Rounds Introduces Legislation to Expand Access to Capital for Small Businesses

WASHINGTON - U.S. Senator Mike Rounds (R-S.D.) introduced legislation to increase access to capital for small businesses and entrepreneurs by modernizing outdated securities regulations.

The Small Business Investor Capital Access Act would update federal securities law to allow more small private funds to invest in emerging businesses by adjusting the threshold that determines when private fund advisers must register with the U.S. Securities and Exchange Commission (SEC). Under current law established in the 2010 Dodd-Frank Act, private fund advisers with up to $150 million in assets under management are exempt from SEC registration.

"Small businesses are the backbone of our economy, but too often they struggle to access the capital needed to expand and create jobs," said Rounds. "This legislation removes unnecessary regulatory barriers that prevent small investment funds from directing capital to innovative startups and entrepreneurs, particularly in rural communities like many across South Dakota."

Senator Ruben Gallego (D-Ariz.) joined Rounds in introducing this legislation.

"For too many small business owners, securing financing is still the hardest part of getting a business off the ground - and the problem runs deepest in communities that traditional lenders have long overlooked. Small investment funds can fill that gap, but right now they are forced to spend time and money following the same expensive compliance rules as massive Wall Street firms. That mismatch means these small funds have less capital to put towards startups and small businesses," said Gallego. "This bill modernizes an outdated $150 million threshold and ties it to inflation so smaller funds can direct resources toward supporting local job-creating investments."

"The Small Business Investor Alliance (SBIA) applauds the introduction of the Small Business Investor Capital Access Act by Senator Mike Rounds and Senator Gallego. This is a smart and necessary modernization of outdated regulation," said Brett Palmer, President of SBIA. "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."

BACKGROUND:

Under Dodd Frank, the current exemption for private fund advisors registering with the SEC is for firms up to $150M - this legislation increases the exemption to $175M for advisers to small private funds to reflect changes from inflation and requires the SEC to adjust the threshold for inflation every 5 years. Representatives Barr and Velázquez lead companion legislation in the House. This legislation passed the House Financial Services Committee 51-2 on July 22, 2025 and was included in the INVEST Act, which passed the House 302-123 on December 11, 2025.

Click HERE for full bill text.

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