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Frequently Asked Questions

What is the JOBS Act?

Enacted in April 2012, the Jumpstart Our Business Startups Act (JOBS Act) fundamentally changed the way that entrepreneurs access capital. The JOBS Act was designed to encourage the funding or small businesses and startups by easing certain securities regulations for both issuers and investors. A few of the main provisions include:

  • Removal of the ban on general solicitation, allowing companies to publicly talk about raising capital
  • Easing the restrictions on the “accredited investor” requirement, allowing non-accredited investors (anyone over the age of 18 regardless of income or net worth) to invest in certain private placements
  • Allowing the creation of online funding portals registered with the SEC for the purpose of equity crowdfunding (yet to take effect)
  • Increasing the limit on the amount a private company could raise and be exempt from registering with the SEC

Read more: JOBS Act Review

What is Reg A+?

Regulation A+ are the final rules promulgated by the SEC that were mandated by Title IV of the JOBS Act. The rules amended and expanded the existing exemptions under Regulation A by increasing the amount of capital smaller companies could raise through the offer and sale of securities. For more information about the requirements of Regulation A+, click here.

What does the current state of crowdfunding look like?

  • The crowdfunding industry has grown 1000% in the past 5 years
  • Crowdfunding contributes over $500 billion in funding per year
  • Equity crowdfunding has already hit $662 million in the first quarter of 2015 and is expected to rise even further now that Title IV of the JOBS Act has finally been adopted
  • Crowdfunding generates over $3.2 trillion in economic value per year

For up-to-date information check out CNBC Crowdfinance 50 Index

What are Peer-to-Peer Lending and Marketplace Lending and what are the differences?

Peer-to-Peer (P2P) Lending and Marketplace Lending are often used interchangeably. Both refer to the idea of matching borrowers to lenders through an online intermediary portal, such as Patch of Land. The portal underwrites general credit and loan risk, facilitates more transactions to take place, creates more equality between the parties, and increases efficiency through technology. The "peer" in P2P lending originally referred to the unrelated end users on the two sides of an online transaction; however, because of the increasing numbers of large money managers taking part in P2P lending, the two parties have become less and less "peers". As such, the idea of an online "Marketplace" makes more sense and has become the preferred term for describing the online portal that acts as the conduit between borrower and lender.

Read more: From Crowdfunding to Peer-to-Real Estate Lending, Financing for the New Millennium, Real Estate Radio talks Peer-to-Peer Lending

What is Title III of the JOBS Act?

Title III of the JOBS Act, also known as the Crowdfunding component, would allow anyone to invest in securities through an online portal. However, the SEC has yet to issue its final rules pertaining to Title III so it is still not clear what restrictions would apply to both issuers and investors.

What is Peer-to-Real-Estate Lending?

Patch of Land straddles crowdfunding (as defined by Title II of the JOBS Act) and P2P (Peer-to-Peer Lending) because we focus on creating a marketplace for real estate lending to be transacted online, in which individuals and institutions can participate seamlessly. Patch of Land is the online portal that connects real estate borrowers to real estate lenders. We are the P2RE (peer-to-real-estate) marketplace.

How is crowdfunding changing real estate investing?

  • Low time commitment, risk, and effort- With crowdfunding, investors do not have to personally manage the property, and the investment minimums are lower than that of traditional real estate investing.
  • Achieves greater diversification- Because amounts for investment minimums are lower through crowdfunding, investors are able to allocate funds across multiple properties.
  • Provides transparency and accessibility- Crowdfunding platforms allow investors to access and view all of the information regarding the investment project as soon as they are made available. Investors can monitor their investments online whenever they choose.
  • Convenience- Investors are able to make investments from the comfort of their home via laptop, tablet, or mobile phone. 

Read more: Real Estate Crowdfunding

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