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The Office of Advocacy has released a new issue brief, Equity-based Crowdfunding: Potential Implications for Small Business Capital. Many small businesses are utilizing crowdfunding as an alternative form of funding, but one method of crowdfunding remains untapped in the United States: equity-based crowdfunding. This issue brief explores this new funding option, how it could unlock additional capital and how it works in other countries.

While only 5 percent of all crowdfunding globally is equity-based, a new regulation being promulgated by the Securities and Exchange Commission (SEC) may shift this trend. Equity-based crowdfunding was created under Title III of the Jumpstart Our Business Startups (JOBS) Act (2012), and the rule is still being written by the SEC to expand the ability for entrepreneurs to sell equity to prospective investors online. Until the SEC issues the final rule, equity-based crowdfunding for the vast majority of Americans remains off-limits.

This issue brief examines the potential benefits equity-based crowdfunding could offer small businesses that have trouble obtaining capital through conventional means while looking at two case studies of equity-based crowdfunding platforms operating in Germany and England.

The issue brief is available on Advocacy’s website at