Capping Excessive Awarding of SBLC Entrants Act of 2025
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- Crpt 119Hrpt107
Summary
House of Representatives Report 119–107 of the 119th Congress, dated May 21, 2025, submitted by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 2987, the Capping Excessive Awarding of SBLC Entrants Act of 2025, or CEASE Act of 2025, together with minority views. The committee reports the bill favorably with an amendment that would add a subsection (k) to Section 23 of the Small Business Act (15 U.S.C. 650) limiting for-profit small business lending companies authorized to make section 7 loans to 16. The report describes the need for legislation, a February 12, 2025 hearing, and the April 30, 2025 markup, and includes the required House rule statements and changes in existing law. The minority views, signed by Ranking Member Nydia M. Velázquez, state that Committee Democrats cannot support the bill in its current form.
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119TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
1st Session 119–107
CAPPING EXCESSIVE AWARDING OF SBLC ENTRANTS ACT
OF 2025
MAY 21, 2025.—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
together with
MINORITY VIEWS
[To accompany H.R. 2987]
The Committee on Small Business, to whom was referred the bill
(H.R. 2987) to amend the Small Business Act to require a limit on
the number of small business lending companies, and for other pur-
poses, having considered the same, reports favorably thereon with
an amendment and recommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 2
IV. Committee Consideration ........................................................................... 2
V. Committee Votes ......................................................................................... 3
VI. Section-by-Section of H.R. 2987 ................................................................. 5
VII. Congressional Budget Office Cost Estimate ............................................. 5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 5
IX. Oversight Findings & Recommendations .................................................. 5
X. Performance Goals and Objectives ............................................................ 5
XI. Statement of Duplication of Federal Programs ........................................ 5
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 6
XIII. Federal Mandates Statement ..................................................................... 6
XIV. Federal Advisory Committee Statement ................................................... 6
XV. Applicability to Legislative Branch ........................................................... 6
XVI. Statement of Constitutional Authority ...................................................... 6
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XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 6
XVIII. Minority Views ............................................................................................ 14
59–006
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The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Capping Excessive Awarding of SBLC Entrants Act
of 2025’’ or the ‘‘CEASE Act of 2025’’.
SEC. 2. LIMITATION ON NUMBER OF SMALL BUSINESS LENDING COMPANIES.
Section 23 of the Small Business Act (15 U.S.C. 650) is amended by adding at
the end the following:
‘‘(k) LIMITATION ON NUMBER OF SMALL BUSINESS LENDING COMPANIES.—The Ad-
ministrator shall ensure that not more than 16 small business lending companies
that are not nonprofit entities are authorized to make loans under section 7 at any
time.’’.
I. PURPOSE AND BILL SUMMARY
On April 24, 2025, Rep. Bresnahan introduced H.R. 2987, the
Capping Excessive Awarding of SBLC Entrants (CEASE) Act. H.R.
2987 limits the number of for-profit Small Business Lending Com-
panies (SBLCs) licensed by the SBA to 16.
II. NEED FOR LEGISLATION
The SBA is authorized to issue government-backed 7(a) loans
through certified depository institutions like banks and credit
unions, as well as certified non-depository SBLCs. Unlike certified
depository institutions, whose primary regulator is the Federal Re-
serve, SBLCs are primarily regulated by the SBA and are not sub-
ject to the same safety and soundness regulations and require-
ments. Currently, the SBA does not have the capabilities to act as
the primary regulatory for a significant number of SBLCs.
In 1981, the SBA instituted its own moratorium on licensing
SBLCs because the agency did not have adequate resources to over-
see and regulate additional SBLCs beyond the existing 14.1 Under
the Biden-Harris Administration, in 2023, the SBA finalized a rule
that lifted the SBA’s self-imposed, 40-year moratorium that limited
licensing on new SBLCs.2 During the 118th Congress, Members of
the House and the Senate expressed bipartisan concerns regarding
this rule due to risks of the integrity of SBA’s loan programs.3
This bill is necessary to restore proper oversight capabilities to
the SBA, while also ensuring that federally regulated lenders, such
as community banks, remain a fundamental pillar of 7(a) lending.
III. HEARINGS
On February 12, 2025, the Committee on Small Business held a
hearing examining matters related to H.R. 2987, titled ‘‘Driving
Economic Growth: SBA Lending Programs and the Vital Role of
Community Banks.’’
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on April 30, 2025, and ordered H.R. 2987,
1 SBA, ‘‘Business Loan Policy; Small Business Lending Companies,’’ 46 Federal Register 41523
(Aug. 17, 1981).
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2 SBA, ‘‘Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the
Requirement for a Loan Authorization,’’ 88 Federal Register 21890 (Apr. 12, 2023).
3 Letter from Roger Williams, et al., Chairman, H. Comm. on Small Bus., to Isabella Casillas
Guzman, Adm’r, U.S. Small Bus. Admin. (May 16, 2023).
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3
as amended, to be reported favorably to the House of Representa-
tives. During the markup, the Committee adopted an amendment
in the nature of a substitute offered by Rep. Bresnahan by voice
vote.
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. 2987, as amended, to the House of
Representatives at 6:16 PM.
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VI. SECTION-BY-SECTION OF H.R. 2987
Section 1—Short title
This Act may be cited as the ‘‘Capping Excessive Awarding of
SBLC Entrants Act’’ or the ‘‘CEASE Act.’’
Section 2—Limitations on number of Small Business Lending Com-
panies
This section limits the maximum number of licensed for-profit
SBLCs to 16.
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
Committee has requested but not received from the Director of the
Congressional Budget Office a cost estimate for the Committee’s
provisions.
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. While the Committee has not received an
estimate of new budget authority contained in the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to Sec. 402 of the Congressional Budget Act of 1974, the Com-
mittee does not believe that there will be any additional costs at-
tributable to this legislation. H.R. 2987 does not direct new spend-
ing, 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 H.R. 2987
are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
With respect to the requirements of clause 3(c)(4) of rule XIII of
the Rules of the House of Representatives, there are no specific
performance goals and objectives of H.R. 2987 applicable.
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. 2987 is known to be dupli-
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cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
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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):
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 (new matter is printed in italics
and existing law in which no change is proposed is shown in
roman):
SMALL BUSINESS ACT
* * * * * * *
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SEC. 23. SUPERVISORY AND ENFORCEMENT AUTHORITY FOR SMALL
BUSINESS LENDING COMPANIES.
(a) IN GENERAL.—The Administrator is authorized—
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(1) to supervise the safety and soundness of small business
lending companies and non-Federally regulated lenders;
(2) with respect to small business lending companies to set
capital standards to regulate, to examine, and to enforce laws
governing such companies, in accordance with the purposes of
this Act; and
(3) with respect to non-Federally regulated lenders to regu-
late, to examine, and to enforce laws governing the lending ac-
tivities of such lenders under section 7(a) in accordance with
the purposes of this Act.
(b) CAPITAL DIRECTIVE.—
(1) IN GENERAL.—If the Administrator determines that a
small business lending company is being operated in an impru-
dent manner, the Administrator may, in addition to any other
action authorized by law, issue a directive to such company to
increase capital to such level as the Administrator determines
will result in the safe and sound operation of such company.
(2) DELEGATION.—The Administrator may not delegate the
authority granted under paragraph (1) except to an Associate
Deputy Administrator.
(3) REGULATIONS.—The Administrator shall issue regulations
outlining the conditions under which the Administrator may
determine the level of capital pursuant to paragraph (1).
(c) CIVIL ACTION.—If a small business lending company violates
this Act, the Administrator may institute a civil action in an appro-
priate district court to terminate the rights, privileges, and fran-
chises of the company under this Act.
(d) REVOCATION OR SUSPENSION OF LOAN AUTHORITY.—
(1) The Administrator may revoke or suspend the authority
of a small business lending company or a non-Federally regu-
lated lender to make, service or liquidate business loans au-
thorized by section 7(a) of this Act—
(A) for false statements knowingly made in any written
submission required under this Act;
(B) for omission of a material fact from any written sub-
mission required under this Act;
(C) for willful or repeated violation of this Act;
(D) for willful or repeated violation of any condition im-
posed by the Administrator with respect to any applica-
tion, request, or agreement under this Act; or
(E) for violation of any cease and desist order of the Ad-
ministrator under this section.
(2) The Administrator may revoke or suspend authority
under paragraph (1) only after a hearing under subsection (f).
The Administrator may delegate power to revoke or suspend
authority under paragraph (1) only to the Deputy Adminis-
trator and only if the Administrator is unavailable to take such
action.
(A) The Administrator, after finding extraordinary cir-
cumstances and in order to protect the financial or legal
position of the United States, may issue a suspension
order without conducting a hearing pursuant to subsection
(f). If the Administrator issues a suspension under the pre-
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ceding sentence, the Administrator shall within two busi-
ness days follow the procedures set forth in subsection (f).
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(B) Any suspension under paragraph (1) shall remain in
effect until the Administrator makes a decision pursuant
to subparagraph (4) to permanently revoke the authority
of the small business lending company or non-Federally
regulated lender, suspend the authority for a time certain,
or terminate the suspension.
(3) The small business lending company or non-Federally
regulated lender must notify borrowers of a revocation and
that a new entity has been appointed to service their loans.
The Administrator or an employee of the Administration des-
ignated by the Administrator may provide such notice to the
borrower.
(4) Any revocation or suspension under paragraph (1) shall
be made by the Administrator except that the Administrator
shall delegate to an administrative law judge as that term is
used in section 3105 of title 5, United States Code, the author-
ity to conduct any hearing required under subsection (f). The
Administrator shall base the decision to revoke on the record
of the hearing.
(e) CEASE AND DESIST ORDER.—
(1) Where a small business lending company, a non-Feder-
ally regulated lender, or other person violates this Act or is en-
gaging or is about to engage in any acts or practices which con-
stitute or will constitute a violation of this Act, the Adminis-
trator may order, after the opportunity for hearing pursuant to
subsection (f), the company, lender, or other person to cease
and desist from such action or failure to act. The Adminis-
trator may delegate the authority under the preceding sen-
tence only to the Deputy Administrator and only if the Admin-
istrator is unavailable to take such action.
(2) The Administrator, after finding extraordinary cir-
cumstances and in order to protect the financial or legal posi-
tion of the United States, may issue a cease and desist order
without conducting a hearing pursuant to subsection (f). If the
Administrator issues a cease and desist order under the pre-
ceding sentence, the Administrator shall within two business
days follow the procedures set forth in subsection (f).
(3) The Administrator may further order such small business
lending company or non-Federally regulated lender or other
person to take such action or to refrain from such action as the
Administrator deems necessary to insure compliance with this
Act.
(4) A cease and desist order under this subsection may also
provide for the suspension of authority to lend in subsection
(d).
(f) PROCEDURE FOR REVOCATION OR SUSPENSION OF LOAN AU-
THORITY AND FOR CEASE AND DESIST ORDER.—
(1) Before revoking or suspending authority under subsection
(d) or issuing a cease and desist order under subsection (e), the
Administrator shall serve an order to show cause upon the
small business lending company, non-Federally regulated lend-
er, or other person why an order revoking or suspending the
authority or a cease and desist order should not be issued. The
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order to show cause shall contain a statement of the matters
of fact and law asserted by the Administrator and the legal au-
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thority and jurisdiction under which a hearing is to be held,
and shall set forth that a hearing will be held before an admin-
istrative law judge at a time and place stated in the order.
Such hearing shall be conducted pursuant to the provisions of
sections 554, 556, and 557 of title 5, United States Code. If
after hearing, or a waiver thereof, the Administrator deter-
mines that an order revoking or suspending the authority or
a cease and desist order should be issued, the Administrator
shall promptly issue such order, which shall include a state-
ment of the findings of the Administrator and the grounds and
reasons therefor and specify the effective date of the order, and
shall cause the order to be served on the small business lend-
ing company, non-Federally regulated lender, or other person
involved.
(2) Witnesses summoned before the Administrator shall be
paid by the party at whose instance they were called the same
fees and mileage that are paid witnesses in the courts of the
United States.
(3) A cease and desist order, suspension or revocation issued
by the Administrator, after the hearing under this subsection
is final agency action for purposes of chapter 7 of title 5,
United States Code. An adversely aggrieved party shall have
20 days from the date of issuance of the cease and desist order,
suspension or revocation, to seek judicial review in an appro-
priate district court.
(g) REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIAL.—
(1) DEFINITION.—In this section, the term ‘‘management offi-
cial’’ means, with respect to a small business lending company
or a non-Federally regulated lender, an officer, director, gen-
eral partner, manager, employee, agent, or other participant in
the management of the affairs of the company’s or lender’s ac-
tivities under section 7(a) of this Act.
(2) REMOVAL OF MANAGEMENT OFFICIAL.—
(A) NOTICE.—The Administrator may serve upon any
management official a written notice of its intention to re-
move that management official if, in the opinion of the Ad-
ministrator, the management official—
(i) willfully and knowingly commits a substantial
violation of—
(I) this Act;
(II) any regulation issued under this Act;
(III) a final cease-and-desist order under this
Act; or
(IV) any agreement by the management official,
the small business lending company or non-Feder-
ally regulated lender under this Act; or
(ii) willfully and knowingly commits a substantial
breach of a fiduciary duty of that person as a manage-
ment official and the violation or breach of fiduciary
duty is one involving personal dishonesty on the part
of such management official.
(B) CONTENTS OF NOTICE.—A notice under subparagraph
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(A) shall contain a statement of the facts constituting
grounds therefor and shall fix a time and place at which
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a hearing, conducted pursuant to sections 554, 556, and
557 of title 5, United States Code, will be held thereon.
(C) HEARING.—
(i) TIMING.—A hearing under subparagraph (B) shall
be held not earlier than 30 days and later than 60
days after the date of service of notice of the hearing,
unless an earlier or a later date is set by the Adminis-
trator at the request of—
(I) the management official, and for good cause
shown; or
(II) the Attorney General.
(ii) CONSENT.—Unless the management official ap-
pears at a hearing under this paragraph in person or
by a duly authorized representative, the management
official shall be deemed to have consented to the
issuance of an order of removal under subparagraph
(A).
(D) ORDER OF REMOVAL.—
(i) IN GENERAL.—In the event of consent under sub-
paragraph (C)(ii), or if upon the record made at a
hearing under this subsection, the Administrator finds
that any of the grounds specified in the notice of re-
moval has been established, the Administrator may
issue such orders of removal from office as the Admin-
istrator deems appropriate.
(ii) EFFECTIVENESS.—An order under clause (i)
shall—
(I) take effect 30 days after the date of service
upon the subject small business lending company
or non-Federally regulated lender and the man-
agement official concerned (except in the case of
an order issued upon consent as described in sub-
paragraph (C)(ii), which shall become effective at
the time specified in such order); and
(II) remain effective and enforceable, except to
such extent as it is stayed, modified, terminated,
or set aside by action of the Administrator or a re-
viewing court in accordance with this section.
(3) AUTHORITY TO SUSPEND OR PROHIBIT PARTICIPATION.—
(A) IN GENERAL.—In order to protect a small business
lending company, a non-Federally regulated lender or the
interests of the Administration or the United States, the
Administrator may suspend from office or prohibit from
further participation in any manner in the management or
conduct of the affairs of a small business lending company
or a non-Federally regulated lender a management official
by written notice to such effect served upon the manage-
ment official. Such suspension or prohibition may prohibit
the management official from making, servicing, review-
ing, approving, or liquidating any loan under section 7(a)
of this Act.
(B) EFFECTIVENESS.—A suspension or prohibition under
subparagraph (A)—
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(i) shall take effect upon service of notice under
paragraph (2); and
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11
(ii) unless stayed by a court in proceedings author-
ized by subparagraph (C), shall remain in effect—
(I) pending the completion of the administrative
proceedings pursuant to a notice of intention to re-
move served under paragraph (2); and
(II) until such time as the Administrator dis-
misses the charges specified in the notice, or, if an
order of removal or prohibition is issued against
the management official, until the effective date of
any such order.
(C) JUDICIAL REVIEW OF SUSPENSION PRIOR TO HEAR-
ING.—Not later than 10 days after a management official
is suspended or prohibited from participation under sub-
paragraph (A), the management official may apply to an
appropriate district court for a stay of the suspension or
prohibition pending the completion of the administrative
proceedings pursuant to a notice of intent to remove
served upon the management official under paragraph (2).
(4) AUTHORITY TO SUSPEND ON CRIMINAL CHARGES.—
(A) IN GENERAL.—If a management official is charged in
any information, indictment, or complaint authorized by a
United States attorney, with a felony involving dishonesty
or breach of trust, the Administrator may, by written no-
tice served upon the management official, suspend the
management official from office or prohibit the manage-
ment official from further participation in any manner in
the management or conduct of the affairs of the small
business lending company or non-Federally regulated lend-
er.
(B) EFFECTIVENESS.—A suspension or prohibition under
subparagraph (A) shall remain in effect until the informa-
tion, indictment, or complaint is finally disposed of, or
until terminated by the Administrator or upon an order of
a district court.
(C) AUTHORITY UPON CONVICTION.—If a judgment of con-
viction with respect to an offense described in subpara-
graph (A) is entered against a management official, then
at such time as the judgment is not subject to further judi-
cial review (and for purposes of this subparagraph shall
not include any petition for a writ of habeas corpus), the
Administrator may issue and serve upon the management
official an order removing the management official, effec-
tive upon service of a copy of the order upon the small
business lending company or non-Federally regulated lend-
er.
(D) AUTHORITY UPON DISMISSAL OR OTHER DISPOSITION.—
A finding of not guilty or other disposition of charges de-
scribed in subparagraph (A) shall not preclude the Admin-
istrator from instituting proceedings under subsection (e)
or (f).
(5) NOTIFICATION TO SMALL BUSINESS LENDING COMPANY OR
A NON-FEDERALLY REGULATED LENDER.—Copies of each notice
required to be served on a management official under this sec-
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tion shall also be served upon the small business lending com-
pany or non-Federally regulated lender involved.
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12
(6) FINAL AGENCY ACTION AND JUDICIAL REVIEW.—
(A) ISSUANCE OF ORDERS.—After a hearing under this
subsection, and not later than 30 days after the Adminis-
trator notifies the parties that the case has been submitted
for final decision, the Administrator shall render a decision
in the matter (which shall include findings of fact upon
which its decision is predicated), and shall issue and cause
to be served upon each party to the proceeding an order
or orders consistent with this section. The decision of the
Administrator shall constitute final agency action for pur-
poses of chapter 7 of title 5, United States Code.
(B) JUDICIAL REVIEW.—An adversely aggrieved party
shall have 20 days from the date of issuance of the order
to seek judicial review in an appropriate district court.
(h) APPOINTMENT OF RECEIVER.—
(1) In any proceeding under subsection (f)(4) or subsection
(g)(6)(C), the court may take exclusive jurisdiction of a small
business lending company or a non-Federally regulated lender
and appoint a receiver to hold and administer the assets of the
company or lender.
(2) Upon request of the Administrator, the court may appoint
the Administrator as a receiver under paragraph (1).
(i) POSSESSION OF ASSETS.—
(1) If a small business lending company or a non-Federally
regulated lender is not in compliance with capital require-
ments or is insolvent, the Administrator may take possession
of the portfolio of loans guaranteed by the Administrator and
sell such loans to a third party by means of a receiver ap-
pointed under subsection (h).
(2) If a small business lending company or a non-Federally
regulated lender is not in compliance with capital require-
ments or is insolvent or otherwise operating in an unsafe and
unsound condition, the Administrator may take possession of
servicing activities of loans that are guaranteed by the Admin-
istrator and sell such servicing rights to a third party by
means of a receiver appointed under subsection (h).
(j) PENALTIES AND FORFEITURES.—
(1) Except as provided in paragraph (2), a small business
lending company or a non-Federally regulated lender which
violates any regulation or written directive issued by the Ad-
ministrator regarding the filing of any regular or special report
shall pay to the United States a civil penalty of not more than
$5,000 for each day of the continuance of the failure to file
such report, unless it is shown that such failure is due to rea-
sonable cause and not due to willful neglect. The civil penalties
under this subsection may be enforced in a civil action brought
by the Administrator. The penalties under this subsection shall
not apply to any affiliate of a small business lending company
that procures at least 10 percent of its annual purchasing re-
quirements from small manufacturers.
(2) The Administrator may by rules and regulations that
shall be codified in the Code of Federal Regulations, after an
opportunity for notice and comment, or upon application of an
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interested party, at any time previous to such failure, by order,
after notice and opportunity for hearing which shall be con-
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ducted pursuant to sections 554, 556, and 557 of title 5, United
States Code, exempt in whole or in part, any small business
lending company or non-Federally regulated lender from para-
graph (1), upon such terms and conditions and for such period
of time as it deems necessary and appropriate, if the Adminis-
trator finds that such action is not inconsistent with the public
interest or the protection of the Administration. The Adminis-
trator may for the purposes of this section make any alter-
native requirements appropriate to the situation.
(k) LIMITATION ON NUMBER OF SMALL BUSINESS LENDING COM-
PANIES.—The Administrator shall ensure that not more than 16
small business lending companies that are not nonprofit entities are
authorized to make loans under section 7 at any time.
* * * * * * *
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XVIII. MINORITY VIEWS
H.R. 2987, the ‘‘Capping Excessive Awarding of SBLC Entrants
Act,’’ or ‘‘CEASE Act,’’ introduced by Representative Rob
Bresnahan (R, PA) places a statutory moratorium on the number
of Small Business Lending Company (SBLC) licenses that can be
issued by the U.S. Small Business Administration (BA) at sixteen.
SBLCs are non-depository lending institutions that are author-
ized by the SBA to make 7(a) loans nationwide up to the pro-
grammatic cap of $5 million per small business. There are cur-
rently sixteen entities that have been awarded SBLC licenses to
make 7(a) program loans.
There has been bipartisan, bicameral, concern about the SBA’s
ability to issue additional SBLC licenses for more than two years.
Committee Democrats, first expressed concern about the SBA’s de-
cision to amend its regulations to lift its previous moratorium on
the licensing of new SBLCs, after the SBA made the announcement
in April 2023, as part of its SBLC Moratorium Recession and Re-
moval of the Requirement for a Loan Authorization rule.1
Prior to finalization of the SBLC rule, the SBA had placed a mor-
atorium on licensing new SBLCs since 1982, as it believed it did
not have the necessary resources to properly supervise any new en-
trants into the program. Prior to adoption of the rule, the only way
for an interested lender to obtain an SBLC license was to acquire
one from one of the fourteen license holders in existence at the
time. Although there is no cap on the number of licenses that can
be issued under the SBLC rule, in the proposed rule, the SBA stat-
ed that based on the oversight capacity it had at the time, it be-
lieved it had the ability to license and supervise three new SBLCs.2
On Number 1, 2023, the SBA announced that it was granting
three new SBLC licenses to lending companies.3 Arkansas Capital
Corporation, Alaska Growth Capital BIDCO, Inc., and Funding Cir-
cle were the three companies granted SBLC lienees.4 Shortly after
being granted an SBLC license, Funding Circle’s U.K.-based parent
company announced that it was selling its U.S.-subsidiary after the
U.S.-based company reported an annual loss of approximately $5
million in 2023.5 Funding Circle ultimately decided to return its
newly granted SBLC license to the SBA upon the sale of its U.S.-
subsidiary to Ready Capital, another SBLC company.6
1 88 Fed. Reg. 21890 (April 12, 2023).
2 87 Fed. Reg. 66963. Small Business Lending Company (SBLC) Moratorium Rescission and
Removal of the Requirement for a Loan Authorization. Pg. 66964. (November 7, 2022).
3 U.S. SMALL BUSINESS ADMINISTRATION. ‘‘Biden-Harris Administration Takes Historic
Step in Expanding Access to Capital and Filling Lending Gaps in Underserved Communities.’’
(Archived New Release 23–86). (Nov. 1, 2023).
4 Id.
5 CHAKRAVARTY, RAJASHREE. ‘‘Funding Circle Sells its US Unit, Returns SBLC License.’’
BANKING DIVE (Jun. 26, 2024).
6 Id.
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(14)
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During the Committee’s markup session, Representative
Bresnahan, the sponsor of H.R. 2987, stated that H.R. 2987 would
statutorily limit the number of SBLC licenses at sixteen and no
currently awarded SBLC licenses would be impacted.
Given the controversy and upheaval associated with the award-
ing of a SBLC license to Funding Circle, Committee Democrats also
believe it is worth exploring the necessity of statutorily codifying
the number of SBLC licenses at the currently issued number of six-
teen. However, the text of H.R. 2987 is silent as to the morato-
rium’s applicability to currently existing Community Advantage
SBLC licenses.
The Community Advantage program (CA program) began oper-
ations in February 2011, as an SBA pilot program. The program
is designed to facilitate smaller-dollar loans to small businesses
that are new businesses or located in an underserved community.
As part of the SBLC rule in 2023, the SBA transitioned the CA
program from its original form as a pilot to a specifically des-
ignated Community Advantage SBLC-licensed program. CA lenders
who continued to be interested in making loans under the program
were required to register with the SBA as CA SBLCs. Thus far,
143 CA lenders have registered with the SBA as CA SBLCs.7
The CA program has been hugely successful in facilitating small-
er-dollar loans to small businesses that are new or located in an
underserved community. In FY 2024, the Community Advantage
program issued 1,118 loans valued at more than $196 million, with
an average loan size of approximately $175,700.8 Thus far in FY
2025, CA lenders have issued 800 loans, valued at approximately
$132 million, with an average loan size of approximately $165,300.9
Given the CA program’s demonstrated track record of bringing
smaller-dollar capital awards to new and underserved small busi-
ness, Committee Democrats, have long championed the program.
Last Congress, Representative Judy Chu (D, CA) and I made sev-
eral efforts to work with the Republican-majority to permanently
codify the program, but those efforts proved unsuccessful.
Committee Democrats believe the CA program needs to continue
to grow and lenders with an interest in participating in the pro-
gram need to be awarded a CA SBLC license, if they meet all the
programmatic requirements for licensure. I am concerned that HR
2987’s textual silence as to the SBLC moratorium’s applicability to
the CA SBLC program could be interpreted by the Trump Adminis-
tration or a future Presidential Administration as Congress’ direc-
tive to the SBA to limit the number of CA SBLC licenses or even
shutdown the program altogether. That could not be further from
the truth.
The standard practice would be for outstanding questions associ-
ated with legislative text to be answered as part of a committee
hearing with the SBA’s leadership or industry participants. Yet no
such hearing on this legislation has been held. Committee Demo-
crats opposed the legislation because of a lack of engagement with
7 Information provided by The Mission Lenders Working Group. (Provided on January 29,
2025). On file with Small Business Committee Staff.
8 U.S. SMALL BUS. ADMIN., 7(a) & 504 Summary Report, (Data as of: Apr. 25, 2025). (Last
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Accessed: Apr. 25, 2025).
9 Id.
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16
the SBA, all necessary industry partners, and a due diligence re-
view required to support the legislation.
So, while Committee Democrats remain concerned about the
SBA’s ability to award an unlimited number of new SBLC licenses,
central questions regarding the legislation’s text remain and there-
fore Democrats cannot support the legislation in its current form.
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
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