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HR 2225

Access to Small Business Investor Capital Act

119th Congress Introduced by Andy Barr and 24 co-sponsors

HR 2225 allows investment companies to exclude certain fees when investing in Business Development Companies, boosting capital for small businesses and fostering growth.

Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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Bill Summary · HR 2225

Summary of HR 2225 - Access to Small Business Investor Capital Act

Bill Overview

  • Bill Number: HR 2225
  • Title: Access to Small Business Investor Capital Act
  • Introduced: March 18, 2025
  • Status: Received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs on June 24, 2025.

Purpose and Intent

The Access to Small Business Investor Capital Act aims to enhance the ability of registered investment companies to invest in Business Development Companies (BDCs) by allowing them to exclude certain fees from the calculation of Acquired Fund Fees and Expenses (AFFE). This change is intended to reduce the financial burden on BDCs and improve their competitiveness in attracting capital for investment in small businesses.

Key Provisions

  1. Exclusion of Fees:

    • Registered investment companies can omit from their AFFE calculations any fees and expenses incurred indirectly from investments in BDCs.
    • This change addresses the issue of double counting expenses, which has historically misrepresented the costs associated with investing in BDCs.

  2. Continued Disclosure:

    • While the bill allows for the exclusion of certain fees, it maintains the requirement for investment companies to disclose management fees and other expenses associated with BDCs.

  3. Definitions:

    • The bill clarifies terms such as "Acquired Fund," "Acquired Fund Fees and Expenses," and "Business Development Company" to ensure clear understanding and compliance.

Background and Need for Legislation

  • BDCs play a crucial role in providing capital to smaller businesses, which often struggle to secure funding through traditional means.
  • A 2006 SEC rule mandated that funds investing in BDCs disclose management fees and expenses, leading to inflated expense reports and discouraging investment in BDCs.
  • By correcting this reporting requirement, the bill aims to provide a more accurate financial picture for investors and encourage greater investment in BDCs, ultimately benefiting small businesses.

Impact

  • Investors: The bill is expected to provide investors with a clearer understanding of the costs associated with investing in BDCs, potentially leading to increased investment.
  • Business Development Companies: By alleviating the burden of double counting expenses, BDCs may attract more capital, enabling them to invest more effectively in small businesses.
  • Small Businesses: Increased capital availability for BDCs could lead to more funding opportunities for small businesses, fostering growth and job creation.

Legislative Process

  • The bill was favorably reported by the Committee on Financial Services on June 3, 2025, and passed the House on June 23, 2025, after a brief debate.
  • It is currently under consideration in the Senate.

Conclusion

HR 2225 seeks to streamline the investment process for BDCs by addressing regulatory burdens that have historically hindered their ability to attract capital. By clarifying fee disclosures and allowing for the exclusion of certain expenses, the bill aims to bolster the financial ecosystem for small businesses in the United States.

Compiled from official sources — confirm details with the bill’s official record.

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