The Government is moving to allow start-up businesses to crowdfund.

Crowd-sourced equity funding has been unregulated in Australia, which prevents businesses from accessing the source of funds that could help them grow.

Legislation to allow ASX-listed companies to get involved will come into effect on September 29.

But a new bill, introduced by Treasurer Scott Morrison this week, seeks to extend the framework to cover Australian businesses that are proprietary companies.

“This will be a game-changer once again for Australian start-ups and new small businesses,” Mr Morrison said.

If it passes, the reforms will allow privately held companies to raise up to $3 million from crowdfunding, but any amount above that would trigger subject a full audit.

Individual investors would only be allowed to put in $10,000 at the most, to limit their risk exposure.

To qualify for the equity crowdfunding schemes, proprietary business with a minimum of two directors will have to make financial reports in accordance with accounting standards and be restricted in some related party transactions.

FinTech Australia was involved in drafting the changes.

“It really is quite a big win for a number of the small to medium enterprises across Australia, not just the start-up community,” FinTech CEO Danielle Szetho told the ABC.

She said larger businesses will probably seek to crowdfund specific projects, like the launch of a new store or expand overseas.

Labor has not yet decided if it will support the legislation.