Times are changing in the world of business finance. No longer are commercial bank loans the only way to finance a business. In today’s modern business environment any entrepreneur can raise capital with private placement programs and platforms. Private capital is available to any entrepreneur with any size of business, small, medium or large.
The most widely used platform is provided by the United States Securities and Exchange Commission (SEC). The SEC has set in place a set of rules and regulations that provide an exemption from the expensive registration process for companies who need to sell HULT PRIVATE CAPITAL stock shares to raise capital from private investors. The most popular of these Regulations is known as Regulation D, which contains Rules 504, 505 and 506.
Although many small business owners are aware of private capital few have the resources to locate private investors, and few possess the upfront capital to pay professionals the required fees to design and develop the investment documents. Developing an investment offering typically requires an attorney, and/or other professionals, who specialize in private placements. Everyone knows that most entrepreneurs have limited capital when starting a business. Prior to 2002 private capital was extremely expensive. The capital itself was not necessarily the most expensive item, but the preparation costs were over-the-top expensive. Entrepreneurs needed a selling document that was vetted by legal experts and/or consultants. This selling document is called the PPM or Private Placement Memorandum. The PPM provides details for every aspect of the business and the investment being sought.
In the earlier days Private Placement Memorandum development started at $15,000 and went as high as $50,000. These prices are still found today in more specialized areas such as Hedge Funds and public offerings, however, a few savvy entrepreneurs have narrowed this price margin substantially over the last 8-9 years bringing the prices down to roughly $4,500 through online services.
Nearly all companies qualify for Regulation D: Any Business or Start Up, Hedge Funds, Large Public Corporations, Mid-Sized Companies, Foreign Corporations, you name it. Literally any type of company can qualify for a Regulation D Private Placement.
The prerequisites include, but are not limited to:
1. A selling document (PPM)
2. A Form D Filing at the SEC (no filing fee)
3. A State Filing in whatever state the company raises private capital (small filing fee)
4. No soliciting to investors
5. The securities are sold as restricted from transfer or trading for 12 months
6. The amounts of capital raised must adhere to one of the Regulation D Rules, e.g., 504, 505, 506