Access to Small Business Investor Capital Act

The bill would permit a registered investment company to omit, from the "Acquired Fund Fees and Expenses" (AFFE) line item on its SEC registration statement, any fees and expenses incurred indirectly through investment in a business development company (BDC). AFFE is a required sub-caption in the fee table that registered funds must file with the Securities and Exchange Commission; it discloses the operating costs a fund bears through its investments in other funds. Under current SEC form requirements, BDC-related fees must be included in this calculation.

The bill would not eliminate the AFFE disclosure line item itself, nor change any other disclosure requirement. It creates a narrow statutory permission for funds to exclude BDC-related costs specifically, leaving all other aspects of the fee table intact. The bill defines key terms by reference to existing SEC registration forms (N-1A, N-2, and N-3) and their successors.

Registered investment companies — including open-end mutual funds, closed-end funds, and variable annuity separate accounts — that currently invest in or are considering investing in business development companies. BDCs themselves would be indirectly affected, as would the small and mid-sized businesses that rely on BDCs for growth capital. Retail investors reading fund fee tables would see a reduced AFFE figure for funds holding BDCs.

Because AFFE currently must include BDC-related costs, funds that invest in BDCs can show a higher apparent expense ratio than peers that avoid them — potentially discouraging fund managers from allocating to BDCs at all. If this exclusion were enacted, fund managers would face less fee-table pressure when investing in BDCs, which could increase the flow of institutional capital into BDCs and, through them, into small businesses seeking financing.

The bill would be largely self-executing: once enacted, any registered investment company could immediately omit BDC-related fees from its AFFE calculation on new or amended registration statement filings. No agency rulemaking is required to activate the permission. The SEC, which administers Forms N-1A, N-2, and N-3, may update its form instructions or guidance to reflect the statutory change, and the bill explicitly extends the permission to any successor fee-table disclosure the SEC later adopts. There are no reporting mandates, grant cycles, or phase-ins.