A bipartisan pair of senators introduced legislation Monday aimed at overhauling the Securities and Exchange Commission’s definition of small businesses. Sens. Katie Britt, R-Ala., and Andy Kim, D-N.J., are set to introduce a bill that would compel the Securities and Exchange Commission to reassess how it classifies small investment advisory firms, and how it would measure compliance costs that these businesses face. The legislation would affect community and perhaps regional banks that compete with independent investment advisors for wealth advisory clients, or those seeking to purchase investment advisory firms. The bill also signals growing agreement among Democratic lawmakers to lower compliance costs on a number of small financial companies. The bill would “ensure these small entities across the state and country are not unduly impacted by onerous regulations so they can continue to play pivotal roles in our economy,” Britt said in a statement. “It is paramount that the SEC considers the unique challenges facing our smallest businesses when issuing any future rulemakings,” she said. The SEC is already required to assess the impact of regulations on “small entities,” defined as a small investment advisor with less than $25 million in assets under management. But the threshold to even be required to register with the SEC is $100 million of assets under management, with few exceptions, making the threshold “virtually meaningless,” according to the lawmakers. A companion bill, introduced by Rep. Ann Wagner, R-Mo., has passed the full House and has been referred to the Senate Banking Committee. The new bill from Britt and Kim suggests at least some bipartisan buy-in on the committee, which any bill will need to pass the narrowly controlled Senate. “Every entrepreneur deserves a fair shot at success, free from outdated and overburdensome red tape,” Kim said in a statement. “This bill is a straightforward way we can modernize and stand by our smallest businesses so they can continue to contribute to our local communities and economies.” The legislation would require the SEC to conduct a study examining market growth and regulatory costs since the agency last modified its small entity definition. Based on those findings, the commission would need to issue new rules adjusting the threshold accordingly. The bill would then index the definition to inflation, with mandatory updates every five years. The proposal has drawn support from financial services industry groups that have long complained about regulatory complexity squeezing smaller firms out of business. Firms have complained that compliance costs have risen steadily as the SEC has expanded its rulebook in response to the 2008 financial crisis and other market disruptions, creating economies of scale that favor larger firms. “For too long, this outdated standard has allowed the SEC to bypass meaningful consideration of less burdensome regulatory alternatives for small investment advisers,” the Investment Adviser Association said in a statement.