Access to Small Business Investor Capital Act
Fix one SEC rule and restore capital to America’s lower middle market businesses.
175
BDCs operating in the U.S.
financing small & mid-sized businesses
$552B
Total AUM
across the BDC industry
29-33%
Slower investment growth
at BDCs hit hardest by the 2014 index exclusion
Why This Legislation Is Needed
Business Development Companies (BDCs) lend to American businesses that are too small to raise money on Wall Street and big for a standard bank loan and too. For a large slice of Main Street, BDCs are how growth gets financed.
An SEC disclosure rule called Acquired Fund Fees and Expenses (AFFE) requires funds that hold BDC shares to count the BDC's operating expenses on top of their own — even though those expenses are already fully disclosed. The result: investing in BDCs looks far more expensive than it really is.
The downstream effect is documented and serious. In 2014, the major index providers excluded BDCs from market indices because of AFFE. Institutional ownership fell, and research coverage thinned. The capital available to BDCs, and to the small businesses that BDCs finance, went down with it.
What Happened After 2014
-
1. The Rule
AFFE double-counts BDC fees
-
2. The Exclusion
Major indices drop BDCs in 2014
-
3. The Retreat
Institutional investors pull back
-
4. The Cost
Less capital reaches small businesses
In Simple Terms: What the Bill Actually Does
Many people own BDCs without knowing it — through mutual funds and ETFs in their retirement accounts. The SEC currently requires a mutual fund or ETF that holds BDC shares to add the BDC’s operating expenses on top of its own, even though those expenses are already disclosed in the BDC’s own filings. This legislation ends that double-count.
No disclosure is eliminated. BDC investors still receive every audited financial statement, every portfolio valuation, and every fee disclosure required under the Investment Company Act of 1940. The bills remove a duplicative line item, not a single piece of investor information.
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Bipartisan. Bicameral. Already Moving.
H.R. 2225 has cleared the House. S. 1808 is the Senate companion. Both do the same operative thing: they remove BDCs from the AFFE calculation registered investment companies are required to disclose.
- Introduced
- Committee
- Passed the House
- Senate · Pending
| H.R. 2225 — House | S. 1808 — Senate | |
|---|---|---|
| Lead Sponsors |
Rep. Brad Sherman (D-CA)
Rep. Bill Huizenga (R-MI)
|
Sen. Dave McCormick (R-PA)
Sen. Angela Alsobrooks (D-MD)
|
| Status |
Passed the House by voice vote.
Unanimously reported out of the House Financial Services
Committee.
|
Introduced May 20, 2025.
Referred to the Senate Banking Committee.
|
| Cosponsors |
25 cosponsors (16 D, 9 R)
|
15 cosponsors (8 D, 7 R)
|
“This commonsense fix removes an artificial hurdle to institutional investment in BDCs while ensuring that investors receive clear, accurate financial information.”
Brett Palmer
President, Small Business Investor Alliance
Official statement
BDC AFFE Reform News Feed
SBIA Celebrates House Passage of the INVEST Act, Delivering Major Wins for American Investors
SBIA Celebrates House Passage of the INVEST Act, Delivering Major Wins for American Investors Capital formation legislation moves to the Senate for further consideration WASHINGTON, D.C. (December 11, 2025) – The Small Business Investor Alliance (SBIA), the national association representing lower middle market private equity investors, applauds the U.S. House of Representatives for passing the…
Read Full ReleaseBDC Reform Bill Clears House, Next Stop: Senate
Key Reform Would Unlock Small Business Investment, Fix Unintended Consequences of Fee Disclosure Rule for Business Development Companies
Read Full ReleaseBDC Bill Advances in the House, Companion Legislation Introduced in the Senate
Legislation Aims to Fix Unintended Consequences of Fee Disclosure Rule for Business Development Companies
Read Full ReleaseProposed BDC Legislation Aims to Fix Unintended Consequences of Fee Disclosure Rule
SBIA Expresses Support for Bill to Ensure Accurate Disclosure for Business Development Companies
Read Full ReleaseSmall Business Investor Capital Access Act
- Introduced
- Committee
- Passed House
- Senate · Pending
Raises the SEC registration exemption for private fund advisers from $150M to $175M in AUM and indexes it to inflation — relieving the smallest managers of institutional-scale compliance costs.
Investing in Main Street Act
- Introduced
- Committee
- Passed House
- Senate · Pending
Raises the cap on how much banks may invest in Small Business Investment Companies from 5% to 15% of capital and surplus — aligning a 1958 statute with current banking law.
Small Business Investor Alliance
529 14th Street, NW, Suite 400
Washington, DC 20045
Phone: 202-628-5055
The Small Business Investor Alliance is the premier organization of lower middle market private equity funds and investors.