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Got Questions?

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:

If an investor’s annual income or net worth is less than $107,000: the investor’s total investment limit is the greater of $2,200 or 5% of the greater of their annual income or net worth.

If an investor’s annual income and net worth is $107,000 or more: then that investor’s total investment limit is 10% of the greater of their annual income or net worth.

Either way, the total amount that an investor may invest per year cannot exceed $107,000.

Accredited investors do not have any investment limits.

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.

We do not charge fees to investors if they use their bank account to invest.

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.

Let’s say you want to raise $100,000, you issue 10,000 Bonds at a $10 par value, your interest rate is determined by financial assessment. We handle the issuance and recordkeeping of the Bonds. You receive your money at the close of the offering, investors receive their Bonds. Each month you pay the principal + interest due but instead of paying your bank, you pay your investors. We administer all of this.

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.

If you read the ‘About SMBX’ page you saw that ‘We Believe in Win-Win’. That is not an empty marketing statement, it is our core value. What it means is we vet the best businesses for investors to ensure they earn their expected returns; the better the investor experience, the more we can drive capital to businesses and the better the business experience.

We realize we did not answer your question. Worst case, you do not raise your desired amount and the amount you do raise is not of use to you, so you walk away having lost time.

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.

Bond

Small 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 Rate

Interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Issuance

An “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”.

Issuer

Only a qualified small or medium sized business is able to be an issuer on SMBX. Only an issuer may offer a security for sale.

Offering

An “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”.

Principal

Principal is the amount borrowed on a loan or put into an investment.

Security

A security is a financial asset that can be bought and sold, and holds some cash value.

Yield

Yield is the amount of return an investor realizes on a Bond.