S 1808119th CongressIn Committee

Access to Small Business Investor Capital Act

Introduced: May 20, 2025

Financial Services

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Access to Small Business Investor Capital Act would allow a registered investment company (a mutual fund or similar fund regulated under the Investment Company Act of 1940) to omit certain indirect fees from the calculation of acquired fund fees and expenses (AFFE) when those fees come from investments in business development companies (BDCs). In practical terms, this means a fund could exclude from its AFFE calculation those costs it incurs indirectly due to owning shares of one or more BDCs. The policy is limited to the registered investment company’s fee disclosures on its SEC registration statements (Form N-1A, N-2, or N-3) and would apply only to investments described in those forms. The bill defines key terms and specifies that the option to omit is available on registration statements filed under Section 8(b) of the Investment Company Act. The overarching goal is to reduce reported costs associated with investing in small-business-focused vehicles (BDCs) and potentially improve the apparent attractiveness of funds that allocate to BDCs. It does not change actual fees charged by funds or BDCs; it changes how certain indirect costs are reported to investors.

Key Points

1Short title: The act is named the “Access to Small Business Investor Capital Act.”
2Definitions: Establishes or clarifies terms used for the amendment, including acquired fund, AFFE, BDC, fee table disclosure, Form N-1A, Form N-2, Form N-3, and registered investment company.
3Core change: A registered investment company may omit from the AFFE calculation those indirect fees and expenses it incurs due to investments in shares of one or more acquired funds that are business development companies.
4Scope of application: The omission would apply on investment company registration statements filed under Section 8(b) of the Investment Company Act of 1940.
5Regulatory framing: The change ties to the fee table disclosures in Form N-1A, Form N-2, or Form N-3, or their successors, ensuring alignment with current SEC reporting formats.

Impact Areas

Primary group/area affected- Registered investment companies (mutual funds and similar funds) that invest in BDCS and currently report AFFE in their SEC registration statements.Secondary group/area affected- Investors in these funds, who would see lower AFFE figures in disclosures (though actual costs to funds and investors may not change, the reporting surface would be reduced for AFFE).- Small business capital markets, via BDCS, which could appear more attractive to investors due to lower reported costs.Additional impacts- Regulatory and compliance implications for funds: fund managers and boards would need to decide when and how to apply the omission on disclosure statements.- Transparency considerations: potential shifts in perceived fund costs and disclosure clarity, since AFFE would no longer reflect certain indirect BDC-related costs.- No change to actual fees: The bill affects reporting of AFFE, not the negotiated or paid fees by funds or BDCS. It could influence investor decision-making indirectly through perceived cost.

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