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 Incentivizing New Ventures and Economic Strength Through Capital Formation Act (INVEST Act) – a bipartisan package that delivers several of SBIA’s top policy priorities and represents a significant step toward strengthening capital access for America’s small businesses.

The INVEST Act includes more than 20 measures designed to expand investment opportunities, improve market transparency, and support the entrepreneurs who fuel economic growth. Central to the bill are two SBIA-backed reforms addressing long-standing regulatory barriers affecting BDCs and smaller private funds – both critical sources of financing for the lower middle market.

A key provision, authored by U.S. Reps. Brad Sherman (D-CA) and Bill Huizenga (R-MI), fixes the acquired fund fees and expenses (AFFE) rule as applied to Business Development Companies (BDCs). The current treatment inaccurately double counts BDC expenses discouraging institutional investment and constraining capital available to lower middle market businesses. The fix restores accurate disclosure and strengthens the flow of capital to thousands of U.S. businesses.

Another major win modernizes the assets under management (AUM) threshold that triggers Securities and Exchange Commission (SEC) registration for private fund advisers. Led by Reps. Andy Barr (R-KY) and Nydia Velazquez (D-NY), the provision updates a 2010 threshold that has never been adjusted for inflation and reduces regulatory burdens disproportionately falling on smaller funds, enabling more efficient investment in emerging and growing businesses.

“House passage of the INVEST Act marks a meaningful step toward a regulatory system that reflects today’s markets and supports the businesses that drive American innovation and job creation,” said SBIA President Brett Palmer. “I applaud the bipartisan leadership that made these reforms possible and encourage the Senate to advance the legislation swiftly.”

Finally, the bill also updates the accredited investor definition, modernizing the rules for private investing to allow people to qualify based on their financial knowledge – not just their income or net worth.

“These changes matter,” said Palmer. “They mean more transparent markets, more efficient capital formation, and more opportunities for the small businesses that drive America’s economic growth.”

SBIA will continue working closely with Senate offices to move these reforms to the President’s desk.

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