Small Business Relief Act
- Bill Number
- H.R. 4130
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-02-25: Placed on the Union Calendar, Calendar No. 450.
- Last Updated
- 2026-06-11T23:26:42Z
AI-Generated Summary
Purpose
The Small Business Relief Act (H.R. 4130) aims to ease regulatory burdens on small businesses by amending the Securities Exchange Act of 1934. It prevents certain sophisticated institutional investors from being counted toward the threshold that triggers mandatory registration of a company's securities with the U.S. Securities and Exchange Commission (SEC), allowing more companies to remain private longer without full public disclosure requirements.
Key Provisions
- Amends Section 12(g)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(1)).
- In subparagraph (A)(i), adds language excluding "qualified institutional buyers" (large institutions like banks or investment funds that meet specific financial thresholds) and "institutional accredited investors" (institutions qualifying as accredited due to their size and expertise) from the count of "persons" holding securities.
- In subparagraph (B), applies the same exclusion to the count of holders for bank issuers.
- These exclusions apply when determining if a company has reached the mandatory registration threshold (generally 500 holders of record for non-bank issuers or 300 for banks).
Significant Changes to Existing Law
- Under current law, all holders of a security are counted toward the registration threshold, which can force smaller companies to register with the SEC and comply with extensive reporting if they exceed the limit.
- The bill modifies this by excluding qualified institutional buyers and institutional accredited investors, effectively raising the effective threshold for registration. This change targets institutional holders presumed to have the resources and knowledge to evaluate investments without needing the same protections as individual retail investors.
Potential Impacts
- On government agencies: Reduces the SEC's oversight workload for certain private companies, potentially allowing the agency to focus on larger public entities, but may limit public access to company information.
- On citizens: Benefits small business owners and entrepreneurs by lowering compliance costs and paperwork, making it easier to raise capital privately. Retail investors might face indirect risks from less transparent private markets but are not directly affected by the exclusions.
- On international relations: Minimal direct impact, though it could make U.S. markets more attractive for institutional investors from abroad by streamlining private offerings.
Main Stakeholders Affected
- Small businesses and startups: Primary beneficiaries, as they can issue securities to institutional investors without triggering SEC registration.
- Qualified institutional buyers and institutional accredited investors: Gain flexibility in investing without pushing companies toward public status.
- SEC and regulators: Experience a shift in enforcement priorities, with fewer mandatory registrations to monitor.
- Retail investors: Potentially indirectly affected, as they may have reduced access to information about companies that stay private longer.
Notable Legal, Constitutional, or Political Implications
- Legal: Aligns with existing SEC rules on accredited investors (defined under Regulation D as those with high net worth or income, or institutions above certain asset thresholds), reinforcing protections for sophisticated parties while maintaining safeguards for less experienced investors. No challenges to constitutional due process or equal protection are evident.
- Constitutional: Does not raise significant issues, as it pertains to regulatory thresholds under Congress's commerce clause authority over securities markets.
- Political: Supports pro-business deregulation efforts, potentially appealing to lawmakers favoring reduced federal oversight on small entities. It could spark debate on investor protection versus economic growth, especially if private markets grow without public disclosures.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Garbarino, Andrew R. [R-NY-2]
Cosponsors (1)
Recent Actions
- 2026-02-25: Placed on the Union Calendar, Calendar No. 450.
- 2026-02-25: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-525.
- 2026-02-25: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-525.
- 2025-12-17: Ordered to be Reported (Amended) by the Yeas and Nays: 28 - 24.
- 2025-12-17: Committee Consideration and Mark-up Session Held
- 2025-12-16: Committee Consideration and Mark-up Session Held
- 2025-06-25: Referred to the House Committee on Financial Services.
- 2025-06-25: Introduced in House
- 2025-06-25: Introduced in House
Bill Versions
- Small Business Relief Act — issued 2025-06-25 — PDF (2 pages)
- Small Business Relief Act — issued 2026-02-25 — PDF (4 pages)