Small Business Administration Opinion on Crowdfunding: Too Legit to Quit?

The United States Small Business Administration recently released an article articulating their position on crowdfunding and its role in the business world. The piece explains the uses of crowdfunding and goes on to explain the regulations hindering its progress, ultimately projecting a positive tone on the matter. At first, I was hesitant to believe that the SBA, which was at one time a central source of funding for small businesses, would embrace an alternative. But the more I think, the more it makes sense.

The SBA is a federal organization that was founded in the early 1950’s as legislators began to acknowledgeScreen Shot 2013-07-25 at 10.04.56 AM that encouraging small businesses would lead the country along the right economic path. To accomplish this mission, the SBA’s provides monetary support to entrepreneurs to “maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses”.

Sound familiar? Crowdfunding was established to empower businesses of all shapes and sizes to promote and ultimately fund their product to the crowd. The goals of the crowdfunding movement and the SBA clearly overlap. So why is the SBA making efforts to accept crowdfunding?

The article suggests that the SBA realizes the limitations of government support for small businesses, and sees crowdfunding as a way to fill the sizeable gap between funding supply and demand. The piece also acknowledges that the crowdfunding ecosystem is changing quickly; it discusses the passing of the JOBs Act in 2012 and mentions the SEC’s position in restricting the role of equity crowdfunding. Ultimately, the article emphasizes that the SBA has received this movement with open arms. We at Launcht are happy to see federal agencies embrace the movement

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