504 Program Risk Oversight Act
- Issuer
- Congressional materials
- Document type
- Crpt 119Hrpt404
- Case
- Crpt 119Hrpt404
Summary
House Report 119–404, submitted December 12, 2025 by Representative Williams of Texas from the Committee on Small Business to accompany H.R. 5788, the 504 Program Risk Oversight Act. The Committee reports the bill favorably without amendment and records that it was ordered reported on November 18, 2025 by a roll call vote of 27 ayes to 0 nos. The report describes the bill as requiring the Small Business Administration to conduct an annual risk analysis of the 504 loan portfolio and report to Congress, published no later than 7 days after submission, and it reprints a new section 511 listing eleven required analyses. It states that a Congressional Budget Office cost estimate was requested but not received. Minority views report Fiscal Year 2024 lending of $31.1 billion across 70,242 loans in the 7(a) program and $6.6 billion in the 504/CDC program.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“504 Program Risk Oversight Act.”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/crpt-119hrpt404/
, SHA-256 275ad7247f1d83233bd29fd582c4d68df61b3a803ccd28c9e949105dcca9a28f.Full text
119TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
1st Session 119–404
504 PROGRAM RISK OVERSIGHT ACT
DECEMBER 12, 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. 5788]
The Committee on Small Business, to whom was referred the bill
(H.R. 5788) to amend title V of the Small Business Investment Act
of 1958 to require an annual portfolio risk analysis of loans guaran-
teed under such title, and for other purposes, having considered the
same, reports favorably thereon without amendment and rec-
ommends that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 2
IV. Committee Consideration ........................................................................... 2
V. Committee Votes ......................................................................................... 2
VI. Section-by-Section of H.R. 5788 ................................................................. 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 ............................................................ 5
XI. Statement of Duplication of Federal Programs ........................................ 5
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
rfrederick on LAP6701GR3PROD with HEARING
XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 5
XVIII. Minority Views ............................................................................................ 8
69–006
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6646 E:\HR\OC\HR404.XXX HR404
2
I. PURPOSE AND BILL SUMMARY
On October 17, 2025, Representative Tran, along with Represent-
ative Patronis, introduced H.R. 5788, the 504 Program Risk Over-
sight Act. H.R. 5788 requires the U.S. Small Business Administra-
tion (SBA) to conduct annual risk assessments of the 504 loan port-
folio and provide comprehensive reports to Congress.
II. NEED FOR LEGISLATION
The SBA’s Office of Capital Access (OCA) administers SBA’s
guaranteed lending programs, including the 7(a) loan, the 504 loan,
and the Microloan programs.
The 504 loan program provides long-term, fixed-rate financing of
up to $5.5 million for the acquisition of fixed assets such as land,
buildings, and heavy machinery.1 The SBA’s 504 loans are avail-
able through Certified Development Companies (CDCs), commu-
nity-based nonprofit partners who promote economic development
within their communities.2 This bill would require the SBA to con-
duct annual risk assessments of the 504 loan portfolio and provide
comprehensive reports to Congress. These reports would be made
available to the public within seven days of submission to Con-
gress.
While the SBA already provides Congress with a program risk
analysis of the 7(a) lending program, extending this requirement to
the 504 program would enhance transparency and offer valuable
insight into the health and risks of the program. Greater visibility
into the program helps mitigate risks, support informed policy-
making, and strengthen the long-term sustainability of the pro-
gram.
III. HEARINGS
On September 16, 2025, the Committee on Small Business held
a hearing examining matters related to H.R. 5788 entitled ‘‘Path-
way to Capital: The Role of SBA Lending in Supporting Main
Street America.’’
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on November 18, 2025, and ordered H.R.
5788, to be reported favorably to the House of Representatives by
a roll call vote of 27 ayes to 0 nos.
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. 5788 to the House of Representatives
at 11:42 AM.
rfrederick on LAP6701GR3PROD with HEARING
1 504 Loans, U.S. SMALL BUS. ADMIN., https://www.sba.gov/funding-programs/loans/504-loans
(last visited Nov. 14, 2025).
2 Id.
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR404.XXX HR404
3
rfrederick on LAP6701GR3PROD with HEARING
Insert offset folio 5 here HR404.001
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR404.XXX HR404
4
VI. SECTION-BY-SECTION OF H.R. 5788
Section 1—Short title
This bill may be cited as the ‘‘504 Program Risk Oversight Act.’’
Section 2—Portfolio risk analysis of loan guaranteed under the 504
program
This section requires the SBA Administrator to submit an annual
report to Congress providing a risk analysis of the SBA’s 504 loan
program. The report must be made publicly available no later than
7 days after it is submitted to Congress.
The report must include: an overall program risk analysis; risk
analysis by industry concentration; risk analysis of CDCs respon-
sible for greater than one percent of the total 504 loans; risk anal-
ysis of loans for limited or special purpose properties; steps taken
by the SBA to mitigate identified risks; statistics on the number of
development companies and loan amounts; purchase and charge-off
statistics; and a description of the number and type of enforcement
actions taken against a CDC by the SBA, including civil penalties,
if any.
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. At the
time this report was filed, the Committee has requested but not re-
ceived a cost estimate from the Director of the Congressional Budg-
et Office.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY,
AND TAX EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. 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 section 402 of the Congressional Budget Act of 1974, the
Committee does not believe that there will be any new or increased
costs attributable to this legislation.
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. 5788
are incorporated into the descriptive portions of this report.
rfrederick on LAP6701GR3PROD with HEARING
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR404.XXX HR404
5
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 goal of H.R. 5788
is to improve transparency of the 504 loan program.
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. 5788 is known to be dupli-
cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS,
AND LIMITED TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee will adopt as its own the estimate of the Federal
mandates prepared by the Director of the Congressional Budget Of-
fice 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):
rfrederick on LAP6701GR3PROD with HEARING
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR404.XXX HR404
6
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 INVESTMENT ACT OF 1958
* * * * * * *
TITLE V—LOANS TO STATE AND LOCAL DEVELOPMENT
COMPANIES
* * * * * * *
SEC. 511. PORTFOLIO RISK ANALYSIS.
(a) IN GENERAL.—The Administrator shall annually conduct a
risk analysis of the portfolio of the Administration with respect to
all loans guaranteed under this title.
(b) REPORT TO CONGRESS.—Not later than December 1, 2025, and
annually thereafter, the Administrator shall submit to Congress a
report containing the results of each portfolio risk analysis con-
ducted under subsection (a) during the fiscal year preceding the
submission of the report, which shall include—
(1) an analysis of the overall program risk of loans guaran-
teed under this title;
(2) an analysis of the program risk, set forth separately by in-
dustry concentration;
(3) without identifying individual development companies by
name, a consolidated analysis of the risk created by develop-
ment companies making loans under this title that are respon-
sible for not less than 1 percent of gross loan approvals under
this title, set forth separately by—
(A) the dollar value of the loans made by such develop-
ment companies;
(B) the number of loans made by such development com-
panies; and
(C) an analysis of the program risk for such loans with
a dollar value—
(i) less than or equal to $500,000;
(ii) greater than $500,000 and less than or equal to
$1,000,000;
(iii) greater than $1,000,000 and less than or equal
to $2,000,000; and
(iv) greater than $2,000,000 and less than or equal
to $5,500,000;
(4) an analysis of the program risk for loan guarantees made
under this title for loans that were originated—
(A) less than one year before the date of submission of the
report;
(B) at least one year, but not more than two years before
rfrederick on LAP6701GR3PROD with HEARING
such date; and
(C) more than two years before such date;
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6603 E:\HR\OC\HR404.XXX HR404
7
(5) an analysis of the program risk for loan guarantees made
under this title for loans that were originated—
(A) to a borrower that uses such loan to open a business;
(B) to a borrower not described in subparagraph (A) that
is a business concern that has been in operation for less
than or equal to two years before the date of origination;
and
(C) to a borrower that is a business concern that has been
in operation for more than two years on the date of origina-
tion;
(6) an analysis of the program risk for loan guarantees made
under this title for loans that were originated for limited or spe-
cial purpose properties;
(7) steps taken by the Administrator to mitigate the risks
identified in paragraphs (1), (2), (3), (4), (5), and (6);
(8) the number of development companies, the number of
loans made, and the gross dollar amount of the loans made
under this title;
(9) the number and total dollar amount of purchases by the
Administrator of the principal and interest of loans guaranteed
under this title that are in default, the total dollar amount of
collections recovered on such purchases, and the number and
total dollar amount of charge-offs for such purchases;
(10) the number and type of enforcement actions with respect
to a loan made by a development company under this title rec-
ommended by the Administrator; and
(11) the number and dollar amount of any civil monetary
penalty assessed pursuant to an enforcement action described in
paragraph (10).
(c) AVAILABILITY OF REPORT.—The Administrator shall make
available to the public on a website of the Administration the report
required under subsection (b) not later than 7 days after the Admin-
istrator submits such report to Congress.
(d) LIMITED OR SPECIAL PURPOSE PROPERTY DEFINED.—In this
section, the term ‘‘limited or special purpose property’’ has the mean-
ing given by the Administrator in the guidance titled ‘‘Lender and
Development Company Loan Programs’’ (SOP 50 10 8; as in effect
on June 1, 2025).
* * * * * * *
rfrederick on LAP6701GR3PROD with HEARING
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6601 E:\HR\OC\HR404.XXX HR404
XVIII. MINORITY VIEWS
The Small Business Administration (SBA) administers multiple
loan guarantee programs that provide affordable financing to
America’s small businesses, including the flagship 7(a) program
and the 504/Certified Development Company (CDC) program. The
7(a) program provides loans to small businesses that cannot obtain
financing on reasonable terms and conditions in the conventional
markets; 7(a) loans can be used for working capital, refinancing,
business debt, or purchasing equipment and supplies. In Fiscal
Year 2024 (FY2024), the 7(a) program supported $31.1 billion in
lending across 70,242 individual loans.1 The 504/CDC program is
administered through nonprofit CDCs and provides long-term fixed
rate financing for major fixed assets. In FY2024, the 504/CDC pro-
gram supported $6.6 billion in lending across approximately 6,000
loans.2 Both the 7(a) and 504/CDC programs are intended to be
zero-subsidy, meaning that the cost of administering the programs
should be covered by the fees that the SBA receives for processing
guarantees.
Federal law requires SBA’s Office of Credit Risk Management
(OCRM) to conduct an annual portfolio risk analysis of the 7(a)
program and provide Congress with a detailed report containing
the results.3 The report provides detailed information on the 7(a)
program’s overall risk, the program’s risk set forth by industry con-
centration, the risk created by individual lenders responsible for
not less than 1 percent of the gross loan approvals, the steps taken
by OCRM to mitigate risk, statistics on the loans made, the num-
ber and dollar amount of losses, the enforcement actions rec-
ommended by OCRM, the enforcement actions approved by the
Lender Oversight Committee, and the number and amount of civil
penalties assessed.4 The most recent 7(a) Risk Analysis Report,
provided by the SBA under the Biden-Harris Administration in De-
cember 2024, has given the Committee valuable insights into the
operation and function of the 7(a) program and the risk posed by
rising defaults, particularly in the manufacturing sector.5
Unfortunately, a similar statutory requirement does not exist for
the 504/CDC program. While a rising level of loan defaults in the
504/CDC program does not currently seem to be a concern, and
publicly available information does seem to demonstrate respon-
sible operation of the program,6 without requiring the SBA to con-
duct an annual portfolio risk analysis and providing the results of
1 U.S. SMALL BUSINESS ADMINISTRATION. 7(a) & 504 Lender Report, Fiscal Year 2025. (Last
Accessed: September 2, 2025).
2 Id.
3 15 U.S.C. § 657t(h).
4 Id.
5 U.S. SMALL BUS. ADMIN., FY 2024 7(A) PROGRAM RISK ANALYSIS. (Dec. 1, 2024).
6 U.S. SMALL BUS. ADMIN. Small Business Administration Loan Program Performance. (Last
Updated: September 15, 2025). (Last Accessed: September 18, 2025).
rfrederick on LAP6701GR3PROD with HEARING
(8)
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00008 Fmt 6604 Sfmt 6604 E:\HR\OC\HR404.XXX HR404
9
that analysis in a detailed report, Congress lacks important infor-
mation about the operation of the 504/CDC program.
The 504 Program Risk Oversight Act would provide Congress
with the information it needs in order to fulfill its oversight respon-
sibility by creating a federal statutory requirement for the SBA to
conduct an annual risk analysis of the 504/CDC program and pro-
vide the results of that analysis to Congress, similar to that re-
quired of the 7(a) program. In addition, this bill would require that
the 504/CDC risk analysis and report assess loans originated under
the program for limited or special use properties, as defined by the
SBA in guidance titled ‘‘Lender and Development Company Loan
Programs’’.7 The National Association of Development Companies
(NADCO) supports the bill.
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
rfrederick on LAP6701GR3PROD with HEARING
7 U.S. Small Business Administration SOP 50.10.8: Lender and Development Company Loan
Programs. (June 1, 2025), (Pg. 140).
VerDate Sep 11 2014 01:05 Jan 11, 2026 Jkt 069006 PO 00000 Frm 00009 Fmt 6604 Sfmt 6611 E:\HR\OC\HR404.XXX HR404
File and source
- File
- CRPT-119hrpt404.pdf
- Size
- 248,343 bytes
- SHA-256
- 275ad7247f1d83233bd29fd582c4d68df61b3a803ccd28c9e949105dcca9a28f
- Our copy
- CRPT-119hrpt404.pdf
- Original
- No public link identified.