New Law Opens Up More Investment Options For Businesses

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HUNTSVILLE, Ala.(WHNT)-Obtaining the necessary start-up cash from investors or the bank often proves to be a major obstacle for would-be entrepreneurs, but a new law just signed by Alabama Governor Robert Bentley could help level the playing field.

Gov. Bentley (R) signed SB 44 this week, which allows "crowdfunding" investment on a limited basis. The new law allows Alabama residents who are trying to start a small business to use social media and online advertising to find investors. Investors who go the crowdfunding route do not have to be accredited, provided they are also a legal resident of Alabama. Individual investments are capped at $5,000, but investors who are accredited can exceed the legal limit.

Sen. Arthur Orr (R-Decatur) sponsored the legislation. Proponents said the crowdfunding option helps entrepreneurs who face tight credit flows at banks and don't have big investor backup plans.

"Now anybody can do it, it should open up some other arenas for investment funds," said Huntsville resident Jeff Walczak, who recently started his own software service company and plans to utilize the crowdfunding route. "We've been waiting for this to happen for a long's here, we're going to see what we can do and try it out."

The new law also sets a total crowdfunding cap for companies at $1 million.