SBIA Backs Senate Introduction of “Small Business Investor Capital Access Act”

Legislation Will Promote New Fund Formation and Improve Capital Access for Small Businesses

WASHINGTON, D.C. (March 6, 2026) – The Small Business Investor Alliance (SBIA), the national association representing lower middle market private equity investors, has expressed strong support for the Senate introduction of the Small Business Investor Capital Access Act (S. 3880) by U.S. Senators Ruben Gallego (D-AZ) and Mike Rounds (R-SD). The bill, which seeks to modernize the exemption for private fund advisors having to register with the Securities and Exchange Commission (SEC), would update the registration threshold from $150 million to $175 million assets under management (AUM), with an inflation adjuster every five years.

“SBIA applauds the introduction of the Small Business Investor Capital Access Act by Sen. Rounds and Sen. Gallego. This is a smart and necessary modernization of outdated regulation,” said SBIA President Brett Palmer. “Their strong support underscores the importance of aligning regulatory thresholds with economic reality. This bill will reduce compliance costs for smaller funds and allow more capital to flow to America’s small businesses.”

The House version of the legislation, introduced by U.S. Representatives Andy Barr (R-KY) and Nydia Velázquez (D-NY), was approved by the House Financial Services Committee in July 2025 and subsequently passed the full House as Section 104 of the INVEST Act (H.R. 3383) on December 11, 2025, by a bipartisan vote of 302–123. The Senate companion ensures continued momentum for this critical reform.

Background and Rationale

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act introduced a $150 million AUM threshold for SEC registration exemptions applicable to private fund advisers. However, the threshold was set too low at the time and has never been raised nor indexed for inflation, notwithstanding the significant growth of the economy and evolution of the private capital markets since 2010. This misalignment means that many private fund advisers who would have been exempt under an inflation-adjusted threshold are now subject to costly SEC registration requirements. The legislation addresses this longstanding oversight by raising the threshold and ensuring that future adjustments occur automatically.

Funds under the current $150 million threshold represent less than 0.5% of the private equity industry’s total AUM, yet they are subject to the same compliance requirements as much larger institutions. These smaller funds often lack the resources to absorb extensive SEC reporting and compliance obligations, diverting capital away from investments in small businesses, startups, and underserved communities. By adjusting the threshold and indexing it to inflation, the legislation ensures that regulatory standards evolve with economic conditions, creating a fairer and more efficient environment for small business investment.

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