WASHINGTON—Startups and small companies would be allowed to raise more money from investors when they opt for light-touch fundraising methods under a plan made public Wednesday by the Securities and Exchange Commission.

The proposal seeks to further ease rules for measures such as crowdfunding, which was supposed to make it cheaper and easier to raise limited pools of capital online. The plan, passed on a 3-1 vote, shows how Trump-appointed regulators are still trying to make those measures more useful to small firms that lack access to alternatives such as venture capital.

Under the plan, which is open for public comment for 60 days, firms could use crowdfunding to raise as much as $5 million, up from about $1 million under current rules. Congress set the $1 million cap in a 2012 law, and the SEC is proposing to use its broad authority to waive that restriction and increase the limit.

Business groups have lamented for years that crowdfunding hasn’t been widely used because the rules set a relatively low fundraising cap. At the same time, the rules require many companies using crowdfunding to provide investors with audited financial statements, which increases the cost of selling stock or debt.

There were 519 completed crowdfunding deals from 2016 to 2018, with a median amount raised of $107,367, SEC staff said in a report last year. The median investor contribution per deal was just $260, the report found.