Starting An Investment Company

Written by Shirley Parker
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Anyone opting to start an investment company probably has a bold vision of the future. He or she (or more likely, they) will also need substantial resources to proceed with such an undertaking. The Small Business Administration (SBA), for example, requires at least $5 million in capital, and this minimum is much higher for certain markets in urban areas.

The US Department of Agriculture recently set up, through the SBA, a Rural Business Investment Program (RBIP). Much like the goals of the urban programs, RBIP is designed to attract venture capital, but to the rural areas of the country. Rural Business Investment Companies (RBIC) are intended to operate under similar licensing rules as Small Business Investment Companies (SBIC).

Unfortunately, instead of making capital requirements lower, the Interim Final Rule regarding the Rural Business Investment Program has doubled the requirements for RBIC capital. Expert commentary by national banking trade associations and others indicates that this is the wrong approach. Therefore, investors and entrepreneurs interested in rural programs should contact either the USDA or the SBA. Ask them if the Interim Rule has been withdrawn or rewritten, to better meet the realities of raising capital outside of urban areas.

Unlicensed Investment Companies

There's apparently no shortage of unlicensed investment companies or unlicensed brokers and advisors. Legal help is readily available to set up and incorporate a business in just about every state. But registration and licensing are handled by government agencies, whose requirements must be met. While often onerous, such regulations are for the protection of the public.


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