SEC Questions about Private Lending Answered – Part 1

There’s been a lot of questions about compliance when raising& using Private Money.

Especially as it’s regulated by a federal government agency, the Securities & Exchange Commission (SEC).

So I asked Alan Cowgill to discuss it further.


While speaking all over the nation, meeting thousands of real estate investors the past few years and getting asked questions on the SEC, I realized that there is a lot of confusion concerning SEC regulations as it applies to private lending.

The confusion seems to arise because of the following:

1) Each state establishes their own regulations and exemptions. Therefore there are different guidelines depending on where you live.

2) If you cross state lines with your private lending, i.e. houses in one state and lenders in another, the Federal SEC regulations come into play.

3) There are a lot of half-truths floating around, and when people hear these, they get confused and possibly fearful.

To be better equipped to answer everyone’s questions, I decided to hire an attorney to do some research.  What I found was that each state is able to establish their own regulations, but they all have the same pattern.  So I’ll use my state of Ohio as a model to explain what is typical for nearly all states.

1) In Ohio I can acquire up to 10 private lenders without having to file any paperwork with the state division of the SEC.  Once I file the proper paperwork my number of lenders is unlimited. Different States have different numbers, and most are higher than Ohio.

2) As long as my properties and lenders are in Ohio.  Just the state regulations apply.  If I have lenders and/or houses in different states then the Federal SEC regulations apply.

3) If I go over 10 lenders, the paperwork I need to file with the state can be fairly simple.  But I’ll want to hire an SEC attorney skilled in filing.

4) I need to give a disclosure statement to potential lenders.

5) Can’t pool lender money but I can if I file the proper paperwork.

6) Can NOT use the word ‘guarantee’ in my advertising.  That would be misleading private lenders and considered FRAUD.

As a side note, some of you are under the impression that the SEC is out to cause you problems.  The SEC is NOT the bad guy; they are looking for the bad guys.  They want legitimate business owners to prosper.

In many states, they are very willing to help you if you just ask.  They just want you to comply with their regulations.


All excellent points.

Looking forward to learning more at our “How to Easily Attract Private Money” events starting next week:

#1.  IN-PERSON: Washington DC Main Monthly Meeting

TOPIC: “How to Easily Attract Private Money”
SPEAKER: Alan Cowgill

Thursday April 20th IN-PERSON
Hilton Garden Inn Tysons Corner
8301 Boone Blvd
Vienna, VA 22182
6pm to 9pm

Click here to RSVP

#2.  IN-PERSON: Full Day Training Event with Alan Cowgill

“MASTERCLASS :: The Easiest & Safest Way to Get Private Money”

Saturday April 22nd IN-PERSON
Hilton Garden Inn Tysons Corner
8301 Boone Blvd
Vienna, VA 22182
9am to 3pm

Get your ticket now

#3.  IN-PERSON: Sarasota/Tampa Monthly Luncheon
SPEAKER: Alan Cowgill

Friday April 28th IN-PERSON

Gecko’s Grill & Pub
Clark Road & Honore Ave
5585 Palmer Crossing Circle
Sarasota, FL 34233

12Noon to 2pm

Click here to RSVP

Tom Zeeb

Traction REIA:
13+ Consecutive Year Recipient of the
National REIA “Honors of Merit” and the “Award of Excellence”
For Best Real Estate Investor Association!

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