Moreover, the SEC proposal runs counter to legislation that has passed by a whopping bipartisan vote of 53–4 in the House Financial Services Committee. That bill is called the Small Business Credit Availability Act (H.R. 3868).
Tom Quaadman, senior vice president, U.S. Chamber of Commerce, Center for Capital Markets Competitiveness, says the SEC rule would drastically reduce the exposure limits of BDCs, a markedly different approach than Congress is contemplating under the Small Business Credit Availability Act. “Doing so ignores the fact that Congress intentionally permitted BDCs to issue senior securities and obtain additional leverage than other funds due to the clear differences in their fundamental purposes and structures,” he explains, noting the differences between BDCs and mutual funds. “This difference warrants different treatment for BDCs under the proposed rule.”