemption. These investors are high-wealth or large income individuals who are not considered to need the protection against losing money. They make enough money that should they lose a little it wouldn’t cause a severe detriment to their life. In most cases an individual has to have made over $200,000 for the last two years. If they are married they have to have over $300,000 a year in those last two years.

There are a few more exemptions but they get a little more difficult to navigate.

Where To Find Investment Opportunities?

There are a lot of options out there for investing in your community. You don’t have to be a major investor in order to help out and get a little money back. Here are some easy ways for you to invest local in Illinois or anywhere else in the world.

Co-Ops

A great place to find investment opportunities is in a Co-Op. The simplest way to explain a Co-Op is that they are a member owned business. You have probably heard of REI, which is similar to a Co-Op as it is a member owned food. The business is run for the benefit of those who are members. Members often can vote and have a say in how the business is run.

At the end of the financial year members can a percentage of the profit from the business. Members also tend to get special deals and benefits when they shop at the Co-Op. Co-Ops tend to be for food and farms but you can occasionally find Co-Ops for other purposes such as learning.

Friends, Family, and LIONs Clubs

If you have any friends that are starting a business or want to start a business ask if you can invest. This will help them start a business while allowing you to make some money. When you go about it this way you have less restrictions to worry about.

LIONS or Local Investing Opportunities Networks connect investors with small businesses in the area. They do it in such a way that the two parties create a community and friendship that will alst beyond the investment. It is more than just helping people fund their businesses, in most cases LIONs are made by community members to better the area they live in. Because LIONs clubs connect investors and businesses in a social environment you do not need to be an accredited investor. There are no third parties pressuring you to invest or instructing you on how to do it.

Pre-Pay For Local Goods

The process for prepaying has been around for a long time but recently it hasn’t been utilized by as many people. The name pretty much says it all, you prepay for your local goods in advance and it helps the store gain the money it needs to operate. If you invest at a certain level you often are able to earn interest on your prepayment. There are a number of websites out there that can help you find locations with prepayment options. Credible is a website that allows you to prepay at local stores through their website. Currently Credible is only for food locations.

Look For Local Stocks

Many small businesses are starting to restructure to become public because it is a great way for them to get investors and spread the knowledge of their business. Recent changes to laws around the country have made this easier. As time continues the laws are predicted to change even more to make it easier for local stores and small businesses to go public.

GoFundMe and Other Crowd Funding

While not the most typical form of investing you can look on websites such as GoFundMe for local businesses. These websites allow users and businesses to post requests for funds. With GoFundMe users are typically only donating money but with websites like KickStarter and Indiegogo allow companies to offer perks for different tiers of investment.

Credit Unions

You may like your big bank but if you truly want to support the community you should consider moving all of your financial accounts to a credit union. These credit unions are set up as non-profits and instead of big bankers benefiting the members of the union benefit. The most important thing about credit unions is that they aim to help the community. For those that need it they provide financial counseling, scholarships, grants, and other forms of outreach to the community. Not only are you helping the community but most credit unions have no fees, better APRs, and better ways to save.

Alternative Investments (Investing In Yourself)

Some people suggest alternative methods of investing locally, they suggest investing in yourself. For example, investing in solar or wind power can not only power your house but it can feed back into the power system to provide extra power for your neighbors and community. When you produce enough power to send power back into the system you can usually get money back from the utility company. Make sure to first get rid of credit card debt, student loans, and any kind of money you owe. You can’t afford to help the community until you are prepared to do so.

Invest in your community today to make an investment in yourself. Not only are you earning money back by investing locally, you are making the place you live better. Often times this will also raise your property value too. It is an all-around win. Help yourself, help your neighbor, and help your community, invest local Illinois.

How to Invest Local

If you’re interested in investing locally, you’ve probably explored credit unions and community banks. The money in community banks goes back out into the community in the form of small business loans. But what are some other options for investing locally?

  1. Angel Investor – If you’re one of the 1% of investors that have a lot of net worth from a successful company or business venture, you can help a start up by becoming an angel investor. Like the name suggests, “angels” invest their own money to make a small business owner’s dream a reality. You are their guardian angel. Most angel investors prefer a focus like food or minority led companies. The sky is the limit.
  2. Community Developed Loan Funds – This is one of the best kept secrets of local investing. Community Developed Loan Funds target under-served and low income neighborhoods. What better way to help a community grow in a positive way than to bring in new business and job opportunities?
  3. Cooperatives – First developed after the industrial revolution, cooperatives are groups of people with similar job sets like ranchers, farmers, brewers, grocers, etc that cooperate or co-op to protect their local interests. They provide loans to the co-op members. By investing in local co-ops, you’d be serving a wide range of businesses at once.
  4. Crowdfunding Local crowdfunding is a hybrid of social media and investment. Most people are familiar with crowdfunded projects like music, tech gadgets, and movies, but a lot of local businesses are turning to crowdfunding to get their product or service to a wider audience. A quick search on any number of popular crowdfunding sites will give you several investment opportunities.
  5. Local Investment Groups –There’s power in numbers. If you want to give a substantial amount of monetary support to local businesses, it may be a good idea to join (or form!) a local investment group. By banding together, your group can help local businesses on a higher scale than you may have been able to just by yourself.
  6. No interest loans – No interest loans fall somewhere between investing and donating to a local business.   The website Kiva popularized the trend of people requesting microloans from potential investors for such things as business supplies and other expenses. The investors get their principal back without interest. Now that dairy farmer can buy more cows thanks to you!
  7. Peer to Peer LendingPeer to Peer (P2P) Lending is gaining popularity. It’s similar to a bank loan except investors loan the person or business the money directly instead of the bank issuing a loan. By cutting out the middle man, the local person or business sees lower interest rates and the investor sees a higher rate of return.  Lending Club and Prosper are two well known P2P sites.

No matter how you decide to invest locally, the important thing is you are giving back to your community members and businesses.   By investing locally, you’re creating a strong foundation of prosperity that everyone benefits from.