Regulation D Offering, Reg D Offering

                                               SEC Regulation D Offering

You have just purchased a new business or decided to expand your current business, and now you need to raise some money to pay for it. If you are going to raise money through the sale of equity (shares) or debt, you need to read this section very carefully. You may think that selling shares to a few friends or associates will allow you to skip these rules: it doesn’t. You may also think that if you say “Gosh, I didn’t know,” it will get you a pass: it doesn’t. This is a federal law—ignore it at your own peril. 

Why a Regulation D Offering?

A Regulation D offering allows you to legally solicit investor money, either equity or debt, from multiple sources. In principle, it is much easier to raise $20,000 each from 50 people than $1,000,000 from one person.

The basic structure for a Regulation D offering is debt and equity. There is no minimum limit, so you can raise as little as $20,000 or more than $10,000,000.

Elements of a Regulation D Offering 

    Determine the amount of money to be raised (offering amount)

    Equity and or debt

    Shares or bonds to be sold

    Maturity date/interest return

    Create a Private Placement Memorandum

    Create a subscription agreement

    Create a promissory note if it is a debt offering

    Create the proper documents and file them with the SEC

Once this is accomplished, you can approach potential investors and sell them shares or notes in your venture. The great thing about the Regulation D or Reg D filing is that it allows you to continue raising money without needing to re-file the documents for a fairly long time. The process sounds much more complex and expensive than it actually is.

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