Ruben Gallego's Bipartisan Bill Targets Small Business' Capital Access

Senators Ruben Gallego (D-AZ) and Mike Rounds (R-SD) have introduced a bipartisan bill expanding capital access opportunities for small businesses.

Currently, under the Dodd-Frank Act of 2010, small private fund advisers must register with the Securities and Exchange Commission (SEC) if they have $150 million in regulatory assets under management (RAUM). If they have less, they are exempt.

As a result, the Small Business Investor Capital Access Act raises the SEC registration exemption to $175 million in assets, allowing private fund advisers to invest more money in emerging businesses and startups.

"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," said Sen. Gallego in a press release. "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."

Such a disparity, Sen. Gallego notes, "means these small funds have less capital to put towards startups and small businesses." Thus, "this bill modernizes an outdated $150 million threshold and ties it to inflation so smaller funds can direct resources toward supporting local job-creating investments."

Sen. Rounds, the bill's cosponsor, commented that "small businesses are the backbone of our economy, but too often they struggle to access the capital needed to expand and create jobs." Because of that, the legislative effort "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."

Gallego and Rounds previously teamed up in February to introduce the Enhancing Multi-Class Share Disclosures Act, which requires publicly traded companies (the kind where you can buy stocks and shares) with multi-class share systems to disclose shareholders' voting power, including the number of shares owned by specified persons and the amount of voting power held by specified persons (those who own 5% or more of the company's total voting power).