Inc. Magazine recently published an article about Peer-toPeer lending networks now being regulated by the SEC. (See “Why Getting A Loan Just Got Harder at http://www.inc.com/articles/2009/01/loans)

Great. Our regulators at the SEC could ignore all the warnings over the years about Bernie Madoff and his multi-billion dollar Ponzi scheme, but now they shut down what appear to be legitimate businesses matching private funds with entrepreneurs starving for cash.

While I agree that the SEC could serve a useful purpose in helping to ensure fewer people get ripped off, I’m pretty sure our regulators in the SEC and otherwise will go a bit overboard in their efforts to regulate. It’s a natural “over correction” now that they’re getting hammered by politicians in Washington. Everyone’s wondering how Bernie could get away with ripping what appears to be billions.

So as a result, fewer Peer-to-Peer networks are in business to help entrepreneurs find the capital they need to grow their business. Like commercial banks are going to get back in the game anytime soon? Give me a break. Most of these guys aren’t returning my client’s phone calls even if the deal is rock solid. So I’m not holding my breath on major banks helping entrepreneurs in the near future.

The big players in the Peer-to-Peer lending space are reacting accordingly. They’re paying lawyers big fees to help them jump through all the compliance hoops in order to get back in the game of funding businesses. It seems only the best capitalized players will pull this off which ultimately limits the number of competitors available to help small businesses get the capital they so badly need.

So while American voters have voted for “change”, it appears that most of the change will be associated with more regulation and pork-belly spending. In the meantime, I’ve got several clients looking for expansion capital and it’s much more difficult to find these days. Yipe.

Good thing we know where to look for new capital.

Clifford Jones, Founder
WealthNet Partners, LLC
“Discover The Art of Business Development”
Headquarters located in Scottsdale, Arizona