The Illinois Senate unanimously passed legislation on Wednesday that would allow Illinois companies to take investments in exchange for equity through crowdfunding platforms. The bill is now on its way to Gov. Bruce Rauner to be signed into law.
State Rep. Carol Sente, D-Vernon Hills, filed the bill in late February 2015. The House passed it unanimously in April. The Senate passed it with a 58-0 vote.
Proponents hail the bill for providing opportunities to investors looking to put their money into new businesses, and for giving entrepreneurs access to new avenues for capital. Anthony Zeoli, a Chicago attorney who specializes in crowdfunding and worked on the bill, said it could be enacted as soon as July.
The law will help improve Illinois’ reputation as being unfriendly to small businesses, said Sente, a small business owner herself. She said she recently started a small business owners caucus and that she and its members are working on more bills to make it easier for these businesses to function in Illinois.
Sente said she wants to send a message to small business owners that says, “Stay here, we’re trying to help you."
The legislation would allow non-accredited investors, whose net worth is less than $1 million and who make less than $200,000 per year, to put money into startups, though their investments would be capped at $5,000 per company per year.
Zeoli said the law is written to encourage diversification, which offsets the risk of an investor sinking money into a single company with an unknown future.
Sente said the final bill dropped the cap of how much companies can raise in a single year because of a request from the Illinois Secretary of State’s office. She said companies with audited financial statements will be allowed to raise $4 million per year, and those without will be able to raise $1 million.
The law would potentially benefit any type of business that exhibits growth, from mom and pop shops to technology startups, Sente said.