The SEC delivered its 45th Annual Government-Business Forum report to Congress this week, and the headline recommendation is a four-fold increase in the Regulation Crowdfunding annual cap — from $5 million to $20 million. Alongside it: a proposed federal “friends and family” exemption that would preempt state blue sky laws, and a broadened accredited investor definition based on sophistication rather than just net worth.
None of it is law. All of it signals where small-business capital-raising rules are headed.
What happened
The forum itself was held March 9, 2026 at SEC headquarters, organized by the Office of the Advocate for Small Business Capital Formation, with remarks from each of the Commissioners and working sessions with practitioners, investors, and business owners. The report to Congress — released the week of July 27 — packages the recommendations that came out of those sessions along with the Commission’s responses.
The recommendations break into three tiers by company stage.
Early-stage capital raising:
- Raise the Regulation Crowdfunding annual cap from $5 million to $20 million
- Expand the accredited investor definition to include additional measures of sophistication
- Create a federal friends-and-family exemption that preempts state blue sky laws
- Modernize the regulation of crypto asset securities
- Expand funding support resources for small businesses
Growth-stage companies and smaller funds:
- Create a new private fund exemption for community-based investing
- Preempt blue sky laws for off-exchange secondary trading
- Streamline the private-to-public market transition
- Ease compliance costs for smaller emerging fund managers
- Increase the number of investors permitted under Section 3(c)(1)
- Advance the INVEST Act
Small-cap companies and public markets:
- Require enhanced over-the-counter trading disclosures
- Expand eligibility for at-the-market offerings
- Enable more issuers to use Form S-3
- Simplify Regulation A reporting requirements
- Reduce cost and liability barriers for smaller public companies
Why it matters
The forum’s report is advisory. Congress and the Commission are free to ignore all of it, and historically most recommendations move slowly or not at all. But the report is one of the few formal channels where small-business capital access gets a structured hearing at the SEC, and the pattern of what makes the list is a reasonable leading indicator.
Two items on this list would matter more than the rest to ordinary operating businesses rather than venture-track startups.
The friends-and-family exemption is the quiet one. Today, a small business owner raising $150,000 from a dozen people they know is navigating a federal exemption plus a separate compliance analysis in every state where an investor lives. A federal exemption preempting blue sky laws would collapse that into one framework — which is the difference between a raise that costs a few thousand dollars in legal fees and one that costs considerably more than the raise is worth.
The crowdfunding cap increase to $20 million moves Reg CF out of seed-round territory and into a range where an established business could genuinely fund an expansion, an acquisition, or a facility. At $5 million, Reg CF is mostly a startup instrument. At $20 million, it starts to compete with bank debt and SBA lending for real growth capital.
Forum participants recommended revising Regulation Crowdfunding to raise the annual cap from $5 million to $20 million, and creating a federal friends-and-family exemption that would preempt state blue sky laws.
What this means for small business owners
Don’t restructure anything around this yet. These are recommendations to Congress, not rule changes. The current $5 million Reg CF cap and existing state blue sky obligations apply exactly as they did last week.
But do get your books in a condition that can survive diligence. Every one of these recommendations lowers a legal barrier to raising capital. None of them lowers the financial-reporting barrier. Reg CF already requires reviewed or audited financial statements once an offering passes certain thresholds, and a $20 million cap would come with heavier requirements, not lighter ones. Clean, reconciled, GAAP-consistent books are the constraint that no rule change removes.
If you’ve been putting off a friends-and-family raise because of multi-state compliance, note the direction of travel. It’s worth revisiting the conversation with counsel in the next year rather than treating the current cost as permanent.
Watch this as a capital-access story, not a securities-law story. Between the SBA doubling the cumulative 7(a)/504 limit to $10 million in May and this report’s push on exempt offerings, the policy environment is tilting toward more financing paths for small companies at exactly the moment the Fed is holding rates at 3.50–3.75%. The rules may loosen faster than the cost of money falls.
The bottom line
The report is a wish list with an SEC letterhead — but wish lists from this particular forum have preceded real rule changes before. The practical takeaway for owners isn’t to plan a raise around a cap that doesn’t exist yet. It’s that the constraint on small-business capital is drifting away from what’s legal and toward what’s provable in your financials. That part you can start working on today.
