Small Business Lending Fraud Prevention Act
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- Congressional materials
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- Crpt 119Hrpt500
- Case
- Crpt 119Hrpt500
Summary
House of Representatives Report 119–500 from the Committee on Small Business, submitted by Mr. Williams of Texas on February 20, 2026 to accompany H.R. 7401, the Small Business Lending Fraud Prevention Act, together with minority views. The committee reports the bill favorably without amendment, stating it would require SBA employees involved in originating, reviewing or approving loans to certify that they have no conflicts of interest before handling an SBA loan. The report states that the committee ordered the bill reported on February 11, 2026 by a roll call vote of 24 ayes to 0 nos, and that a cost estimate had been requested but not received from the Congressional Budget Office. It includes a section-by-section summary and the standard House rule statements. The minority views, signed by Ranking Member Nydia M. Velázquez, discuss 18 U.S.C. § 208 and support a certification form.
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Full text
119TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
2d Session 119–500
SMALL BUSINESS LENDING FRAUD PREVENTION ACT
FEBRUARY 20, 2026.—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. 7401]
The Committee on Small Business, to whom was referred the bill
(H.R. 7401) to require employees of the Small Business Administra-
tion to certify that the employee does not have any prohibited con-
flicts of interest with respect to loans in which the employee is in-
volved, 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. 7401 ................................................................. 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
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XVI. Statement of Constitutional Authority ...................................................... 5
XVII. Minority Views ............................................................................................ 6
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I. PURPOSE AND BILL SUMMARY
On February 5, 2026, Rep. Dan Meuser (R–PA) and Rep. Maggie
Goodlander (D–NH), introduced H.R. 7401, the Small Business
Lending Fraud Prevention Act. H.R. 7401 strengthens the U.S.
Small Business Administration’s (SBA) conflict of interest rules by
requiring SBA employees to certify that they do not have a conflict
of interest prior to handling an SBA loan, including loan origina-
tion, review, or approval.
II. NEED FOR LEGISLATION
In August 2025, a former SBA employee pled guilty to making
false statements in connection with fraudulent loan applications.
While employed by the SBA in 2021, the employee approved
$550,000 in fraudulent pandemic loans to herself and relatives. The
SBA Office of Inspector General has identified multiple instances
in which SBA employees processed loans to family members or oth-
ers barred under conflict of interest rules.
This bill strengthens SBA’s conflict of interest rules by requiring
SBA employees who process SBA loans to certify, prior to participa-
tion, that they do not have a conflict of interest; that they will im-
mediately disclose and recuse themselves if a conflict is discovered;
and that they understand the rules and regulations regarding con-
flicts of interest.
This quick certification process will act as a safeguard, pre-
venting employees from handling loans when a conflict exists. It
will also provide a clear basis for disciplinary action if employees
make false certifications. Reforming the conflict of interest require-
ments is a necessary step to protect taxpayer dollars and ensure
accountability within the SBA.
III. HEARINGS
On September 16, 2025, the Committee on Small Business held
a hearing examining matters related to H.R. 7401 titled ‘‘Pathway
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 February 11, 2026, and ordered H.R.
7401 to be reported favorably to the House of Representatives by
a roll call vote of 24 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. 7401 to the House of Representatives
at 9:40 a.m.
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VI. SECTION-BY-SECTION OF H.R. 7401
Section 1—Short title
This Act may be cited as the ‘‘Small Business Lending Fraud
Prevention Act.’’
Section 2—Small Business Administration employee conflict of in-
terest certification
This section requires SBA employees who are involved in origi-
nating, reviewing, or approving loans to certify, prior to handling
an SBA loan, that they do not have any conflicts of interest, that
they will inform their supervisor and recuse themselves should any
conflicts arise, and that they understand conflict of interest rules.
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. 7401
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 goal of H.R. 7401
is to strengthen the SBA’s conflict of interest rules.
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. 7401 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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5
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.
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XVII. MINORITY VIEWS
On August 11, 2025, Rena Barrett, of Covington, Georgia, pled
guilty to making false statements in connection with fraudulent
COVID–19 pandemic loan applications of over $500,000. Ms. Bar-
rett became an employee of the Small Business Administration
(SBA) in October 2020, and in May 2021, she submitted a fraudu-
lent Economic Injury Disaster Loan (EIDL) application for
$170,000. The SBA initially declined the application but in July
2021, Ms. Barrett approved the loan for herself, and other loans
submitted by relatives, receiving nearly half of the $550,000
sought. She resigned from the SBA after the fraud was discovered,
and her case was investigated by the Office of Inspector General
(OIG).1 She was sentenced on February 2, 2026, in the Northern
District of Georgia (NDGA) to 14 months imprisonment, followed
by one (1) year of supervised release. Ms. Barrett was also ordered
to pay a $100 special assessment and make restitution in the
amount of $350,849.
Federal employees are required to abide by 18 U.S.C. § 208, a
Criminal Conflict of Interest Statute, as well as 5 C.F.R. Part 2635,
Standards of Ethical Conduct for Employees of the Executive
Branch. The Criminal Conflict of Interest Statute prohibits federal
employees from participating in government matters in which they
have a financial interest. This requirement extends to their spouse
or minor children, their general partners, or any organization in
which the employee serves as an officer, director, trustee, general
partner, or employee.2 The Standards of Ethical Conduct for Em-
ployees of the Executive Branch applies to all employees in the ex-
ecutive branch to ensure federal employees maintain the public’s
trust by adhering to ethical principles that prevent conflict of inter-
est, improper influence, and abuse of public office.3 Violations may
result in disciplinary action including removal, suspension, or rep-
rimand.4
The process worked well in the instance of Ms. Barrett, however,
a certification form will provide an extra layer of security and help
the SBA to more effectively link an action to an associated fraudu-
lent act.
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
1 U.S. DEP’T OF JUST., Former Federal Employee and Two Other Women Plead Guilty in Pan-
demic Fraud Cases, U.S. Attorney’s Office for the N.D. Ga. (Aug. 12, 2025), https://
www.justice.gov/usao-ndga/pr/former-federal-employee-and-two-other-women-plead-guilty-
pandemic-fraud-cases.
2 Acts Affecting a personal financial interest 18 U.S.C. § 208 (2025).
3 5 C.F.R. 2635 (2025).
4 5 U.S.C. § 75 (2025).
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