The publication is reproduced in full below:
504 CREDIT RISK MANAGEMENT IMPROVEMENT ACT OF 2021
Ms. DAVIDS of Kansas. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 1482) to amend the Small Business Act to enhance the Office of Credit Risk Management, to require the Administrator of the Small Business Administration to issue rules relating to environmental obligations of certified development companies, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1482
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``504 Credit Risk Management Improvement Act of 2021''.
SEC. 2. ENHANCEMENTS TO THE OFFICE OF CREDIT RISK MANAGEMENT.
Section 47 of the Small Business Act (15 U.S.C. 657t) is amended--
(1) by striking subsection (b) and inserting the following:
``(b) Duties.--The Office--
``(1) shall be responsible for--
``(A) supervising--
``(i) any lender making loans under section 7(a) (in this section referred to as a `7(a) lender');
``(ii) any Lending Partner or Intermediary participant of the Administration in a lending program of the Office of Capital Access of the Administration;
``(iii) any small business lending company or a non-Federally regulated lender without regard to the requirements of section 23; and
``(iv) any certified development company described under the program established under title V of the Small Business Investment Act of 1958 (referred to in this section as a
`certified development company'), as provided in subsection
(k); and
``(B) conducting file reviews with respect to loan closings under the program established under title V of the Small Business Investment Act of 1958, as provided in subsection
(j); and
``(2) may--
``(A) take formal and informal enforcement actions against a certified development company, as provided in subsection
(l); and
``(B) charge a certified development company a fee, as provided in subsection (m).''; and
(2) by adding at the end the following new subsections:
``(j) Loan Closing File Reviews.--With respect to a loan closing under the program established under title V of the Small Business Investment Act of 1958, the Office shall be responsible for the following:
``(1) Conducting a complete file review of a random selection of all loan closings, the number, frequency, and conduct of which shall be at the discretion of the Office, to ensure program integrity, including a review of the items listed on the Checklist for Complete File Review contained in the appropriate form of the Administration.
``(2) Not later than 60 days after the date on which each complete file review conducted under paragraph (1) is completed, preparing a written report documenting the results of that review, which the Office shall send to--
``(A) the applicable certified development company;
``(B) the designated attorney that closed the loan for the certified development company; and
``(C) the Commercial Loan Service Center.
``(3) If a complete file review conducted under paragraph
(1) reveals a deficiency that could result in a loss to the Administration, requiring the applicable certified development company or the designated attorney to promptly correct the deficiency.
``(k) Supervision of Certified Development Companies.--With respect to the supervision of certified development companies--
``(1) an employee of the Office shall--
``(A) be present for, and supervise, the review of any such company that is conducted by a contractor of the Office on the premises of the company; and
``(B) supervise the review of any such company that is conducted by a contractor of the Office that is not conducted on the premises of the company; and
``(2) the Administrator shall--
``(A) develop a timeline for the review by the Office of certified development companies and the submission of reports regarding those reviews, under which the Administrator shall--
``(i) submit to a certified development company a written report of any review of the company not later than 90 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 90-day period described in clause (i), notify the company of the expected date of submission of the report and the reason for the delay; and
``(B) if a response by a certified development company is requested in a report submitted under subparagraph (A)(i), require the company to submit responses to the Administrator not later than 45 business days after the date on which the company receives the report.
``(l) Enforcement Authority Against Certified Development Companies.--
``(1) Informal enforcement authority.--The Director may take an informal enforcement action against a certified development company if the Director finds that the company has violated a statutory or regulatory requirement or any requirement in a Standard Operating Procedures Manual or Policy Notice relating to a program or function of the Office of Capital Access.
``(2) Formal enforcement authority.--
``(A) In general.--With the approval of the Lender Oversight Committee established under section 48, the Director may take a formal enforcement action against any certified development company if the Director finds that the company has violated--
``(i) a statutory or regulatory requirement, including a requirement relating to the necessary funds for making loans when those funds are not made available to the company from private sources on reasonable terms; or
``(ii) any requirement described in a Standard Operating Procedures Manual or Policy Notice relating to a program or function of the Office of Capital Access.
``(B) Enforcement actions.--The decision to take an enforcement action against a certified development company under subparagraph (A) shall be based on the severity or frequency of the violation and may include assessing a civil monetary penalty against the company in an amount that is not greater than $250,000.
``(3) Failure to submit annual report.--With respect to a certified development company that, as of the date that is 30 days after the date on which the company is required to submit any report, fails to submit that report, the Director may--
``(A) suspend the company from participating in the program established under title V of the Small Business Investment Act of 1958 for a period that is not longer than 30 days; or
``(B) impose a penalty on the company in an amount to be determined by the Director, except that the amount of the penalty shall be not more than $10,000.
``(m) Fee Authority Regarding Certified Development Companies.--
``(1) In general.--Effective one year after the date of the enactment of this subsection, the Office may collect from each certified development company a fee, the amount of which--
``(A) shall be determined on a graduated scale according to the size of the portfolio of the certified development company with respect to the program carried out under title V of the Small Business Investment Act of 1958; and
``(B) shall not exceed the amount that is 1 basis point with respect to the value of the portfolio described in subparagraph (A).
``(2) Payment.--A certified development company on which a fee is imposed under paragraph (1) shall pay the fee from the servicing fees collected by the development company pursuant to regulation.''.
SEC. 3. RULES RELATING TO OBLIGATIONS OF CERTIFIED
DEVELOPMENT COMPANIES UNDER THE NATIONAL
ENVIRONMENTAL POLICY ACT.
(a) In General.--Not later than 180 days after the date of the enactment of this Act, the Administrator of the Small Business Administration shall issue rules to clarify the procedures necessary for an eligible certified development company to comply with the applicable requirements under National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
(b) Rule of Construction.--Nothing in this section shall be construed to modify the requirements of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
(c) Eligible Certified Development Company Defined.--In this section, the term ``eligible certified development company'' means a certified development company defined under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) that receives assistance pursuant to such title.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from Kansas (Ms. Davids) and the gentleman from Missouri (Mr. Luetkemeyer) each will control 20 minutes.
The Chair recognizes the gentlewoman from Kansas.
General Leave
Ms. DAVIDS of Kansas. Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the measure under consideration.
The SPEAKER pro tempore. Is there objection to the request of the gentlewoman from Kansas?
There was no objection.
{time} 1500
Ms. DAVIDS of Kansas. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise in support of the bill before us today, H.R. 1482, the 504 Credit Risk Management Improvement Act, which clarifies the oversight role of the SBA's Office of Credit Risk Management in respect to CDCs.
To improve oversight of the SBA business loan programs, including the 7(a) and 504 loan programs, the agency established the Office of Credit Risk Management--OCRM--within the Office of Capital Access. OCRM conducts periodic reviews of SBA lenders to ensure they are complying with program requirements.
In 2018, Congress passed bipartisan legislation to codify the office and gave it the tools it needs to conduct proper oversight and hold noncompliant lenders accountable.
It was our intent to boost the office's enforcement powers to help minimize the likelihood that business loan programs would face losses and reduce the need for Congress to appropriate funds.
I should point out that these programs are designed to operate at zero subsidy, meaning they come at no cost to the taxpayer, and we intend to keep it that way.
I am pleased that the gentleman from North Carolina, along with the gentlewoman from Minnesota, worked together to bring this bill to life last Congress. This bill clarifies OCRM's oversight role and shifts loan closing file review responsibilities to the office and, in turn, keeps the program running at a zero subsidy. I applaud their bipartisanship and, more importantly, their commitment to America's small businesses.
Madam Speaker, I urge all of my colleagues to vote ``yes,'' and I reserve the balance of my time.
Mr. LUETKEMEYER. Madam Speaker, I yield myself such time as I may consume.
I rise in support of H.R. 1482, the 504 Credit Risk Management Improvement Act of 2021.
I thank the chair again for advancing all these bills that are meant to assist small businesses across the Nation. I also thank the gentleman from North Carolina (Mr. Bishop), the gentlewoman from California (Mrs. Kim), the gentlewoman from Kansas (Ms. Davids), the gentlewoman from Minnesota (Ms. Craig), as well as the gentleman from Ohio (Mr. Chabot) for working in a bipartisan manner to strengthen the 504/CDC loan program.
Government programs, especially government guaranteed loan programs, are only as strong as the oversight that is required.
In order to protect and safeguard American tax dollars, executive branch agencies must have a watchful eye focused on these programs.
The Office of Credit Risk Management is a division at the Small Business Administration that is charged with overseeing many of the government guaranteed lending programs that the SBA offers to small businesses. H.R. 1482 ensures the Office of Credit Risk Management has a trained eye focused on the 504/CDC loan program.
Specifically, the legislation outlines how the office should conduct reviews under the lending program.
Additionally, H.R. 1482 details the enforcement authority of the Office of Credit Risk Management. These enhancements will ensure the program operates effectively and efficiently into the future.
Lastly, the bill requires the SBA to clearly and concisely define how the 504/CDC loan program operates in conjunction with the Nation's environmental laws and rules. Unfortunately, this process currently lacks certainty by the SBA.
Simply put, Federal Government programs require robust oversight and the programs must have clear rules for small businesses. H.R. 1482 addresses both of these issues head on.
Madam Speaker, I urge and recommend all my colleagues to support H.R. 1482, and I reserve the balance of my time.
Ms. DAVIDS of Kansas. Madam Speaker, I reserve the balance of my time.
Mr. LUETKEMEYER. Madam Speaker, I yield such time as he may consume to the gentleman from Ohio (Mr. Chabot), the former chairman of the Small Business Committee.
Mr. CHABOT. Madam Speaker, I rise today in support of H.R. 1482.
I thank my colleague from Minnesota, Representative Angie Craig, for working with me on this bipartisan bill.
I also thank the other cosponsors, Representatives Sharice Davids and Young Kim, for their work; as well as the full chair of the committee, Ms. Velazquez, who I worked with many years either with myself as chair and she as ranking, or her as chair and myself as ranking.
I thank Mr. Luetkemeyer for the great job he is doing. At this point he is the ranking member of the committee. Hopefully he will be chair next time, depending on what the American people think a year and a half down the road.
So what does this legislation do?
A number of things. It streamlines the 504 loan closing process, clarifies the loan closing and oversight process, and enhances the program for small manufacturers. And small manufacturers are absolutely critical in the economy nowadays. And we were actually making great strides in bringing back more and more jobs there until COVID hit. So that is why programs like this are so important to give them the assistance that they need to get those jobs growing once again in that sector of the economy.
The 504 program has been one of the more successful of the SBA--the Small Business Administration--loan programs over the years, and it is really crucial as we recover from COVID-caused hardships of the past year.
The SBA CDC/504 loan program provides the Nation's smallest businesses with long-term and fixed-rate financing. Importantly, it requires that certain economic development criteria are in place to qualify for the program. And job creation and job retention are critical goals of the program.
This bill passed the House last December in the previous Congress, and I am happy to see it on the floor again this Congress. Hopefully we will get this bill signed into law this time and help provide small businesses with the support they need to recover from the pandemic, and hopefully we will be looking at the pandemic in the rearview mirror sooner rather than later.
I thank the Small Business Committee for the great work they are doing on behalf of America's small businesses. It is one of those committees that really does work in a bipartisan manner, Republicans and Democrats working together, and that is absolutely critical if we are going to get anything done.
Madam Speaker, I urge my colleagues to support this bill.
Ms. DAVIDS of Kansas. Madam Speaker, I reserve the balance of my time.
Mr. LUETKEMEYER. Madam Speaker, I yield such time as she may consume to the gentlewoman from California (Mrs. Kim), a really hard worker and a big supporter of small businesses around this country.
Mrs. KIM of California. Madam Speaker, I thank Ranking Member Luetkemeyer for yielding.
I rise in strong support of H.R. 1482, the 504 Credit Risk Management Improvement Act of 2021.
I am proud to have joined my colleagues, Representatives Angie Craig,
Dan Bishop, and Sharice Davids, to introduce this important bipartisan bill.
The Small Business Administration's 504 loan program provides small businesses with affordable long-term financing to purchase major fixed assets, such as machinery and real estate. This bill would ensure that our taxpayers' hard-earned dollars are spent effectively by enhancing oversight responsibilities of the SBA Office of Credit Risk Management.
Our bill will provide the SBA with the tools to enforce penalties for any violation of rules and regulations. By providing the SBA with these tools, we look to strengthen the 504 loan program for many years to come.
Additionally, this bill provides consistent and clear guidance when requiring certain environmental certifications. This change will provide small businesses with certainty about requirements and uniform regulations across the country.
For any Federal program to be successful, Congress and the executive branch must work together to ensure that we have a regulatory framework that is efficient and able to prevent fraud and abuse of taxpayer dollars. I commend my colleagues from both sides of the aisle for their leadership on this important issue.
Madam Speaker, I urge my colleagues on both sides of the aisle to support H.R. 1482.
Ms. DAVIDS of Kansas. Madam Speaker, I continue to reserve the balance of my time.
Mr. LUETKEMEYER. Madam Speaker, I yield such time as he may consume to the gentleman from North Carolina (Mr. Bishop).
Mr. BISHOP of North Carolina. Madam Speaker, I thank the gentleman for yielding.
I rise in support of my legislation, the 504 Credit Risk Management Improvement Act of 2021.
As you may remember, this exact bill passed unanimously last December, and I hope the commonsense measure can pass overwhelmingly again.
For those who do not know about the 504 program, this was one of the first programs established at the Small Business Administration and has been a key tool for economic development.
To receive financing, 504 loan recipients must create jobs or meet public policy goals, like aiding rural development or revitalizing a business district.
In its economic development role, the 504 program has provided access to capital and helped build communities across the country for over six decades.
To ensure the program's continued success and viability for years to come, I partnered with Representative Angie Craig to craft a bill that provides the SBA with the tools necessary to maintain the long-term health of the 504 program.
This bill codifies the SBA's oversight responsibilities for the 504 program and provides the Office of Credit Risk Management with full control of the review process for certified development companies, known as CDCs, that deliver this program.
The legislation also establishes a formal process of communication between the Office of Credit Risk Management and CDCs to facilitate reviews to make sure the SBA is providing timely feedback to CDCs.
Additionally, this legislation requires the SBA to provide clear direction to certified development companies as they navigate environmental rules and regulations.
Finally, this bill will help ensure that the program continues to operate on the fees built into the program.
SBA programs, including the 504 program, have been at the forefront of economic aid to businesses struggling as a result of the COVID-19 pandemic. The SBA core lending programs will continue to play a key role in business recovery.
I am proud to do my part to ensure the 504 program continues to be a lifeline to businesses and communities today and into the future.
I thank Chairwoman Velazquez and Ranking Member Luetkemeyer for their leadership. I thank my colleague, Ms. Craig, for her partnership on this important bill. I also thank Mrs. Young Kim, Ms. Davids, Ms. Tenney, and Mr. Cohen for their support of this bill.
Madam Speaker, I urge my colleagues to support this legislation.
Ms. DAVIDS of Kansas. Madam Speaker, I have no further speakers at this time, and I am prepared to close.
Mr. LUETKEMEYER. Madam Speaker, I yield myself the balance of my time.
Oversight of Federal Government programs is paramount to ensure American taxpayer dollars are used wisely. H.R. 1482 not only increases the oversight capabilities of the SBA over the 504/CDC loan program, but also requires clear and concise guidance for small business owners moving forward. There are sound changes that will improve the program for future 504/CDC borrowers.
I applaud all Members for working on this legislation and all of the small business bills before us today. We must continue to put our Nation's job creators at the forefront of this economic recovery.
Madam Speaker, I would like to take a few moments to make a couple comments here with regard to all the bills that we have offered here today. All these bills dealt with things that deal with oversight.
We, as legislators in this body, have two jobs. One is to provide legislation to improve the lives of our businesses and the people in this country, protect our country. Second is to provide oversight over all of the activities that go on within the executive branch, as well as the judicial branch, to whatever extent we can.
In our committee, we oversee the legislation with regard to the Small Business Administration, as well as oversight of their activities. We have come to find over the last several weeks here that the inspector general reports that the SBA is not being run as well as it should. There is fraud rampant in some of the programs, which is verified by the AG reports. We have a new Administrator who has got her hands full because of the lack of knowledge of what goes on with all the brand-new things going on.
So we have got a real problem and we, as legislators, have got to step up. These bills today are just one step in the process of providing the kind of oversight that it takes. We will continue to provide oversight, I can assure you. And those listening and watching today need to take heart in the fact that we are going to continue to provide the kind of oversight over the Small Business Administration and all of its programs that we have been tasked with and are responsible for.
Madam Speaker, I urge my colleagues to support H.R. 1482, the last bill we will discuss today, and I yield back the balance of my time.
Ms. DAVIDS of Kansas. Madam Speaker, in its 62-year history, the SBA's 504 loan program has helped thousands of entrepreneurs acquire heavy machinery and equipment, expand to more locations, and hire workers. It has long been a strong-performing SBA program and has enjoyed consistent bipartisanship support.
We must continue to take all steps needed to preserve the integrity of the 504 program and ensure it will be an option for the next generation of entrepreneurs. Passing the bill before us today will help us do so.
I thank Mr. Bishop and Ms. Craig for their hard work and collaboration in bringing this bill to the floor today. I also thank Mr. Luetkemeyer for his leadership today and his unwavering commitment to our Nation's 30 million small businesses.
Madam Speaker, I urge my colleagues to vote ``yes,'' and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the gentlewoman from Kansas (Ms. Davids) that the House suspend the rules and pass the bill, H.R. 1482.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds being in the affirmative, the ayes have it.
Mr. WEBER of Texas. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this motion are postponed.
____________________
SOURCE: Congressional Record Vol. 167, No. 64
The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
House Representatives' salaries are historically higher than the median US income.
Alerts Sign-up