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7(a) Loan Agent Oversight Act (2025 Report)

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Congressional materials
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Crpt 119Hrpt33
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Crpt 119Hrpt33

Summary

House Report 119–33 of the 119th Congress, 1st Session, submitted March 24, 2025 by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 1804, the 7(a) Loan Agent Oversight Act. The committee reports the bill favorably without amendment; the bill requires the SBA's Office of Credit Risk Management to submit an annual report to Congress on the performance, cost and risk of 7(a) loans generated through loan agent activity. The report states that nearly 15 percent of 7(a) loans include a loan agent and cites more than $335 million in documented loan agent fraud over the last decade. It records a hearing on February 12, 2025 and markup on March 5, 2025, reprints changes to section 47 of the Small Business Act, and closes with minority views signed by Ranking Member Nydia M. Velázquez.

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Full text

                                                                                  119TH CONGRESS                                                                                            REPORT
                                                                                                 " HOUSE OF REPRESENTATIVES                                                        !
                                                                                     1st Session                                                                                            119–33




                                                                                                           7(A) LOAN AGENT OVERSIGHT ACT



                                                                                       MARCH 24, 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. 1804]

                                                                                    The Committee on Small Business, to whom was referred the bill
                                                                                  (H.R. 1804) to amend the Small Business Act to require a report
                                                                                  on 7(a) agents, and for other purposes, having considered the same,
                                                                                  reports favorably thereon without amendment and recommends
                                                                                  that the bill 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 .........................................................................................             2
                                                                                     VI. Section-by-Section of H.R. 1804 .................................................................                     4
                                                                                    VII. Congressional Budget Office Cost Estimate .............................................                               4
                                                                                   VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures                                                     4
                                                                                     IX. Oversight Findings & Recommendations ..................................................                               4
                                                                                      X. Performance Goals and Objectives ............................................................                         4
                                                                                     XI. Statement of Duplication of Federal Programs ........................................                                 4
                                                                                    XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
                                                                                            Benefits .....................................................................................................     5
                                                                                   XIII. Federal Mandates Statement .....................................................................                      5
                                                                                    XIV. Federal Advisory Committee Statement ...................................................                              5
                                                                                     XV. Applicability to Legislative Branch ...........................................................                       5
                                                                                    XVI. Statement of Constitutional Authority ......................................................                          5
                                                                                   XVII. Changes in Existing Law Made by the Bill, As Reported .......................                                         5




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                                                                                  XVIII. Minority Views ............................................................................................          10

                                                                                         59–006




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                                                                                                               I. PURPOSE AND BILL SUMMARY
                                                                                    On March 3, 2025, Rep. Meuser, along with Rep. McIver, intro-
                                                                                  duced H.R. 1804, 7(a) Loan Agent Oversight Act. H.R. 1804 re-
                                                                                  quires the Small Business Administration’s (SBA) Office of Credit
                                                                                  Risk Management (OCRM) to submit an annual report to Congress
                                                                                  regarding the performance and risk associated with 7(a) loans gen-
                                                                                  erated through loan agent activity.
                                                                                                                 II. NEED FOR LEGISLATION
                                                                                     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 originate commercial and working capital loans of up to $5
                                                                                  million to small businesses that cannot access credit elsewhere.
                                                                                     Nearly 15 percent of all 7(a) loans include a loan agent, though
                                                                                  that percentage declined during the COVID–19 pandemic. Unfortu-
                                                                                  nately, investigations have identified increased fraud risk using
                                                                                  7(a) loan agents and has reported that over the last decade with
                                                                                  more than $335 million in documented loan agent fraud. This risk
                                                                                  has been consistently cited as a top management and performance
                                                                                  challenge facing the SBA, and most recently in FY2024.
                                                                                     Though lenders bear primary responsibility for monitoring their
                                                                                  agents, only the SBA is positioned to aggregate loan agent port-
                                                                                  folios, evaluate their performance, and inform lenders and policy
                                                                                  makers about distressing program risk or trends.
                                                                                     The reporting requirements in H.R. 1804 consists of information
                                                                                  the SBA currently collects but does not utilize.
                                                                                                                           III. HEARINGS
                                                                                    On February 12, 2025, the Committee on Small Business held a
                                                                                  hearing examining matters related to H.R. 1804 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 March 5, 2025, and ordered H.R. 1804
                                                                                  favorably reported to the House of Representatives. During the
                                                                                  markup, no amendments were offered.
                                                                                                                     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. 1804 to the House of Representatives
                                                                                  at 11:45 AM.




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                                                                                                        VI. SECTION-BY-SECTION OF H.R. 1804
                                                                                  Section 1—Short title
                                                                                    This Act may be cited as the ‘‘7(a) Loan Agent Oversight Act.’’
                                                                                  Section 2—Report on 7(a) agents
                                                                                    This section requires OCRM to submit to Congress an annual re-
                                                                                  port that includes the performance, cost, and risk associated with
                                                                                  loans generated through loan agent activity.
                                                                                             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 as the bill requires reporting informa-
                                                                                  tion that the SBA currently collects and tracks in its loan database
                                                                                  E–TRAN. H.R. 1804 does not direct new spending, but instead re-
                                                                                  allocates 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. 1804
                                                                                  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, the performance goals
                                                                                  and objectives of H.R. 1804 are to require SBA’s OCRM to submit
                                                                                  an annual report to Congress on the performance, cost, and risk as-
                                                                                  sociated with 7(a) loans generated through loan agent activity.
                                                                                           XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS




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                                                                                    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
                                                                                  of Representatives, no provision of H.R. 1804 is known to be dupli-
                                                                                  cative of another Federal program, including any program that was




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                                                                                  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):
                                                                                   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 (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. 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-
                                                                                  ferred to as the ‘‘Office’’).
                                                                                    (b) DUTIES.—The Office shall be responsible for supervising—
                                                                                          (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; and
                                                                                          (3) any small business lending company or a non-Federally
                                                                                       regulated lender without regard to the requirements of section
                                                                                       23.
                                                                                    (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-




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                                                                                            spect to a 7(a) lender as the Administrator determines nec-
                                                                                            essary.
                                                                                    (e) ENFORCEMENT AUTHORITY AGAINST 7(a) LENDERS.—




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                                                                                          (1) INFORMAL ENFORCEMENT AUTHORITY.—The Director may
                                                                                        take an informal enforcement action against a 7(a) lender if
                                                                                        the Director finds that the 7(a) lender has violated a statutory
                                                                                        or regulatory requirement under section 7(a) or any require-
                                                                                        ment in a Standard Operating Procedures 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 if the Director finds that the 7(a) lender has vio-
                                                                                             lated—
                                                                                                     (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 by the Director under subparagraph
                                                                                             (A) shall be based on the severity or frequency of the viola-
                                                                                             tion and may include assessing a civil monetary penalty
                                                                                             against the 7(a) lender in an amount that is not greater
                                                                                             than $250,000.
                                                                                          (3) APPEAL BY LENDER.—A 7(a) lender may appeal an en-
                                                                                        forcement action imposed by the Director described in this sub-
                                                                                        section to the Office of Hearings and Appeals established 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




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                                                                                             by industry concentration;
                                                                                                (C) without identifying individual 7(a) lenders by name,
                                                                                             a consolidated analysis of the risk created by the indi-




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                                                                                            vidual 7(a) lenders responsible for not less than 1 percent
                                                                                            of the gross loan approvals set forth separately for the
                                                                                            year covered by the report by—
                                                                                                    (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) ANNUAL REPORT.—
                                                                                         (1) IN GENERAL.—The Director shall submit to Congress, in
                                                                                       addition to the report required under subsection (h)(2), an an-
                                                                                       nual report including, for the calendar year covered by the re-
                                                                                       port—
                                                                                               (A) the number of 7(a) agents assisting applicants for
                                                                                            loans under section 7(a), disaggregated by the type of 7(a)
                                                                                            agents consistent with information reported on the Fee Dis-
                                                                                            closure and Compensation Agreement, or any subsequent
                                                                                            agreement forms that collect such information;
                                                                                               (B) the number of fraudulent loans made for which an
                                                                                            applicant used services of a 7(a) agent;
                                                                                               (C) the purchase rate by the Administrator of loans for
                                                                                            which an applicant used services of a 7(a) agent;
                                                                                               (D) the number and aggregate dollar value of referral
                                                                                            fees paid to 7(a) agents, disaggregated by whether the ap-
                                                                                            plicant or 7(a) lender paid such fees;




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                                                                                               (E) without identifying individual 7(a) agents by name,
                                                                                            a consolidated analysis of the risk created by the individual
                                                                                            7(a) agents responsible for not less than 1 percent of—




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                                                                                                      (i) the dollar value of loans made with the assistance
                                                                                                   of 7(a) agents; and
                                                                                                      (ii) the number of loans made with the assistance of
                                                                                                   7(a) agents;
                                                                                                 (F) an analysis of interest rates on loans for which an ap-
                                                                                              plicant or 7(a) lender used services of an agent; and
                                                                                                 (G) a description of how the Administrator communicates
                                                                                              with 7(a) agents.
                                                                                            (2) DEFINITIONS.—In this subsection:
                                                                                                 (A) 7(A) AGENT.—The term ‘‘7(a) agent’’ means a person
                                                                                              who provides covered services on behalf of a lender or ap-
                                                                                              plicant.
                                                                                                 (B) COVERED SERVICES.—The term ‘‘covered services’’’
                                                                                              means—
                                                                                                      (i) assistance with completing an application for a
                                                                                                   loan under section 7(a) (including preparing a business
                                                                                                   plan, cash flow projections, financial statements, and
                                                                                                   related documents); or
                                                                                                      (ii) consulting, broker, or referral services with re-
                                                                                                   spect to a loan under section 7(a).
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                                                                                                                 XVIII. MINORITY VIEWS
                                                                                                                           BACKGROUND

                                                                                     Authorized by section 7(a) of the Small Business Act, the Small
                                                                                  Business Administration (SBA) 7(a) Loan Guaranty program (7(a)
                                                                                  program) is the agency’s flagship loan program. Private sector lend-
                                                                                  ers (mostly banks but also some non-depository lenders) originate
                                                                                  commercial and working capital loans up to $5 million to small
                                                                                  businesses who cannot access credit elsewhere. For the majority of
                                                                                  7(a) loans, SBA relies on lenders with delegated authority to proc-
                                                                                  ess and service loans, and ensure borrowers meet the program’s eli-
                                                                                  gibility requirements. In FY 2024, the 7(a) program supported a
                                                                                  substantial volume of lending nationally, with over $31.1 billion
                                                                                  across more than 70,000 individual loans.1 Thus far, in FY 2025,
                                                                                  the 7(a) program has issued 33,376 loans valued at
                                                                                  $14,329,900,000.2
                                                                                     Concern about the use of loan agents in the 7(a) program was
                                                                                  first noted in a report published by the SBA’s Office of Inspector
                                                                                  General (OIG) in 1998. The report stated that even though appli-
                                                                                  cants and lenders were increasingly relying on the use of loan
                                                                                  agents for referral and/or loan application services, the SBA could
                                                                                  not determine the level of loan agent involvement in the program.3
                                                                                  Importantly, the report noted that while the increased use of loan
                                                                                  agents helped small businesses gain access to capital, poor over-
                                                                                  sight created an environment susceptible to fraud.4 Following that
                                                                                  report, the need to improve tracking and oversight of 7(a) loan
                                                                                  agents became a consistent focus for the OIG and House Small
                                                                                  Business Committee.
                                                                                     In February 2020, the Committee held a hearing reviewing the
                                                                                  management of SBA’s Office of Credit Risk Management (OCRM).
                                                                                  During the hearing, OCRM’s director testified that approximately
                                                                                  11 percent of the 7(a) loan portfolio was generated through loan
                                                                                  agent activity, but lacked a way to uniquely identify and system-
                                                                                  ically track loan agents, instead relying on lender reviews to obtain
                                                                                  information about loan agents. The OIG also identified the need to
                                                                                  improve oversight of 7(a) agents in reports issued in 2015 and
                                                                                  2021.5
                                                                                     According to a third OIG report issued in October 2023, the SBA
                                                                                  had ‘‘made great progress in resolving’’ the oversight challenges as-
                                                                                    1 U.S. SMALL BUS. ADMIN., 7(a) & 504 Lender Reports, Fiscal Year 2024., https://
                                                                                  careports.sba.gov/views/7a504LenderReport/LenderReport?%3Aembed=yes&%3Atoolbar=no (last
                                                                                  visited Feb. 27, 2025).
                                                                                    2 Id.
                                                                                    3 OFF. OF INSP. GEN., U.S. SMALL BUS. ADMIN., LOAN AGENTS AND THE SECTION 7(A) PROGRAM
                                                                                  (March 31, 1998).
                                                                                    4 Id.
                                                                                    5 OFF. OF INSP. GEN., U.S. SMALL BUS. ADMIN., SBA NEEDS TO IMPROVE ITS OVERSIGHT OF
                                                                                  LOAN AGENTS, (Sep. 25, 2015); OFF. OF INSP. GEN., U.S. SMALL BUS. ADMIN., TOP MANAGEMENT
                                                                                  AND PERFORMANCE CHALLENGES FACING THE SMALL BUSINESS ADMINISTRATION IN FISCAL YEAR




rfrederick on LAP8M3WLY3PROD with HEARING
                                                                                  2021, 15 (Oct. 16, 2020).
                                                                                                                                  (10)




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                                                                                                                                    11

                                                                                  sociated with 7(a) loan agents.6 The agency had improved informa-
                                                                                  tion collected on agents by enhancing its Fee Disclosure and Com-
                                                                                  pensation Agreement (known as Form 159) and requiring such
                                                                                  forms to be submitted electronically through the Capital Access Fi-
                                                                                  nancial System, as well as other steps.7 The OIG determined that
                                                                                  the SBA had made such progress that it decided to close out the
                                                                                  recommendation on the need to improve oversight of 7(a) loan
                                                                                  agents as a top management challenge.8
                                                                                     Because loan agent involvement in the 7(a) program is so signifi-
                                                                                  cant and has been a long-standing concern for the Committee, it is
                                                                                  important for Congress to continue to have oversight tools that
                                                                                  monitor loan agent involvement in the Agency’s largest program.
                                                                                                                         NYDIA M. VELÁZQUEZ,
                                                                                                                                 Ranking Member.

                                                                                                                                        Æ




                                                                                    6 OFF. OF INSP. GEN., U.S. SMALL BUS. ADMIN., TOP MANAGEMENT AND PERFORMANCE CHAL-
                                                                                  LENGES FACING THE SMALL BUSINESS ADMINISTRATION IN FISCAL YEAR 2024, 33 (Oct. 16, 2023).




rfrederick on LAP8M3WLY3PROD with HEARING
                                                                                       7 Id. at 33.
                                                                                       8 Id.




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