H.R. 3673, the Small Business Investor Capital Access Act, is a legislative proposal currently before Congress aimed at revising the registration requirements for certain investment advisers to private funds. The bill is sponsored by Rep. Andy Barr (R-KY) and co-sponsored by Rep. Nydia Velázquez (D-NY), demonstrating bipartisan interest in promoting growth and regulatory relief for small financial services firms.
Purpose and Key Provisions
The bill’s primary objective is to modernize the threshold amount under the Investment Advisers Act of 1940 that indicates whether an investment adviser to private funds must register with the Securities and Exchange Commission (SEC). Specifically, H.R. 3673 would:
- Adjust the Exemption Threshold for Inflation: The bill proposes that the dollar amount triggering mandatory SEC registration be updated to reflect cumulative inflation since the enactment of the Private Fund Investment Advisers Registration Act of 2010. This adjustment would be measured according to the Consumer Price Index for All Urban Consumers, as published by the Bureau of Labor Statistics.
- Annual Inflation Adjustments: Following the initial revision, the threshold would be updated each year to keep pace with ongoing inflation. This mechanism ensures that the regulatory threshold remains relevant and does not become overly restrictive over time.
Legislative Status
After its introduction on June 3, 2025, H.R. 3673 was referred to the House Financial Services Committee. On July 22, 2025, the committee voted 51-2 to report the bill, moving it closer to full House consideration. The bill’s progress signals strong committee support and momentum for passage.
The next steps for HR 3673 in the legislative process are for the bill to be scheduled for debate and a vote on the House floor. If it passes the House, HR 3673 will then be sent to the Senate, where it could be assigned to a relevant committee for further review and possible amendment before reaching a full Senate vote. If both chambers approve the bill—potentially after reconciling any differences—it would then proceed to the President for signature and enactment into law.
Implications for Private Equity Fund Managers
For advisers to private equity funds, the bill’s provisions offer potential relief from SEC registration and oversight. As the exemption threshold increases with inflation, a broader group of smaller and mid-sized advisers could remain exempt from registration, provided their assets under management (AUM) stay below the new adjusted threshold. This reduces regulatory burdens and lowers compliance costs, making it easier for emerging managers to attract capital and compete in the investment advisory space.
Moreover, the annual inflation adjustment mechanism mitigates the risk that future inflation could gradually expose more managers to federal regulation, maintaining a stable environment for business growth. Advisers managing funds just below the previous limits will likely be the primary beneficiaries, enjoying a regulatory “buffer” that ensures their status is not abruptly altered due to changing economic conditions.
Inflation-Adjusted AUM Limit
If enacted, HR 3673 would raise the private fund adviser SEC registration exemption threshold from the current $150 million in assets under management (AUM), originally set in 2010, to approximately $210 million—reflecting the cumulative inflation adjustment since 2010. The bill also provides for annual increases to this threshold based on ongoing inflation, ensuring the exemption remains valid as economic conditions evolve. This adjustment would allow many fund managers previously required to register with the SEC to remain exempt, aligning regulatory requirements with current market realities.
Conclusion
The Small Business Investor Capital Access Act offers a streamlined path for private equity fund managers to remain exempt from federal registration, aligned with economic changes. By linking exemption thresholds to inflation, the bill supports a vibrant, competitive private funds industry and avoids regulatory traps caused by static thresholds—a development welcomed by emerging advisers and small business stakeholders in the private funds sector.