Rule 504 provides an exemption from registration for the offer and sale of up to $1,000,000 of securities in a 12-month period. The company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act of 1934 reporting requirements. Under certain circumstances general offering and solicitations are permitted under Rule 504 as long as they are restricted to accredited investors. Under certain circumstances the securities can also be re-sold.
The rule 504 is ideal for small businesses looking for initial seed capital.
The 504 provision can be an excellent alternative for those who are seeking Small Business Administration or (SBA) loans.