WSJ Highlights Effects of Delays on Crowdfunding Regs for Business

MegaTech OregonIn an article published today on WSJ.com (Subscription), the author highlights the woes of a small businessman – in dire need of capital to expand with nowhere to go.

Scott Schroeder owns a small electronics assembly business in Oregon.  His business experienced a recent surge in demand but his local bank has refused to increase his line of credit.  Next stop: regional crowdfunding portal?  Nope.  Not an option yet due to the ongoing delays at the SEC.  While other countries are plowing forward into the future, crowdfunding in the United States will end 2012 with a bit of a whimper.

As described in WSJ.com,

Mr. Schroeder says his Corvallis-based Mega Tech of Orgeon intends to be a pioneer. He hopes to raise at least $500,000 for his 35-employee plant through online connections with potential investors on the Web. “I’m looking for money to grow, but banks aren’t willing to take any risks,” he says, adding that he will “gladly give out equity” to get capital.

The article goes on to state,

He would like to add as many as 15 assembly workers to meet the demands of high-tech startups including medical device and touch-screen payment product makers cropping up in nearby Portland, Ore. “We have underutilized equipment and want to fill that capacity,” he says. Mega Tech did about $6 million in sales in the last 12 months.

 

Mega Tech Oregon Workers

 

 

 

On the surface one must wonder why Mr. Schroeder’s banker will not extend the credit when the picture seems rather bright.  But considering the morass of regulations small banks must endure these days, it is a wonder at all if bank has the stamina to make a loan.

The balance between appropriate regulation and suffocating oversight can be a tricky task.  The SEC certainly has their work cut out.  One would hope the efficient realities of crowd based funding charges our regulatory brethren with the needed energy to forge ahead in 2013 – earlier in the year rather than later.

 

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