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Small businesses are imperative in the United States economy. Small businesses make up 99.7 percent of all employer firms in the United States. These firms employ nearly fifty-five million individuals and provide 42.6 percent of the nation’s private-sector payroll. In addition, small businesses are job creators. Between 1993 and 2013, small businesses accounted for 14.3 million net new jobs, sixty-three percent of net new jobs during that period. Further, these firms are responsible for sixty percent of the net new jobs created since the most recent recession. Additionally, in March 2011, about 900,000 self-employed individuals were unemployed the prior year.

Small businesses, despite their prominence in the economy, account for the vast majority of firm failures. One cause of these failures is inadequate capital. The lack of capital is caused, in part, by the small business capital gap. In order to strengthen the small business environment, the United States economy must bridge this gap. One way to address the disparity between small business capital demand and supply is through the further development of crowdfunding.