WASHINGTON, D.C. — Senators Dave McCormick (R-PA) and Angela Alsobrooks (D-MD) have introduced the Access to Small Business Investor Capital Act, a bipartisan effort aimed at improving access to capital for small- and middle-market businesses. By addressing regulatory hurdles, the proposed legislation seeks to empower businesses to secure funding, foster job creation, and drive economic growth nationwide.
“Small businesses are the engine that powers a growing economy and creates good-paying jobs on Main Street,” said Senator McCormick. “I’m proud to partner with my Banking Committee colleague, Senator Alsobrooks, on this legislation to eliminate red tape and make it more attractive for investors to put capital into job-creators.”
Since their establishment in 1980, business development companies (BDCs) have played a vital role in supporting small- and middle-market businesses. These investment vehicles are mandated to allocate at least 70% of their investments to eligible assets, including private U.S. companies or smaller public businesses with an equity market capitalization of up to $250 million. Currently, there are over 130 BDCs that have collectively facilitated more than $300 billion in investments for middle-market enterprises across the United States.
Despite their critical role, BDCs face a significant barrier when it comes to attracting institutional investors. Under current law, investment funds that acquire stakes in BDCs must include both the BDC’s fees and their own fees in their expense ratios, effectively double-counting costs. This practice can lead to inflated expense figures, discouraging investors from contributing capital to BDCs.
The Access to Small Business Investor Capital Act aims to eliminate this double-reporting requirement, ensuring investors have a more accurate understanding of fund fees and costs. By removing this disincentive, the legislation seeks to make it easier for institutional investors to channel capital into BDCs, which in turn will support the growth and development of small businesses.
Senator Alsobrooks emphasized the importance of reducing barriers for community businesses, stating, “I am so proud to work with Senator McCormick on this bipartisan legislation that will make it easier for Maryland businesses to thrive and grow. For too long, community businesses have been trapped by red tape and unable to access the capital and support they need. Our bill ensures an easier flow of capital to small- and medium-sized companies, so more Marylanders cannot just get by but can truly thrive.”
With small businesses often regarded as the backbone of the U.S. economy, this bipartisan initiative has the potential to unlock critical funding needed to support innovation, expand local economies, and create jobs. By tackling regulatory inefficiencies, the Access to Small Business Investor Capital Act proposes a practical solution to bolster the flow of capital to businesses in need.
The bill now heads to the Senate Banking Committee for further consideration, where its bipartisan backing and focus on economic growth provide strong incentives for broad support. For small businesses across the nation, the future could include a more streamlined path to the resources necessary for sustained success.
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