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CLICK HERE to view the SBIA Capital Formation Agenda: Legislative Recommendations for Members of the 114th Congress. These legislative recommendations, when enacted into law, will provide the essential means to increasing capital to small businesses.                        


CLICK HERE to view the SBIA Business Development Companies (BDC) Modernization Agenda: Legislative Recommendations for Members of the 115th Congress.   


SBIA Legislative & Regulatory Agenda for the 114th Congress


SBIC Advisers Relief Act (S. 1978 and H.R. 432)

Introduced on January 21, 2015 by Rep. Blaine Luetkemeyer (R-MO), 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.  Original cosponsors include Reps. Carolyn Maloney (D-NY), Keith Rothfus (R-PA), Mick Mulvaney (R-SC), Patrick Murphy (D-FL), Bill Foster (D-IL), and Frank Guinta (R-NH). H.R. 432 previously passed out of the House in this Congress as part of a larger bill package, H.R. 37, on January 14, 2015.  During the 113th Congress, the bill (then titled H.R. 4200/S.2765) passed unanimously out of the House Financial Services Committee on May 22, 2014 (56-0).  The bill later passed the House floor under suspension through a voice vote on December 2, 2014.  The content of H.R. 432 is the same language as that of H.R. 4200 in the 113th Congress.


The SBIC Advisers Relief Act will make sensible changes to remedy unintended consequences of the Dodd-Frank Act on certain investment advisers that are advising SBICs. More specifically, the bill will:

  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. 

Gayle Hughes, SBIA Executive Committee Member and Partner at Merion Investment Partners, testified in support of the SBIC Advisors Relief Act on April 29, 2015, in the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Read her testimony here.

William Spell, SBIA Member and President of Spell Capital Partners, testified in support of the SBIC Advisers Relief Act on March 24, 2015, in the Senate Banking Committee. Read his testimony here and watch the live hearing here.

The House Financial Services Committee passed the SBIC Advisers Relief Act by a vote of 53 to 0 on May 20, 2015. SBIA calls passage of the SBIC Advisers Relief Act a significant step toward delivering its Members relief from redundant regulatory and compliance costs. The News Release on passage of the bill may be found here.

By unanimous vote, the U.S. House passed H.R. 432 on July 14, 2015.

S. 1978, the SBIC Advisers Relief Act

S. 1978 was introduced in the U.S. on August 5, 2015, by Senators Mark Kirk (R-IL) and Joe Donnelly (D-IN). The bill is identical to H.R. 432.

SBIC Capital Act of 2015 (S. 552 and H.R. 1023)

The SBIC Capital Act of 2015 raises the SBIC Family of Funds limit from $225 million to $350 million, making new capital available to SBICs that invest exclusively in domestic small businesses. 

  • SBICs that hold multiple licenses under the same management umbrella – otherwise known as “Family of Funds” – are currently restricted from accessing SBIC leverage above a statutory cap of $225 million.  
  • This statutory cap is currently restricting proven small business investors from accessing new SBIC leverage.  Approximately 30% of debenture “Family of Funds” in the SBIC Program are hitting the cap or risk hitting the cap if they raise their next fund.  
  • If Congress increases this cap, SBIA estimates that SBICs will facilitate up to $750 million a year in new small business investing.

Reps. Steve Chabot (R-OH) and David Cicilline (D-RI) introduced the SBIC Capital Act of 2015 (H.R. 1023). The Bill has eight cosponsors including Small Business Committee Vice Chairman Blaine Luetkemeyer (R-MO), and Reps. Mike Bost (R-IL), Judy Chu (D-CA), Richard Hanna (R-NY), Carlos Curbelo, and Steve Knight (R-CA), and also Reps. Renee Ellmers (R-NC) and Chris Collins (R-NY)

Sens. Jim Risch (R-ID) and Ben Cardin (D-MD) introduced the SBIC Capital Act of 2015 (S. 552) in the Senate.  The bill has two cosponsors Sens. Kelly Ayotte (R-NH) and Jeanne Shaheen (D-NH).

On April 23, S 552 won bipartisan support in the Senate Small Business Committee. Following Senate action, SBIA President Brett Palmer stated that "Senate action spotlights the importance of domestic small businesses in solidifying America's economic recovery."

SBIA President Brett Palmer testified May 19, 2015, before the U.S. House Small Business Subcommittee on Economic Growth, Tax, and Capital Access on "Improving Capital Access Programs within the SBA," including H.R. 1023. His written testimony can be read here and a webcast of the hearing viewed here.

The House Small Business Committee unanimously passed H.R. 1023 on June 10. SBIA's President said "The finish line is getting closer after achieving today's significant milestone in our dedicated campaign to attain enactment of this important legislation for America's small businesses. Now that both House and Senate Small Business Committees have passed identical, bipartisan bills that raise this outdated limit, the stage is set for speedy action through the Congress for enactment." 

SEC Small Business Advocate Act of 2015 (H.R. 3784)

H.R. 3784 creates an Office of the Advocate for Small Business Capital Formation at the Securities and Exchange Commission (SEC) to represent the interests of small business owners and investors. This advocacy office is an important SBIA legislative initiative identified in the SBIA Capital Formation Agenda

This bipartisan measure, the SEC Small Business Advocate Act of 2015 (H.R. 3784), was introduced by Congressmen John Carney (D-DE), Ander Crenshaw (R-FL), Sean Duffy (R-WI), and Mike Quigley (D-IL). This new advocacy office will help the SEC fulfil its mandate of facilitating capital formation.

In a letter initiated by SBIA and signed by the U.S. Chamber of Commerce, Biotechnology Industry Organization, Small Business & Entrepreneurship Council, Association for Corporate Growth, National Small Business Association, Crowdfunding Professional Association, and National Venture Capital Association, the signators thanked the sponsors of the bill for recognizing the critical need to give small business an independent voice at the SEC and elevating the importance of facilitating capital formation.

For a copy of the letter, go here. To read the bill, go here. For a summary of the bill, click hereThe News Release may be found here.

BDC Modernization

The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing entitled "Legislative Proposals to Modernize Business Development Companies and Expand Investment Opportunities" on June 16, 2015. The subject of the hearing was a discussion draft developed by Congressman Mick Mulvaney (R-SC),"Small Business Credit Availability Act," available here. Presenting testimony on behalf of the SBIA was Vincent Foster, Chairman, President, and Chief Executive Officer of Main Street Capital Corporation in Houston, Texas. For a copy of Mr. Foster's written testimony, please click here. A webcast of the hearing can be viewed here.

SBIA Comments to Senate Finance Committee Working Groups on Tax Reform

On April 15, 2015, SBIA submitted comments to the Senate Finance Committee tax reform working groups.  SBIA used the opportunity to weigh in with the Committee on the top priorities of its members.  The comment letter urged tax writers to promote – not inhibit – small business investment.  SBIA argued that policymakers should be mindful of the differences between smaller funds and larger funds when crafting and implementing tax policies.  

  1. SBIA’s foremost tax priorities were presented in the tax comment letter, including:
  2. Maintaining the capital gains tax treatment of carried interest;
  3. Preserving the unique features of partnership taxation;
  4. Encouraging investment in small businesses by reducing the capital gains rates on qualified investments;
  5. Maintaining the deductibility of interest on debt; and
  6. Making improvements to the regulated investment company section of the code.

Click here to access a copy of the SBIA comment letter to the Senate Finance Committee tax reform working groups.


Encourage Investment In Small Business through the Tax Code

The 100% exclusion for the sale of stock in a "qualified small business" is a very valuable incentive in the tax code.  The 100% exclusion, located in Section 1202 of the Tax Code, expired at the end of 2014, and the Small Business Investor Alliance supports making the provision permanent and expanding the definition of qualified small business to allow investments in LLCs.

Click here to view the Recommendation to Congress on extending and expanding this tax provision to incentivize new and long term investments in small businesses.


Recovery Improvements for Small Entities After Disaster Act (S.1470)

The Senate Small Business Committee unanimously passed S.1470, a package of disaster relief provisions aimed at increasing investment in areas declared as Presidential disaster areas. This bill amends the Small Business Investment Act of 1958 and makes two changes to the Small Business Investment Company (SBIC) program:

  • Provides an incentive to SBICs to invest in presidentially declared disaster areas by not counting any investments against the single fund cap or the family of funds cap. Eligible investments must be made within a year of the disaster declaration.
  • Allows the Administrator to prioritize applications to the SBIC program that are located in Presidential declared disaster areas.

Click here for a copy of the bill.

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