Main Street America: Notes from the Field

Main Street America: Notes from the Field

Last month Jenny and I attended Main Street Now 2019the annual Main Street America™ Conference which was held in Seattle.

Main Street America is a grassroots network made up of small cities, towns and urban commercial districts that work on preservation based economic development and revitalization.

The work of the Main Street America network is increasingly vital for the support of local business communities that are relentlessly decaying in the face of the huge disparity in investment capital between Wall Street and Main Street.

One of the unique focuses of the conference this year was the topic of Opportunity Zones. Created by the 2017 Tax Cuts and Jobs Act, the Opportunity Zone program was designed to stimulate private investment in distressed communities throughout the country in exchange for capital gain tax incentives.  

In June 2018, more than 8700 communities in all 50 states, the District of Columbia, and five U.S. territories were designated as qualified Opportunity Zones and will retain their designation for 10 years. By making an appropriate investment in a zone, private individuals may defer tax on almost any capital gain until 2026 AND pay NO capital gains tax on the investment in the zone.

The tax benefits provided for investments in opportunity zones are a welcome addition to the self-directed investment tool we launched last year—Crowdfund Mainstreet. We are working toward building  a robust finance ecosystem for the small businesses that create local jobs and preserve local character.  Please join us in the movement to fund and grow small businesses throughout the nation by investing in a business on Crowdfund Mainstreet.  We hope to offer Opportunity Zone investments on the platform in the near future.

If you’re a small business owner looking to raise capital, feel free to schedule a call with us to explore how we can help you.  We can also work with you to determine whether you are in an Opportunity Zone and, if so, how you can take advantage of that.

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How would a President Trump affect small business finance?

How would a President Trump affect small business finance?

One thing is certain.  Trump has an awkward relationship with the chair of the Securities and Exchange Commission, Mary Jo White.

According to this fascinating article in the Washington Post, Mary Jo White, when in private practice, deposed the Donald on behalf of her client, a New York Times reporter that Trump had sued for writing that his net worth was far less than what he claimed.

Apparently the deposition was quite challenging for Trump – he was caught in about 30 lies.

So, Mary Joe White is not likely to be our SEC chair for much longer.

What else might happen?

At a recent crowdfunding conference, some of the speakers expressed optimism that deregulation will make capital raising and secondary trading easier for small business.  It is certainly true that it has become so expensive to be a public company that very few companies are choosing to go public these days and some are choosing to go private.

It’s hard to know what might change under a Trump presidency, but one possibility is that the restrictions on who can invest in a small business could be loosened.

As the Republican member of the SEC says, “I want to move beyond the artificial distinction between so-called “accredited” and “non-accredited” investors and challenge the notion that non-accredited investors are “being protected” when the government prohibits them from investing in high-risk securities. . . .  Because most investors are risk averse, riskier securities must offer investors higher returns. This means that prohibiting non-accredited investors from investing in high-risk securities is the same thing as prohibiting them from investing in high-return securities. . . .  [E]ven a well-intentioned investor protection policy can ultimately harm the very investors the policy is intended to protect. . . .  Remarkably, if you think about it, by allowing only high-income and high-net-worth individuals to reap the risk and return benefits from investing in certain securities, the government may actually exacerbate wealth inequality.”

What do you think?  How do we balance the need to protect “un-sophisticated” investors with the need to make it possible for small businesses to raise capital from their communities, customers, and fans?

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