SEC Responds to 2025 Small Business Forum Recommendations

In its Report on the 44th Annual Small Business Forum, the SEC responded to policy recommendations from market participants on initiatives to improve the capital raising framework for small businesses at different stages of growth.

Among others, the SEC addressed recommendations to:

• Expand non-dilutive funding options: The SEC stated that "[e]xpansion of federal, regional, and state options for non-dilutive funding, such as grants and loans, and the implementation of debt relief or debt forgiveness programs, would require action by federal, state, and local governments, as well as other institutions and entrepreneurial support organizations." The SEC also noted that it provides educational resources to "support entrepreneurs and their investors," such as its Funding Roadmap.
• Broaden the "accredited investor" definition: The SEC noted that it amended the definition in 2020 to "add[] ways for individuals to qualify as accredited investors and participate in private offerings...includ[ing] amendments allowing natural persons to qualify as accredited investors based on certain professional certifications, designations, or credentials." The SEC also noted that it will consider further updates to the "accredited investor" definition in connection with initiatives related to exempt offering rules that are included in the Spring 2025 Regulatory Agenda.
• Revise Regulation Crowdfunding: The SEC responded that it amended Regulation Crowdfunding in 2020 and that potential further updates to exempt offering rules are under consideration in its Spring 2025 Regulatory Agenda.
• Expand retail investor access to private investments: The SEC said staff recently issued guidance confirming it would "no longer provide comments requesting registered closed-end funds that invest more than 15 percent of their assets in private funds to limit their shares to accredited investors."
• Streamline SEC registration for small public companies: The SEC highlighted its past actions to reduce burdens by expanding the "smaller reporting company" definition in 2018 and amending the "accelerated filer" definition in 2020. The SEC also noted that additional filer simplification initiatives are part of the Spring 2025 Regulatory Agenda.

The SEC's report also addressed recommendations to (i) support emerging fund managers, (ii) bolster tax incentives, and (ii) expand Regulation A offering limits and exemptions. The SEC noted that many of these recommendations would require congressional or other governmental action.