Funding Portal
Definition
A funding portal is a type of intermediary created by the JOBS Act for Regulation Crowdfunding offerings under Securities Act Section 4(a)(6). Every Reg CF offering must run through exactly one intermediary, which is either a registered broker-dealer or a funding portal. A funding portal registers with the SEC on Form Funding Portal (filed on EDGAR as CFPORTAL), must become a member of FINRA, and is defined by what it may not do: under Exchange Act Section 3(a)(80) it may not offer investment advice or recommendations, may not solicit purchases or sales of the securities on its platform, may not pay anyone for soliciting or based on sales, and may not hold, manage or possess investor funds or securities. Investor money goes to a qualified third party, usually a bank escrow account, and is released to the issuer only when the offering reaches its target. The portal's job is to host the offering, deliver the issuer's Form C disclosure, run the communication channel, vet the issuer for fraud risk, deliver investor education, enforce investment limits and the 48-hour cancellation right, and disclose its own compensation. The securities an investor buys are obligations of the issuer, not of the portal; whether anything else, such as payment servicing, survives the portal's closure depends on arrangements the portal chooses to disclose.
Why it matters
Almost everything a retail investor experiences on a crowdfunding site is provided by the portal, and almost none of it is guaranteed by the portal. The offering page, the investor education, the escrow, the cancellation button, the payment dashboard and the 1099 all arrive through the portal, so investors reasonably treat it as the counterparty. It is not. The issuer owes the security; the portal is a licensed host whose statutory obligations end at fraud screening, disclosure delivery and escrow direction. That gap shows up in three ways on the record. A portal can be disciplined for its own conduct while every loan on it performs, as FINRA's 2025 action against Honeycomb shows. A portal's parent can be in litigation that has nothing to do with the offerings, as with Netcapital, whose parent company was sued by the SEC in August 2026 over its own revenue recognition. And a portal can stop operating, as Mainvest did in June 2024, leaving securities that are still legally owed and no one collecting on them. Reading a portal's CFPORTAL filing, its FINRA record and its servicing disclosures is the part of Reg CF diligence that the offering page cannot do for you.
Common misconceptions
- •Listing on a funding portal is not a recommendation, an endorsement or a credit opinion. Portals are prohibited from giving advice; the Rule 301 screen is for fraud and disqualification, not for whether the business can repay.
- •A funding portal is not a broker-dealer. It has no net capital requirement, no SIPC membership, may not hold customer funds or securities, and may not solicit. Venues that do those things are using a broker-dealer affiliate.
- •The portal does not owe you the security. Bonds, notes and shares bought through a portal are obligations of the issuer; the portal's own terms say it is not a party to the transaction.
- •Escrow protects the offering, not the repayments. Rule 303(e) governs where subscription money sits until the target is met; the servicing of payments afterwards is a portal service with no regulatory backstop and, on most portals, no disclosed backup servicer.
- •SEC registration of a portal is not SEC review of the offerings on it. Form C is a notice filing, and the SEC does not approve or review Reg CF offerings or the portals' listing decisions.
Technical details
Registration and membership
Statute: Exchange Act Section 3(a)(80) defines a funding portal; Section 3(h) exempts it from broker-dealer registration on conditions; Regulation Crowdfunding Rules 400 to 404 (17 CFR 227) govern registration, conduct and records.
Form: Form Funding Portal, filed on EDGAR as CFPORTAL, with amendments (CFPORTAL/A) within 30 days of any material change and withdrawal on CFPORTAL-W. The form discloses ownership, control persons, compensation arrangements, the qualified third party holding investor funds, and disciplinary history in the same yes/no format as a broker-dealer's Form BD.
Membership: the portal must be a member of a national securities association, in practice FINRA, which admits portals under its Funding Portal Rules (100 to 1200 series), examines them and may discipline them.
Fidelity bond: at least $100,000, per Rule 400(f).
Records: Rule 404 requires five-year retention of investor and issuer records, communications, and the platform's notices and confirmations, with the first two years readily accessible.
Non-US portals: a portal organized outside the United States must have a US agent for service and consent to SEC and FINRA examination.
What a portal may not do, and the safe harbor for what it may
Prohibited (Section 3(a)(80) and Rule 402): offering investment advice or recommendations; soliciting purchases, sales or offers to buy the securities displayed; compensating employees, agents or others for solicitation or based on the sale of securities; holding, managing, possessing or otherwise handling investor funds or securities.
Permitted under the Rule 402(b) safe harbor: limiting the offerings on the platform by objective criteria (industry, geography, security type, minimum size) applied consistently; highlighting offerings by objective criteria, not by the portal's view of merit; providing search and sort tools; running the communication channel where investors and the issuer discuss the offering, provided the portal itself does not participate except to moderate; advising the issuer on structure or content of the offering; paying a third party for referring investors to the platform, as long as the fee is not tied to purchases; receiving compensation in the issuer's securities on the same terms as investors, if disclosed.
Financial interest (Rule 300(b)): a portal and its officers may not hold a financial interest in an issuer using its services except as compensation for services, on the same terms as the public, and disclosed. FINRA's 2025 action against Honeycomb concerned, among other things, an issuer-affiliated portal acting as intermediary.
Compensation (Rule 305): the portal must disclose how it is paid, including any securities-based compensation, on the offering page and in the Form C; on SMBX, Honeycomb and Mainvest that was a percentage of the amount raised plus, on some, posting and monthly fees, disclosed per offering.
What a portal must do for investors
Issuer screening (Rule 301): a reasonable basis for believing the issuer complies with Reg CF and can keep accurate holder records; background and enforcement checks on the issuer, officers, directors and 20 percent holders; denial of access on a reasonable belief of fraud potential or bad-actor disqualification, with any collected funds returned.
Investor education (Rule 302): educational materials covering the process, the securities, resale limits, investment limits, cancellation rights, the issuer's ongoing reporting and the possibility that reporting stops, delivered before the first commitment and kept current; the investor must affirm reading them and acknowledge the risk of loss.
Disclosure delivery (Rule 303(a)): the issuer's Form C and any amendments available on the platform for at least 21 days before any sale and until the offering ends; progress updates and closing notices.
Communication channels (Rule 303(c)): a public forum for the offering in which the portal does not participate, posters identify themselves, and issuer and promoter comments are labeled.
Investment limits (Rule 303(b)): the portal must have a reasonable basis for believing each investor is within the Reg CF annual limits, which it may satisfy by relying on the investor's representations unless it has reason to question them.
Escrow and transmission (Rule 303(e)): funds directed to a qualified third party, released to the issuer only when the target is met and the cancellation period has run, returned within five business days if the offering fails.
Cancellation (Rule 304): unconditional cancellation until 48 hours before the deadline; material-change reconfirmation within five business days; five business days' notice of any accelerated close.
Confirmations (Rule 303(f)): a notice at commitment and a confirmation at close stating the security, price, number, date and the portal's compensation.
Portal versus broker-dealer as Reg CF intermediary
Registration: portal on Form Funding Portal under Section 3(a)(80); broker-dealer on Form BD under Section 15 and FINRA membership under the full FINRA rulebook.
Advice and solicitation: prohibited for a portal; permitted for a broker-dealer subject to suitability, Regulation Best Interest and communications rules.
Customer assets: a portal may hold none; a broker-dealer may, under the customer protection rule and net capital rule, with SIPC coverage of custodied assets (not of investment losses).
Compensation: both must disclose it; only a broker-dealer may pay representatives on sales.
Scale: the same Reg CF offering limit ($5 million per issuer per 12 months) applies whichever intermediary hosts it; the choice affects the venue's conduct obligations, not the issuer's cap.
In practice: several large venues run a portal for Reg CF and a broker-dealer affiliate for Regulation A and Rule 506(c) offerings, so an investor on one brand may be dealing with two differently regulated entities depending on the offering.
The record: fined, absorbed, ceased, and a parent in litigation
Fined: FINRA Letter of Acceptance, Waiver and Consent, Honeycomb Portal LLC (Funding Portal Org ID #289015), May 14, 2025: censure, $140,000 fine and a corrective-action undertaking, consented to without admitting or denying findings that on two offerings an issuer-affiliated portal improperly acted as intermediary and that certain communications were not preserved. The loans on the platform were not the subject.
Absorbed: Raise Green Inc., a climate-focused portal with 45 Form C offerings, transferred its investors to Honeycomb by January 5, 2025; Honeycomb acquired certain assets and took over servicing, not the portal license. Investors kept their securities and gained a servicer by private arrangement, not by rule.
Ceased: MainVest, Inc. (SEC File 007-00162; 779 offerings) stopped operating on June 14, 2024, 53 days after its banking intermediary Synapse filed for Chapter 11; repayments through the portal were accepted until May 22, issuers were told to pay investors directly, no successor servicer was named, and about $2.4 million in investor-wallet balances became tied up in the Synapse bankruptcy. The notes survived; the servicing did not.
Dormant: SMBX, Inc. (CFPORTAL filed November 28, 2018, SEC File 007-00129; 271 offerings) remains registered and services 148 repaying bonds, but has funded no bond since April 2026 and listed no offering on September 16, 2026, with no company statement and no backup servicer disclosed.
Parent in litigation: Netcapital Funding Portal Inc. (CIK 0001669191; 473 offerings) is the portal; on August 10, 2026 the SEC filed a civil complaint in Boston federal court against its parent, Netcapital Inc., and individual defendants, alleging roughly $14 million of improperly recognized revenue. Those are contested allegations about the parent's own accounting, not findings about the portal's offerings, and they bear on platform continuity rather than on any issuer.
In none of these cases did the securities themselves change hands or terms. What changed was who, if anyone, was collecting on them.
What to check about a portal before investing
The CFPORTAL filing and its amendments on EDGAR: control persons, the named qualified third party for escrow, compensation description, and the disciplinary answers.
FINRA's funding portal roster for current membership and its disciplinary actions list for any AWC.
The portal's own investor agreement: who services repayments, through which bank, whether payments halt on delinquency, and whether any backup or continuity arrangement is described. On SMBX and Honeycomb none is.
The portal's Form C record as intermediary: how many offerings, how many issuers filed a final Form C-U and an annual Form C-AR, and how many withdrew. On SMBX six Form C-Us exist across 271 offerings; on Honeycomb 783 across 1,109.
The parent's own filings, if any: a portal whose parent reports on Form C-AR (Worthy Financial, Netcapital) or under the Exchange Act discloses its runway and going-concern status there, which is where Mainvest's 2.5 months of runway was on file eighteen months before it closed.
Frequently asked questions
- What is a funding portal in simple terms?
- A website licensed to host Regulation Crowdfunding offerings, where companies raise up to $5 million a year from the public. It is a marketplace, not a broker: it can list offerings and show you the issuer's SEC filing, but it cannot tell you what to buy, cannot call you to sell, and cannot touch your money, which sits in a bank escrow account until the offering succeeds. SMBX, Honeycomb Credit, Wefunder and Republic's Reg CF venue are funding portals.
- What is the difference between a funding portal and a broker-dealer?
- Both may act as the intermediary in a Reg CF offering. A broker-dealer is registered under Exchange Act Section 15, may recommend securities, solicit investors, pay its representatives on sales, and hold customer funds and securities, and carries net capital and SIPC obligations. A funding portal is registered under Section 3(a)(80), is limited to hosting, may do none of those things, holds no customer assets, has no net capital requirement and no SIPC membership. Some venues operate both, using the broker-dealer affiliate for Regulation A and Regulation D offerings and the portal for Reg CF.
- What must a funding portal check before listing an offering?
- Under Rule 301 the portal must have a reasonable basis for believing the issuer complies with Reg CF and has the means to keep accurate records of its security holders, and must conduct a background and securities-enforcement check on the issuer, its officers, directors and 20 percent holders. It must deny access if it reasonably believes the issuer or the offering presents a potential for fraud or is subject to bad-actor disqualification. That is a fraud screen, not underwriting: the portal is not required to assess the business's creditworthiness or the fairness of the terms, and listing is not a recommendation.
- Does a funding portal hold my money?
- No. Rule 303(e) requires investor funds to be directed to a qualified third party, in practice a bank or credit union escrow agent, and released to the issuer only when the offering reaches its target offering amount, or returned to investors if it does not or if the investor cancels. Repayments after the offering are a separate matter: on debt offerings the portal often services payments through a partner bank account it administers, and that arrangement is a service the portal provides, not a regulatory requirement, so continuity depends on what the portal discloses.
- Can I cancel a Regulation Crowdfunding investment?
- Yes, until 48 hours before the offering deadline stated in the Form C, under Rule 304. After that the commitment is final unless the issuer makes a material change, in which case the portal must notify you and cancel your commitment unless you reconfirm within five business days. If the issuer reaches its target early and wants to close early, it must give at least five business days' notice of the new deadline, and you keep the right to cancel until 48 hours before that date.
- Is a funding portal responsible if the business fails or defaults?
- No. The security is an obligation of the issuer alone, the portal is an intermediary, and its own agreements say so. The portal's liability runs to its own conduct: hosting an offering it should have screened out, communications it failed to preserve, or acting as intermediary where it was affiliated with the issuer. FINRA's May 2025 action against Honeycomb Portal LLC, a censure and $140,000 fine consented to without admitting or denying the findings, concerned those kinds of portal duties, not the performance of any loan.
- What happens to my investment if the funding portal shuts down?
- The security survives, because the issuer owes it, not the portal. What may not survive is everything the portal was doing for you: collecting payments, holding them for withdrawal, sending statements and tax forms, and chasing a late issuer. Mainvest ceased operations on June 14, 2024, told businesses they remained responsible for paying investors directly, and named no successor servicer. Raise Green's investors were moved to Honeycomb in January 2025, which acquired certain assets and took over servicing but not the portal license. Neither outcome is written into Regulation Crowdfunding; a portal is not required to have a backup servicer, and most do not disclose one.
- How do I check whether a funding portal is registered?
- Search EDGAR for the portal's company name; a registered portal has a Form Funding Portal filing (form type CFPORTAL) and amendments, and a withdrawn one has a CFPORTAL-W. FINRA publishes a roster of funding portal members and a separate list of its disciplinary actions against them. Then read the portal's own Form C filings as intermediary: every offering it has ever hosted names it, which is how a portal's whole history, including offerings that failed or issuers that stopped reporting, can be reconstructed from primary sources.