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Can anyone invest? Or do you have to be accredited?Anyone with a US bank account and/or credit/debit card, $10, and the desire to, can invest. You do NOT have to be accredited. There are investment limits set by the SEC worth noting which are based on an individual’s annual income or net worth:
What are the risks involved in investing in an offering?The greatest risk involved is loss of money invested -you ought only invest what you can afford to lose.
How much does it cost to invest?$0. Investing is free on SMBX when using your bank account to make purchases.
If investing is free on the SMBX, how does the SMBX make money?Great question. We charge businesses a 3.5% service fee of the total fundraise, only if successful. For example, if a business raises $100,000, we charge $3,500 at the close of the offering.
How do you determine the yield cited for each business?We analyze financial and qualitative information to understand a business’s capacity to repay its debts. The information we take into account, includes, but is not limited to: the measure of cash flow to service current debt (aka Debt Service Coverage Ratio); how aggressive, or risky, a company is with financing growth (aka Debt/Equity Ratio); ability of its short-term assets to cover short-term debt (aka Working Capital Ratio); financial trends; customer and vendor reviews; management tenure; competitive landscape; etc. We ask a lot of questions to understand the business model, its evolution, and its future intentions.
How and when do I pay for Bonds in an offering?Payment for Bonds happens as soon as you buy the Bonds and your funds will then be held in an escrow account. If you cancel your purchase, or if the offering is unsuccessful or terminated for any reason, funds will be credited back to your linked account within the normal ACH payment and/or credit card processing time guidelines.
How and when do I receive the Bonds that I’ve purchased?Bonds successfully purchased by investors will be delivered electronically via email on behalf of the businesses to investors after the close of the offering + 5-10 business days (which accounts for the time for all transactions to settle). On the bond issuance date, the electronically signed Bond certificate(s) provided to you in PDF format will be your authoritative copy of ownership of the Bonds. At the same time, investor funds are released to the business.
How do I get paid?For the duration of the Bond repayment period, each month on the same day as the bond issuance date, your Portfolio will be credited principal + interest payments for the previous month where you have earned interest on your investment. You can either keep the funds in your Portfolio which will be held in an escrow account on behalf of investors or withdraw the funds to your bank account.
What regulators and regulations govern the SMBX?The SMBX is governed by the rules and regulations established by the SEC and FINRA. In 2012, the US Congress passed Title III of the JOBS Act. Title III authorizes small & medium sized businesses, investors, and funding portals to participate in Title III securities offerings. In 2015, the Securities & Exchange Commission (SEC) published Regulation CF, which are the rules that regulate Title III funding portals. The SMBX is a FINRA-registered ‘funding portal,’ which works with qualified small & medium sized businesses to issue Title III securities to investors.
Where can I find the SEC rules that govern the SMBX?The complete Regulation Crowdfunding (aka Reg CF) rules for Title III offerings can be found here.
How much does it cost?We charge a 3.5% service fee of the total amount you raise, only if successful. For example, if you raise $100,000, we charge $3,500 at the close of the offering.
How much can I raise?You can raise between $25,000 - $5,000,000, though raising any amounts greater than $250,000 will require additional due diligence beyond the basic compliance.
How do you determine my interest rate?We analyze financial and qualitative information to understand a business’s capacity to repay its debts. The information we take into account, includes, but is not limited to: the measure of cash flow to service current debt (aka Debt Service Coverage Ratio); how aggressive, or risky, a company is with financing growth (aka Debt/Equity Ratio); ability of its short-term assets to cover short-term debt (aka Working Capital Ratio); financial trends; customer and vendor reviews; management tenure; competitive landscape; etc. We ask a lot of questions to understand the business model, its evolution, and its future intentions.
How long does this process take?If your required financial documentation is clear and complete, it should take 60 days from start to finish: initial discussion + financial review + paperwork + marketing = money in your account.
How do Small Business Bonds™ work?Like a term loan with a fixed interest rate.
What happens if I do not raise my desired amount?We fire our business team. No, we don’t actually do that but we do take fully subscribing your offering, getting you the money you want to grow, that seriously. We cannot guarantee you other people’s money, as that is what raising from the crowd is, but we can work with you to market your offering to the right people, gaining you interest and the dollars that follow.
You’re not a bank, you’re not a lending platform. What are you?SMBX is an SEC and FINRA registered Title III crowdfunding portal.
If you are a crowdfunding portal, am I giving up ownership of my business?No. Bonds are a debt instrument. You pay principal + interest monthly. You retain 100% ownership of your business.
BondSmall and medium sized businesses issue Bonds on the SMBX. A Bond is a debt-based financial asset, in which an investor loans money to an issuer for a period of time in exchange for a legal right to the issuer’s promise to repay the borrowed money, plus interest. On SMBX, small and medium businesses sell Bonds to investors, who earn anywhere from 5% to 10% interest.
Interest RateInterest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.
IssuanceAn “issuance” is a security that is being “offered” for sale by a small or medium sized business. An “issuance” is also sometimes called an “offering”.
IssuerOnly a qualified small or medium sized business is able to be an issuer on SMBX. Only an issuer may offer a security for sale.
OfferingAn “offering” is a security that is being “offered” for sale by a small or medium sized business. An offering is also sometimes called an “issuance”.
PrincipalPrincipal is the amount borrowed on a loan or put into an investment.
SecurityA security is a financial asset that can be bought and sold, and holds some cash value.
YieldYield is the amount of return an investor realizes on a Bond.