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Washington has become the first state to adopt a new, simplified form that will make it easier for small companies to sell stock to the public without SEC involvement. Using a question-and-answer format, the document serves as both registration and prospectus for companies trying to raise up to $1 million a year. Developed by the American Bar Association, it can easily be filled out by lawyers who are not securities specialists; for companies seeking less than $500,000, some accounting requirements can be relaxed as well. The experiment also includes plans for newspaper and electronic stock listings. Other states are expected to watch closely.

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Thanks to the Women's Business Ownership Act of 1988, it should get easier to secure SBA start-up loans of $50,000 or less. In principle, such SBA loans have always been available, but few banks have found them profitable enough to justify the paperwork. So when women's groups drafted the new law, they included a passage requiring the SBA to promote "mini-loans" -- on the theory that many women launching service businesses need only small amounts of start-up capital. The SBA hopes to attract certified lenders to mini-loans by rebating a portion of its origination fee and by simplifying paperwork.

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The next time you buy commercial property, don't be surprised if you have to do an environmental audit to check for hazardous wastes. The practice is becoming standard, mainly because of cleanup laws that hold purchasers liable for hazardous wastes on their property, regardless of fault. A few states mandate some environmental reviews, but increasingly it is lenders who insist on audits before making loans. The reason? Some courts have recently held lenders liable for cleanup if they foreclose on contaminated property or interfere in the land-owning company's management.

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A start-up in Stamford, Conn., hopes to pioneer a new way of taking companies public. ShareAmerica plans to sell individual investors accounts of $5,000 or more, with the money going to buy up the $3-million to $10-million offerings of companies ShareAmerica takes public. The pitch? Small investors get in on high-quality IPOs, and small companies get long-term investors without hassle. One obvious problem will be pricing, since ShareAmerica would represent both stock buyer and seller. Still, the company's principals -- one of whom is a former Bank of America executive vice-president -- feel they have the experience needed to get the scheme off the ground.

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A nonprofit group in Iowa is running what may be the nation's only privately financed small-business loan-guarantee fund. The Des Moines-based group, Golden Circle Development Corp., was started in 1985 by local businesspeople who feared the effect on the Iowa economy if SBA loan-guarantee programs were cut off. With $1.5 million raised from large companies, Golden Circle began offering guarantees in 1987. Recently it has adopted a less risky strategy: working with the SBA to spot local loans that would be rejected only because the borrower lacks required equity capital. The group then guarantees 90% of a loan for the needed capital, thus piggybacking on the SBA's loan.

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Family businesses are beginning to attract attention from investors and investment bankers looking to establish long-term relationships. A new $30-million group -- Pon Capital Corp., in Braintree, Mass. -- has been formed to make passive minority investments in privately held businesses. On Wall Street, meanwhile, Smith Barney has started a special family business group, whose aim is to convince such businesses that investment bankers can do more than help them sell out. One active area: leveraged recapitalizations, in which family members borrow to buy out dissident or inactive shareholders.

-- Martha E. Mangelsdorf

Last updated: Feb 1, 1989




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