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SBIA Legislative and Regulatory Agenda for the 113th Congress


S. 2765/H.R. 4200, the SBIC Advisers Relief Act of 2014

Business Coalition Letter Endorsing JOBS Bill Including HR 4200

Text of Legislation

S 2765/H.R. 4200 Background and Summary

The Dodd-Frank Act creates a new regulatory regime for advisers of private equity funds.  Under this new system, advisers of private equity funds must register as investment advisers with the Securities and Exchange Commission (SEC).  There are several exemptions from SEC registration for advisers that meet certain conditions.  The main exemption for smaller private funds is calculated based upon an “assets under management” (AUM) threshold test.  Two other exemptions from SEC registration are available for advisers that solely advise Small Business Investment Companies (SBICs) and for advisers that solely advise Venture Capital (VC) funds.


The intent of Congress, by drafting these exemptions into the Act, was to reduce the regulatory burden for smaller private funds, SBICs, and VC funds.  However, the law has created several unintended consequences which have resulted in new regulatory costs for some advisers.  SBIA supports legislation to clarify these concerns and eliminate the duplicative and unnecessary regulation of advisers to SBICs.

Introduced on March 11, 2014, by Rep. Blaine Luetkemeyer (R-MO), and July 31, 2014, by Senators Mark Kirk (R-IL) and Joe Manchin (D-WV), the SBIC Advisers Relief Act amends the Investment Advisers Act of 1940 to reduce unnecessary regulatory costs and eliminate duplicative regulation of advisers to SBICs. Cosponsors: Carolyn Maloney (D-NY), Erik Paulsen (R-MN), Patrick McHenry (R-NC), Rep. Jim Himes (D-CT), Rep. Gwen Moore (D-WI), Rep. Patrick Murphy (D-FL), Brad Schneider (D-IL), Keith Rothfus (R-PA), and Bill Foster (D-IL).

H.R. 4200 will make sensible changes to remedy unintended consequences of the Dodd-Frank Act on certain investment advisers. More specifically, the bill will

1)      1) Preempt any state registration requirements of those advisers solely advising SBIC funds

2) Allow advisers to Venture Capital (VC) funds to continue to be “exempt reporting advisers” should they also advise an SBIC fund; and

3) Prevent the inclusion of the assets of an SBIC fund in the SEC registration calculation of AUM for those advisers that advise private funds in addition to SBIC funds.

H.R. 1105, the Small Business Job Preservation and Capital Access Bill (Hurt Himes)

SBIA Fact Sheet on H.R. 1105

SBIA Support Letter H.R. 1105

Hurt-Himes Bill Committee Mark-up Notice 

Hurt-Himes Bill Text (H.R. 1105)

SBIA Member Marc Reich Testimony on H.R. 1105 before the House Financial Services Committee Subcommittee

Watch Video of Hearing on H.R. 1105 with testimony of Ironwood Capital President Marc Reich


Business Development Company (BDC) Legislation

SBIA BDC Letter For the Record to the House Committee on Financial Services Subcommittee on Capital Markets regarding the Hearing on October 23rd entitled, "Legislation to Further Reduce Impediments to Capital Formation."

SBIA Spearheaded a Letter From 24 BDCs asking the SEC to Modernize BDC Regulations.  The letter was sent on October 7, 2013.

Letter to House Financial Services Committee from Curtis Hartman, SBIA BDC Committee Chair


Increase SBIC Leverage Limits

SBIA Issue Sheet - Small Business Investment Companies (SBIC)

SBIC Program Overview

Small Business Investment Companies are highly regulated private equity funds that invest exclusively in domestic small businesses.  Some, not all, SBICs access a U.S. Small Business Administration (SBA) credit facility to increase the amount of capital available for small business investment.  This SBA credit facility operates at a zero subsidy rate, meaning the leverage does not come at any additional cost to the taxpayer.

Congressional Action: SBIC Bills in the 113th Congress

H.R. 1106 - Introduced by Representative Steve Chabot (OH-1), David Cicilline (RI-1), and Renee Ellmers (NC-2) on March 13, 2013.

S. 550 - Introduced by Senator Jim Risch (Idaho) on March 13th, 2013.

S. 511 - Introduced by Senator Mary Landrieu (Louisiana) on March 11th, 2013.  Actual Text of Landrieu bill.


Photo by Blanken Photography

SBIA Member Barry Peterson and Congressman Steve Chabot (R-OH) discuss introduction of H.R. 1106, the Small Business Investment Company Modernization Act, which increases the SBIC Family of Funds limit from $225 million to $350 million.


Financial Regulatory Reform

SBIA Issue Sheet - Financial Regulatory Reform

Private Equity Funds should not be subjected to onerous and ineffective regulations.  Private Equity Funds, particularly funds investing in small and medium sized businesses, have never posed any systemic risk nor did they play a negative role in the financial crisis.  In fact, private equity investors stepped up and sustained many businesses during the financial crisis.


Tax Reform

SBIA Letter on Tax Reform to Senate Small Business Committee - July 2013

At the end of June 2013, Senate Finance Chair Max Baucus and Ranking Member Orrin Hatch wrote a Dear Colleague Letter to gather feedback from fellow Senators on their top priorities in Tax Reform.  Click here to read the Dear Colleague Letter.

SBIA Issue Sheet - Tax Reform

Businesses and investors embrace and thrive on business risk.  However, political risk is a foreign and destructive force to investment and growth.  Tax policy should provide a stable tax structure that encourages investment.

SBIA Issue Sheet - Maintain Interest on Debt as an ordinary business expense

Businesses rely on debt to finance their operations and grow.  Interest is incurred in the ordinary course of a trade or business, and it should continue to be treated the same as any other ordinary business expense.  Limiting the deductibility of interest would penalize businesses that rely on external financing to manage cash flow, innovate, expand and create jobs.

SBIA Letters to Ways and Means Tax Reform Working Group
The House Ways and Means Committee held an open comment period to accept comments from the public on options on tax reform.  SBIA submitted two comment letters.  The first comment letter addresses partnership tax reform and the second comment letter addresses capital gains, dividends, carried interest, and the 1202 capital gains tax exclusion.




H.R. 6504 - Small Business Investment Company Modernization Act of 2012

(Introduced by Reps. Steve Chabot (OH-1), David Cicilline (RI-1), and Renee Ellmers (NC-2) on September 21, 2012.)

Final Roll Call Vote in the House (359 Yeas, 36 Nays, 1 Present)

Debate on the House Floor of H.R. 6504 (CSPAN: December 18, 2012) featuring speeches by Rep. Steve Chabot (R-OH), Rep. Nydia Velazquez (D-NY), and Rep. David Cicilline (D-RI)

SBIA Support Letter Available Here

U.S. Chamber of Commerce Support letter

SBIA One-Pager on H.R. 6504

Press Release from introduction of the bill Available Here

  •  Would increase the maximum amount of leverage available to multiple SBIC debenture funds under common control to a limit of $350 million. The current cap for multiple SBICs under common control is $225 million.

Dodd-Frank Wall Street Reform and Consumer Protection Act

(Became Law on July 21, 2010)

Text Available Here

  • Exempted SBICs from new regulations requiring private funds with over $150 million in assets under management to register with the SEC.
  • Exempted SBICs from those entities which banks and hedge funds are sharply limited in investing in under the "Volcker Rule.”


American Recovery and Reinvestment Act of 2009

(Became Law on February 17, 2009)

Text Available Here

  • Increased available SBA leverage for a single SBIC to $150 million and for a group of commonly managed SBICs to an aggregate of $225 million. Previously, the maximum amount of leverage available to an SBIC, or a group of commonly controlled SBICs, was $137 million.



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