This SCOR Is All About Raising Capital

Austin, Texas:  The Securities Exchange Commission (SEC) instrument known as Small Corporate Offering Registration (SCOR), sometimes referred to as Reg D Rule 504, is a little-known, but a potentially important tool for a small business owner.   Mandated by Congress, every year since 1982 the SEC has held an annual meeting for small business investors and owners called "Small Business Capital Formation Conference."   The first result of that conference was the Reg D Rule 504.

 Deborah Bortner (pictured above) is the Securities Administrator for the State of Washington.  In 1992,she led the way to simplify the registration by developing the SCOR document.  At that time Congress wanted to help small business owner who have a difficult time finding money.  Another aspect of the SCOR is use it as a liquidity model that forces a business valuation. It could also be used as an exit strategy.  The majority of small business owners do not have a succession plan and a SCOR would necessitate that such a plan be implemented.

Historically, out of every $100 in banks loan, small business gets about $7. Though contributing over 50% of the Gross National Product,  working capital is often difficult to obtain.

The SCOR has not caught on. There is very little publicity about it and just a few educational resources. It does require three years of audited financials. It does involve your CPA and a good securities lawyer. 

The SCOR could be used in the following ways:
1.  A cornerstone of a succession plan and liquidity model for mature small businesses,
2. An alternative to an employee-stock ownership program,
3. A means for all those who already want to buy into a business to do so without going through an IPO and without necessarily being a qualified investor, and,
4. An instrument to provide a conservative diversification strategy for pension funds, mutual funds, and private investors.