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SEC's new rule to positively impact alternative financial services, entrepreneurs

Jul 25, 2013 Sean Albert

The federal government has become more active in the fight to reduce the financial strain that has plagued the small business community for several years. With more legislation being passed to help entrepreneurs obtain the financing they need to either start or expand their company, the time to start applying for more credit is now.

While the U.S. Small Business Administration has been most involved in the entrepreneurial lending market, other arms of the government are also passing progressive rules to loosen standards and improve the chances of commercial loan approvals. One of the biggest decisions made in recent months came from the U.S. Securities and Exchange Commission.

New rule
The Washington Post recently reported that the SEC has decided to allow small businesses owners to partake in open solicitation for alternative lending prospects. The rule also included a component that will permit hedge funds and private firms to advertise to the public in efforts to fundraise, which has been illegal since the 1930s.

According to the news provider, the commission believed that this rule will help alternative lenders, private firms, startups and other organizations better reach potential investors without increasing the associated risks. This decision came on the heals of a decision in Congress to demand that the SEC lift the ban and allow such firms to use new technology to expand their reach.

The source explained that the business sector has largely rejoiced following the news about the rule and the lifted ban on mass marketing in the investment sector. One of the biggest reasons why enterprise executives and small business owners have pulled behind this legislation is that many believe the ban had substantially hindered the chances that entrepreneurs will be able to discover and utilize the most beneficial financial services.

However, this will not open the flood gates for shoddy practices to mass market their services and obtain funds which will never be returned. The Washington Post explained that the commission passed another rule simultaneously that will prevent firms that are associated with known felons from partaking in the mass marketing process.

Experts and economists believe that this rule will cause a positive and immediate financial impact on the entrepreneurial community, as more avenues will be open to access credit and less red tape will stand in the way of approval.

New research on alternative lending
Research and Markets recently published a new report titled "Small Business Lending: New Alternatives," which is available on the firm's website. The study looked to discover why commercial loan disbursement volumes from traditional lending institutions have yet to rebound to pre​-recession levels, and the role that the alternative financial services sector has had in this trend.

The Research and Markets report also discusses the rapid increase of new alternative lending products and how they have impacted the small business landscape.

With the resurgence in small business lending being especially on the shoulders of alternative financiers, entrepreneurs should always look at all of the options available to get approved on the most beneficial loan products.