Small Business 7(a) Loan Agent Transparency Act — House Report 118–100 (June 5, 2023)
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Summary
House Report 118–100 of the 118th Congress, 1st Session, dated June 5, 2023, submitted by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 1651, the Small Business 7(a) Loan Agent Transparency Act. The committee reports the bill favorably without amendment and recommends that it pass. The report states that the bill would establish a registration system with unique identifiers for 7(a) agents, extend enforcement authority over them, and require agents to pay an annual registration fee. It describes three committee hearings, the May 23, 2023 markup and a section-by-section analysis. The Congressional Budget Office cost estimate puts implementation at $43 million over the 2023–2028 period and notes civil monetary penalties of up to $250,000, and the report closes with changes in existing law.
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“Small Business 7(a) Loan Agent Transparency Act — House Report 118–100 (June 5, 2023).”
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118TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
1st Session 118–100
SMALL BUSINESS 7(A) LOAN AGENT TRANSPARENCY ACT
JUNE 5, 2023.—Committed to the Committee of the Whole House on the State of
the Union and ordered to be printed
Mr. WILLIAMS of Texas, from the Committee on Small Business,
submitted the following
R E P O R T
[To accompany H.R. 1651]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the bill
(H.R. 1651) to amend the Small Business Act to establish require-
ments for 7(a) agents, and for other purposes, having considered
the same, reports favorably thereon without amendment and rec-
ommends that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 1
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 3
IV. Committee Consideration ........................................................................... 3
V. Committee Votes ......................................................................................... 4
VI. Section-by-Section of H.R. 1651 ................................................................. 7
VII. Congressional Budget Office Cost Estimate ............................................. 7
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 9
IX. Oversight Findings & Recommendations .................................................. 9
X. Performance Goals and Objectives ............................................................ 9
XI. Statement of Duplication of Federal Programs ........................................ 10
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 10
XIII. Federal Mandates Statement ..................................................................... 10
XIV. Federal Advisory Committee Statement ................................................... 10
XV. Applicability to Legislative Branch ........................................................... 10
XVI. Statement of Constitutional Authority ...................................................... 10
XVII. Changes in Existing Law, Made by the Bill, As Reported ...................... 10
I. PURPOSE AND BILL SUMMARY
The purpose of H.R. 1651, the ‘‘Small Business 7(a) Loan Agent
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Transparency Act’’, is to establish a registration system with
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unique identifiers for 7(a) agents to help the Small Business Ad-
ministration’s (SBA) Office of Credit Risk Management (OCRM)
track and evaluate the performance of 7(a) loans generated through
loan agent activity. H.R. 1651 also enhances OCRM’s and the SBA
Lender Oversight Committee’s (LOC) enforcements authority with
respect to loan agents.
II. NEED FOR LEGISLATION
H.R. 1651 was introduced by Rep. Dean Phillips (D–MN) and
Rep. Dan Meuser (R–PA) on March 17, 2023 to improve SBA’s
oversight of loan agent and broker activity in the 7(a) Loan Guar-
anty Program (7(a) program). A prospective borrower or a lender
sometimes may pay for the assistance of a loan agent to prepare
documentation for an SBA loan application and/or refer the bor-
rower to a lender. While loan agents can provide a useful function
in bringing borrowers and lenders together and facilitating loan
transactions, previous OIG audits and investigations have identi-
fied fraud schemes perpetrated by loan agents for hundreds of mil-
lions of dollars—showing that the SBA could not effectively identify
and track loan agent involvement in its 7(a) and 504 loan port-
folios. Tracking such agents is crucial in managing the portfolios
because many lenders rely on the services of fee-based and other
third-party agents to help originate, close, service, and liquidate
SBA loans.1
Authorized by section 7(a) of the Small Business Act, the SBA’s
7(a) program is the agency’s flagship loan program. Private sector
lenders (mostly banks and credit unions but also some non-deposi-
tory lenders) originate commercial and working capital loans of up
to $5 million to small businesses who cannot access credit else-
where. SBA guarantees 50 to 90 percent of each 7(a) loan made,
depending on loan characteristics, assuring the lender that if a bor-
rower defaults on the loan, SBA will purchase the loan and the
lender will receive an agreed-upon portion of the outstanding bal-
ance. SBA also administers several subprograms within the 7(a)
program that offer streamlined and expedited loan procedures for
different groups of borrowers, including the SBA Express, Export
Express, and Community Advantage Pilot programs. Although
these subprograms have their own distinguishing eligibility re-
quirements, terms, and benefits, they operate under the 7(a) pro-
gram’s authorization.
For the majority of 7(a) loans, SBA relies on lenders with dele-
gated authority to process and service loans, and ensure borrowers
meet the program’s eligibility requirements. In FY2022, SBA ap-
proved 47,678 7(a) loans for a total of over $25.7 billion, with an
average loan size of $539,033.2 Increased risk to SBA’s business
loan programs introduced by loan agents and brokers has been con-
sistently cited by SBA’s OIG as a top management and perform-
ance challenge facing the agency, most recently in FY 2023.3 The
1 U.S. SMALL BUS. ADMIN. OFFICE OF INSPECTOR GEN., TOP MANAGEMENT AND PERFORMANCE
CHALLENGES FACING THE SMALL BUSINESS ADMINISTRATION IN FISCAL YEAR 2023, 21–22 (Oct.
14, 2022).
2 Press Release, U.S. Small Business Administration, SBA Announces End-of-Year Capital
Benchmarks (Dec. 14, 2022).
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3 U.S. SMALL BUS. ADMIN. OFFICE OF INSPECTOR GEN., TOP MANAGEMENT AND PERFORMANCE
CHALLENGES FACING THE SMALL BUSINESS ADMINISTRATION IN FISCAL YEAR 2023, 21–22 (Oct.
14, 2022).
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OIG notes that further improvements are necessary to ensure pro-
gram integrity and mitigate the risk of fraud and loss in the loan
programs.4
Since loan agent involvement in the 7(a) program is significant,
it is important for SBA to have oversight tools that monitor loan
agent involvement in this sizeable program. A previous OIG anal-
ysis determined that 7(a) loans made in which a lender paid a re-
ferral fee to a loan agent defaulted at a rate 28 percent higher than
loans where no referral fee was reported. Furthermore, OIG identi-
fied that agents have targeted multiple SBA lenders, who would be
unaware of loan agents’ past performance or activity with other
lenders. The Committee agrees with OIG that though lenders bear
primary responsibility for monitoring their agents, only SBA is po-
sitioned to aggregate loan agent portfolios, evaluate their perform-
ance, and inform lenders and policymakers about concerning pro-
gram risks or trends. Companion legislation (H.R. 1644, the ‘‘Small
Business 7(a) Loan Agent Transparency Act’’) would require OCRM
to compile loan agent data using a registration system that assigns
each agent a unique identifier. H.R. 1651 requires a report to Con-
gress regarding such data, including an analysis of the perform-
ance, cost, and risk associated with loan agent activity in the 7(a)
program.
III. HEARINGS
In the 118th Congress, the Committee held three hearings exam-
ining the issues covered in H.R. 1651. On April 19, 2023, during
the Subcommittee on Oversight Investigations and Regulations
hearing, ‘‘Office of Inspector General Reports to Congress on Inves-
tigations of SBA Programs’’ the Inspector General testified to the
Committee that the SBA will face significant challenges managing
increased loan volume going forward, as well as significant staff
shortages within the department overseeing SBLCs.
On May 10, 2023, during the Full Committee Hearing ‘‘Taking
on More Risk: Examining the SBA’s Changes to the 7(a) Lending
Program Part I’’ both Republican and Democrat members of the
Committee expressed concerns with two recent SBA Final Rules
that would add significant risk to the integrity of the 7(a) Program.
Specifically, how lifting the licensing moratorium on SBLCs and
eliminating long-standing loan underwriting criteria will create
ripe conditions for an increase in defaulted loans. Further, on May
17, 2023, during the Full Committee Hearing, ‘‘Taking on More
Risk: Examining the SBA’s Changes to the 7(a) Lending Program
Part II’’ one of the witnesses noted that broadening access to cap-
ital is a worthy goal but that the SBA’s proposals change too much
too soon in an uncontrolled environment.
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on May 23, 2023, and ordered H.R. 1651 fa-
vorably reported to the House of Representatives. During the
markup no amendments were offered.
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4 Id.
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V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list the recorded votes on the mo-
tion to report legislation and amendments thereto. The Committee
voted to favorably report H.R. 1651 to the House of Representatives
at 2:41 p.m.
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VI. SECTION-BY-SECTION OF H.R. 1651
Section 1. Short title
This Act may be cited as the ‘‘Small Business 7(a) Loan Agent
Transparency Act’’.
Section 2. Requirements for 7(a) agents
This section adds 7(a) agents as entities against whom OCRM
and LOC may take a formal or informal enforcement action, which
improves SBA’s ability to hold noncompliant agents accountable.
This section also requires OCRM to establish a registration system
for 7(a) agents that assigns each a unique identifier and collects
data to help OCRM track and evaluate loan performance for loans
generated through loan agent activity. It also requires OCRM to es-
tablish and maintain a database featuring the types of services pro-
vided by different 7(a) agents. This would improve SBA’s ability to
assess the role agents and brokers play in providing access to cap-
ital through the 7(a) program, as well as help it monitor risk asso-
ciated with loan agent activity. Finally, this section requires 7(a)
agents to register in the system before providing services to a lend-
er or borrower, and to pay an annual registration fee to OCRM.
VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to 3(c)(3) of rule XIII of the Rules of the House of Rep-
resentatives, the Committee adopts as its own the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to section 402 of the Congressional Budget Act of 1974.
The bill would:
• Require the Small Business Administration (SBA) to es-
tablish a registration system for agents assisting small busi-
nesses with applying for loans under the SBA’s 7(a) loan pro-
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gram
Estimated budgetary effects would mainly stem from:
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• Spending subject to appropriation to establish and main-
tain a registration system for agents working on 7(a) loans
• Collections of annual registration fees and civil monetary
penalties, both of which are classified as revenues
• Direct spending of annual registration fees
Bill summary: H.R. 1651 would require the Small Business Ad-
ministration (SBA) to supervise agents that help small businesses
to secure loans of up to $5 million that are guaranteed by the SBA
under the 7(a) loan program and to take enforcement action
against any of those agents that are found to violate the Small
Business Act. Agents include attorneys, consultants, and account-
ants that assist small businesses during the 7(a) loan application
process. Those agents would be required to register with the SBA
and to pay annual registration fees. Finally, the bill would require
the SBA to establish and maintain a database of services provided
by agents working on 7(a) loans.
Estimated Federal cost: The estimated budgetary effect of H.R.
1651 is shown in Table 1. The costs of the legislation fall within
budget function 370 (commerce and housing credit).
TABLE 1.—ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 1651
By fiscal year, millions of dollars—
2023–
2023 2024 2025 2026 2027 2028 2028
Estimated Authorization ........................................................... * 8 9 9 9 9 44
Estimated Outlays .................................................................... * 8 8 9 9 9 43
* = between zero and $500,000.
Basis of estimate: CBO assumes that H.R. 1651 will be enacted
near the end of 2023. The bill would take effect six months after
enactment.
Spending subject to appropriation: The bill would require the
SBA to establish and maintain a system to register agents that
help businesses secure 7(a) loans. Using information from the SBA,
CBO estimates that it would cost $20 million over the 2023–2028
period to build and maintain that system. The SBA also would
need contractors to administer the registration program and com-
pile the database. CBO estimates that cost at $23 million over that
same period. In total, CBO estimates, implementing H.R. 1651
would cost $43 million over the 2023–2028 period, assuming appro-
priation of the estimated amounts.
Revenues and direct spending: H.R. 1651 would increase reve-
nues and direct spending by about $1 million over the 2024–2033
period.
Registration Fees. H.R. 1651 would require the SBA to collect an-
nual registration fees from agents. Using information about the
number of agents working on 7(a) loans and assuming that the fee
would be similar to the $40 fee levied by the Appraisal Sub-
committee of the Federal Financial Institutions Examination Coun-
cil, CBO estimates that enacting H.R. 1651 would increase fee col-
lections, which are treated as revenues, by $1 million over the
2024–2033 period. Because the bill would allow the SBA to set the
fee amount, which would be done through the rulemaking process,
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revenues collected under the bill could be higher or lower than
CBO estimates.
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The SBA is authorized to retain and spend some fees, including
the registration fee that would be collected under H.R. 1651. As a
result, CBO estimates that the bill would increase direct spending
by about $1 million over the 2024–2033 period and that the net ef-
fect on the deficit would be negligible.
Civil Penalties. H.R. 1651 would authorize the SBA to take en-
forcement actions and levy civil monetary penalties of up to
$250,000 against agents working on 7(a) loans if they are found to
violate the Small Business Act. CBO estimates that this new au-
thority would increase collections of civil monetary penalties—
which are treated as revenues—by an insignificant amount over
the 2024–2033 period.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act
of 2010 establishes budget-reporting and enforcement procedures
for legislation affecting direct spending or revenues. Over the
2023–2032 period, CBO estimates that enacting the bill would in-
crease both direct spending and revenues by $1 million.
Increase in long-term net direct spending and deficits: None.
Mandates: None.
Estimate prepared by: Federal Costs: David Hughes; Mandates:
Rachel Austin.
Estimate reviewed by: Justin Humphrey, Chief, Finance, Hous-
ing, and Education Cost Estimates Unit; Kathleen FitzGerald,
Chief, Public and Private Mandates Unit; Ann E. Futrell, Senior
Adviser for Budget Analysis.
Estimate approved by: Phillip L. Swagel, Director, Congressional
Budget Office.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX
EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. The Committee does not believe that
there will be any additional costs attributable to this legislation.
H.R. 1651 does not direct new spending, but instead reallocates
funding independently authorized and appropriated.
IX. OVERSIGHT FINDINGS & RECOMMENDATIONS
In accordance with clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the over-
sight findings and recommendations of the Committee on Small
Business with respect to the subject matter contained in the H.R.
1651 are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
With respect to the requirements of clause 3(c)(1) of rule XIII of
the Rules of the House of Representatives, the performance goals
and objectives of H.R. 1651 is to enhance OCRM’s ability to mon-
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itor 7(a) loan agent activity and give OCRM enforcement authority
against noncompliant agents.
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10
XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
of Representatives, no provision of H.R. 1651 is known to be dupli-
cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS, AND
LIMITED TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal man-
dates prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act.
XIV. FEDERAL ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
XV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to clause 7 of rule XII of the Rules of the House, the
Committee finds that the authority for this legislation in Art. I, § 8,
cl.1 of the Constitution of the United States.
XVII. CHANGES IN EXISTING LAW, MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
SMALL BUSINESS ACT
* * * * * * *
SEC. 47. OFFICE OF CREDIT RISK MANAGEMENT.
(a) ESTABLISHMENT.—There is established within the Adminis-
tration the Office of Credit Risk Management (in this section re-
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ferred to as the ‘‘Office’’).
(b) DUTIES.—The Office shall be responsible for supervising—
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11
(1) any lender making loans under section 7(a) (in this sec-
tion referred to as a ‘‘7(a) lender’’);
(2) any Lending Partner or Intermediary participant of the
Administration in a lending program of the Office of Capital
Access of the Administration; øand¿
(3) any small business lending company or a non-Federally
regulated lender without regard to the requirements of section
23ø.¿;
(4) any 7(a) agent.
(c) DIRECTOR.—
(1) IN GENERAL.—The Office shall be headed by the Director
of the Office of Credit Risk Management (in this section re-
ferred to as the ‘‘Director’’), who shall be a career appointee in
the Senior Executive Service (as defined in section 3132 of title
5, United States Code).
(2) DUTIES.—The Director shall be responsible for oversight
of the lenders and participants described in subsection (b), in-
cluding by conducting periodic reviews of the compliance and
performance of such lenders and participants.
(d) SUPERVISION DUTIES FOR 7(A) LENDERS.—
(1) REVIEWS.—With respect to 7(a) lenders, an employee of
the Office shall—
(A) be present for and supervise any such review that is
conducted by a contractor of the Office on the premise of
the 7(a) lender; and
(B) supervise any such review that is not conducted on
the premise of the 7(a) lender.
(2) REVIEW REPORT TIMELINE.—
(A) IN GENERAL.—Notwithstanding any other require-
ments of the Office or the Administrator, the Adminis-
trator shall develop and implement a review report
timeline which shall—
(i) require the Administrator to—
(I) deliver a written report of the review to the
7(a) lender not later than 60 business days after
the date on which the review is concluded; or
(II) if the Administrator expects to submit the
report after the end of the 60-day period described
in clause (i), notify the 7(a) lender of the expected
date of submission of the report and the reason for
the delay; and
(ii) if a response by the 7(a) lender is requested in
a report submitted under subparagraph (A), require
the 7(a) lender to submit responses to the Adminis-
trator not later than 45 business days after the date
on which the 7(a) lender receives the report.
(B) EXTENSION.—The Administrator may extend the
time frame described in subparagraph (A)(i)(II) with re-
spect to a 7(a) lender as the Administrator determines nec-
essary.
(e) ENFORCEMENT AUTHORITY AGAINST 7(a) LENDERS.—
(1) INFORMAL ENFORCEMENT AUTHORITY.—The Director may
take an informal enforcement action against a 7(a) lender or
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7(a) agent if the Director finds that the 7(a) lender or 7(a)
agent has violated a statutory or regulatory requirement under
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12
section 7(a) or any requirement in a Standard Operating Proce-
dures Manual or Policy Notice related to a program or function
of the Office of Capital Access.
(2) FORMAL ENFORCEMENT AUTHORITY.—
(A) IN GENERAL.—With the approval of the Lender Over-
sight Committee established under section 48, the Director
may take a formal enforcement action against any 7(a)
lender or 7(a) agent if the Director finds that the 7(a) lend-
er or 7(a) agent has violated—
(i) a statutory or regulatory requirement under sec-
tion 7(a), including a requirement relating to credit
elsewhere; or
(ii) any requirement described in a Standard Oper-
ating Procedures Manual or Policy Notice, related to a
program or function of the Office of Capital Access.
(B) ENFORCEMENT ACTIONS.—An enforcement action im-
posed on a 7(a) lender or 7(a) agent by the Director under
subparagraph (A) shall be based on the severity or fre-
quency of the violation and may include assessing a civil
monetary penalty against the 7(a) lender or 7(a) agent in
an amount that is not greater than $250,000.
(3) APPEAL BY LENDER.—A 7(a) lender or 7(a) agent may ap-
peal an enforcement action imposed by the Director described
in this subsection to the Office of Hearings and Appeals estab-
lished under section 5(i) or to an appropriate district court of
the United States.
(f) REGULATIONS.—Not later than 1 year after the date of the en-
actment of this section, the Administrator shall issue regulations,
after opportunity for notice and comment, to carry out subsection
(e).
(g) SERVICING AND LIQUIDATION RESPONSIBILITIES.—During any
period during which a 7(a) lender is suspended or otherwise prohib-
ited from making loans under section 7(a), the 7(a) lender shall re-
main obligated to maintain all servicing and liquidation activities
delegated to the lender by the Administrator, unless otherwise
specified by the Director.
(h) PORTFOLIO RISK ANALYSIS OF 7(a) LOANS.—
(1) IN GENERAL.—The Director shall annually conduct a risk
analysis of the portfolio of the Administration with respect to
all loans guaranteed under section 7(a).
(2) REPORT TO CONGRESS.—On December 1, 2018, and every
December 1 thereafter, the Director shall submit to Congress
a report containing the results of each portfolio risk analysis
conducted under paragraph (1) during the fiscal year preceding
the submission of the report, which shall include—
(A) an analysis of the overall program risk of loans guar-
anteed under section 7(a);
(B) an analysis of the program risk, set forth separately
by industry concentration;
(C) without identifying individual 7(a) lenders by name,
a consolidated analysis of the risk created by the indi-
vidual 7(a) lenders responsible for not less than 1 percent
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of the gross loan approvals set forth separately for the
year covered by the report by—
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13
(i) the dollar value of the loans made by such 7(a)
lenders; and
(ii) the number of loans made by such 7(a) lenders;
(D) steps taken by the Administrator to mitigate the
risks identified in subparagraphs (A), (B), and (C);
(E) the number of 7(a) lenders, the number of loans
made, and the gross and net dollar amount of loans made;
(F) the number and dollar amount of total losses, the
number and dollar amount of total purchases, and the per-
centage and dollar amount of recoveries at the Administra-
tion;
(G) the number and type of enforcement actions rec-
ommended by the Director;
(H) the number and type of enforcement actions ap-
proved by the Lender Oversight Committee established
under section 48;
(I) the number and type of enforcement actions dis-
approved by the Lender Oversight Committee; and
(J) the number and dollar amount of civil monetary pen-
alties assessed.
(i) BUDGET SUBMISSION AND JUSTIFICATION.—The Director shall
annually provide, in writing, a fiscal year budget submission for
the Office and a justification for such submission to the Adminis-
trator. Such submission and justification shall—
(1) include salaries and expenses of the Office and the charge
for the lender oversight fees;
(2) be submitted at or about the time of the budget submis-
sion by the President under section 1105(a) of title 31; and
(3) be maintained in an indexed form and made available for
public review for a period of not less than 5 years beginning
on the date of submission and justification.
(j) REGISTRATION SYSTEM FOR 7(a) AGENTS.—
(1) IN GENERAL.—The Director shall establish a registration
system for 7(a) agents that assigns a unique identifier to each
7(a) agent and collects data necessary for the Director to submit
the report required under paragraph (4).
(2) REQUIREMENTS.—A 7(a) agent shall—
(A) register in the system established under paragraph
(1) before providing covered services to a lender or appli-
cant; and
(B) effective 1 year after the date of the enactment of this
subsection, submit an annual fee for such registration to
the Director.
(3) DATABASE.—The Director shall establish and maintain an
electronic database of the types of covered services provided by
each 7(a) agent.
(k) DEFINITIONS.—In this section:
(1) 7 7(a) AGENT.—The term ‘‘7(a) agent’’ means a person who
provides covered services on behalf of a lender or applicant.
(2) COVERED SERVICES.—The term ‘‘covered services’’ means—
(A) assistance with completing an application for a loan
under section 7(a) (including preparing a business plan,
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(B) consulting, broker, or referral services with respect to
a loan under section 7(a).
SEC. 48. LENDER OVERSIGHT COMMITTEE.
(a) ESTABLISHMENT.—There is established within the Adminis-
tration the Lender Oversight Committee (in this section referred to
as the ‘‘Committee’’).
(b) MEMBERSHIP.—The Committee shall consist of at least 8
members selected by the Administrator, of which—
(1) 3 members shall be voting members, 2 of whom shall be
career appointees in the Senior Executive Service (as defined
in section 3132 of title 5, United States Code); and
(2) the remaining members shall be nonvoting members who
shall serve in an advisory capacity on the Committee.
(c) DUTIES.—The Committee shall—
(1) review reports on lender oversight activities;
(2) review formal enforcement action recommendations of the
Director of the Office of Credit Risk Management with respect
to any lender making loans under section 7(a) øand any Lend-
ing Partner or Intermediary participant¿, any 7(a) agent (as
defined in section 47), or any Lending Partner or Intermediary
participant of the Administration in a lending program of the
Office of Capital Access of the Administration;
(3) in carrying out paragraph (2) with respect to formal en-
forcement actions taken under subsection (d) or (e) of section
23, vote to recommend or not recommend action to the Admin-
istrator or a designee of the Administrator;
(4) in carrying out paragraph (2) with respect to any formal
enforcement action not specified under subsection (d) or (e) of
section 23, vote to approve, disapprove, or modify the action;
(5) review, in an advisory capacity, any lender oversight,
portfolio risk management, or program integrity matters
brought by the Director; and
(6) take such other actions and perform such other functions
as may be delegated to the Committee by the Administrator.
(d) MEETINGS.—
(1) IN GENERAL.—The Committee shall meet as necessary,
but not less frequently than on a quarterly basis.
(2) REPORTS.—The Committee shall submit to the Adminis-
trator a report detailing each meeting of the Committee, in-
cluding if the Committee does or does not vote to approve a for-
mal enforcement action of the Director of the Office of Credit
Risk Management with respect to a lender.
* * * * * * *
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