House Passes Bill That Would Expand Uses of Crowdfunding

Steven Lofchie Commentary by Steven Lofchie

The House of Representatives passed the Crowdfunding Amendments Act (H.R. 4860), which would expand permissible uses of crowdfunding.

Representative Patrick McHenry (R-NC), who introduced the bill alongside Maxine Waters (D-CA), said that it was designed to reverse the decline of small-business lending and loans by encouraging investment crowdfunding. Specifically, the bill would:

  • incentivize high-growth companies to use crowdfunding by increasing the asset threshold for (i) small businesses with existing revenue and (ii) startups without revenue; and

  • allow the use of single-purpose funds (wherein groups of people make joint investments in a holding company that makes one investment in the issuer), which are not currently allowed by the SEC.

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