PUBLIC LAW 115–189—JUNE 21, 2018 

SMALL BUSINESS 7(a) LENDING OVERSIGHT 

REFORM ACT OF 2018 


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132 STAT. 1492 PUBLIC LAW 115–189—JUNE 21, 2018 

Public Law 115–189 

115th Congress 

An Act 

To amend the Small Business Act to strengthen the Office of Credit Risk Management within the Small Business Administration, and for other purposes. 

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 ‘‘Small Business 7(a) Lending 

Oversight Reform Act of 2018’’. 

SEC. 2. DEFINITIONS. 

In this Act, the terms ‘‘Administration’’ and ‘‘Administrator’’ 

mean the Small Business Administration and the Administrator 

thereof, respectively. 

SEC. 3. CODIFICATION OF THE OFFICE OF CREDIT RISK MANAGEMENT 

AND THE LENDER OVERSIGHT COMMITTEE. 

(a) IN GENERAL.—The Small Business Act (15 U.S.C. 631 et 

seq.) is amended— 

(1) by redesignating section 47 as section 49; and 

(2) by inserting after section 46 the following new sections: 

‘‘SEC. 47. OFFICE OF CREDIT RISK MANAGEMENT. 

‘‘(a) ESTABLISHMENT.—There is established within the Administration the Office of Credit Risk Management (in this section 

referred to as the ‘Office’). 

‘‘(b) DUTIES.—The Office shall be responsible for supervising— 

‘‘(1) any lender making loans under section 7(a) (in this 

section 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 referred 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), including by conducting periodic reviews of the compliance 

and performance of such lenders and participants. 

15 USC 657t. 

15 USC 631 note. 

15 USC 657t 

note. 

Small Business 

7(a) Lending 

Oversight Reform 

Act of 2018. 

15 USC 631 note. 

June 21, 2018 

[H.R. 4743] 


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PUBLIC LAW 115–189—JUNE 21, 2018 132 STAT. 1493 

‘‘(d) SUPERVISION DUTIES FOR 7(a) LENDERS.—With respect to 

7(a) lenders, an employee of the Office shall— 

‘‘(1) 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 

‘‘(2) supervise any such review that is not conducted on 

the premise of the 7(a) lender. 

‘‘(e) ENFORCEMENT AUTHORITY AGAINST 7(a) LENDERS.— ‘‘(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 requirement 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 

Oversight 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 violated— 

‘‘(i) a statutory or regulatory requirement under 

section 7(a), including a requirement relating to credit 

elsewhere; or 

‘‘(ii) any requirement described in a Standard 

Operating Procedures Manual or Policy Notice, related 

to a program or function of the Office of Capital Access. 

‘‘(B) ENFORCEMENT ACTIONS.—An enforcement action 

imposed on a 7(a) lender by the Director under subparagraph (A) shall be based on the severity or frequency of 

the violation 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 

enforcement action imposed by the Director described in this 

subsection 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 enactment 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 

prohibited from making loans under section 7(a), the 7(a) lender 

shall remain 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— 

Analyses. 

Deadline. 


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132 STAT. 1494 PUBLIC LAW 115–189—JUNE 21, 2018 

‘‘(A) an analysis of the overall program risk of loans 

guaranteed under section 7(a); 

‘‘(B) an analysis of the program risk, set forth separately by industry concentration; 

‘‘(C) without identifying individual 7(a) lenders by 

name, a consolidated analysis of the risk created by the 

individual 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 percentage and dollar amount of recoveries at the 

Administration; 

‘‘(G) the number and type of enforcement actions recommended by the Director; 

‘‘(H) the number and type of enforcement actions 

approved by the Lender Oversight Committee established 

under section 48; 

‘‘(I) the number and type of enforcement actions disapproved by the Lender Oversight Committee; and 

‘‘(J) the number and dollar amount of civil monetary 

penalties 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 Administrator. 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 submission 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. 

‘‘SEC. 48. LENDER OVERSIGHT COMMITTEE. 

‘‘(a) ESTABLISHMENT.—There is established within the Administration the Lender Oversight Committee (in this section referred 

to as the ‘Committee’). 

‘‘(b) MEMBERSHIP.—The Committee shall consist of at least 

8 members selected by the Administrator, of which— 

‘‘(1) 3 members shall be voting members, 2 of whom shall 

be career appointees in the Senior Executive Service (as defined 

in section 3132 of title 5, United States Code); and 

‘‘(2) the remaining members shall be nonvoting members 

who shall serve in an advisory capacity on the Committee. 

‘‘(c) DUTIES.—The Committee shall— 

‘‘(1) review reports on lender oversight activities; 

‘‘(2) review formal enforcement action recommendations of 

the Director of the Office of Credit Risk Management with 

respect to any lender making loans under section 7(a) and 

15 USC 657u. 

Public 

information. 

Time period. 


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PUBLIC LAW 115–189—JUNE 21, 2018 132 STAT. 1495 

any Lending Partner or Intermediary participant of the 

Administration in a lending program of the Office of Capital 

Access of the Administration; 

‘‘(3) in carrying out paragraph (2) with respect to formal 

enforcement actions taken under subsection (d) or (e) of section 

23, vote to recommend or not recommend action to the Administrator or a designee of the Administrator; 

‘‘(4) in carrying out paragraph (2) with respect to any 

formal enforcement action not specified under subsection (d) 

or (e) of section 23, vote to approve, disapprove, or modify 

the action; 

‘‘(5) review, in an advisory capacity, any lender oversight, 

portfolio risk management, or program integrity matters 

brought by the Director; and 

‘‘(6) take such other actions and perform such other functions as may be delegated to the Committee by the Administrator. 

‘‘(d) MEETINGS.— 

‘‘(1) IN GENERAL.—The Committee shall meet as necessary, 

but not less frequently than on a quarterly basis. 

‘‘(2) REPORTS.—The Committee shall submit to the 

Administrator a report detailing each meeting of the Committee, including if the Committee does or does not vote to 

approve a formal enforcement action of the Director of the 

Office of Credit Risk Management with respect to a lender.’’. 

(b) SUPERVISION DUTIES FOR 7(A) LENDERS.—Effective January 

1, 2019, subsection (d) of section 47 (as added by subsection (a)) 

is amended to read as follows: 

‘‘(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 requirements of the Office or the Administrator, the Administrator 

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 Administrator not later than 45 business days after the date 

on which the 7(a) lender receives the report. 

Notification. 

15 USC 657t 

note. 

Recommendations. 


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132 STAT. 1496 PUBLIC LAW 115–189—JUNE 21, 2018 

‘‘(B) EXTENSION.—The Administrator may extend the 

time frame described in subparagraph (A)(i)(II) with respect 

to a 7(a) lender as the Administrator determines necessary.’’. 

(c) TRANSFER OF FUNCTIONS.— (1) OFFICE OF CREDIT RISK MANAGEMENT.—All functions 

of the Office of Credit Risk Management of the Small Business 

Administration, including the personnel, assets, and obligation 

of the Office of Credit Risk Management, as in existence on 

the day before the date of the enactment of this Act, shall 

be transferred to the Office of Credit Risk Management established under section 47 of the Small Business Act, as added 

by subsection (a). 

(2) LENDER OVERSIGHT COMMITTEE.—All functions of the 

Lender Oversight Committee of the Small Business Administration, including the personnel, assets, and obligations of the 

Lender Oversight Committee, as in existence on the day before 

the date of the enactment of this Act, shall be transferred 

to the Lender Oversight Committee established under section 

48 of the Small Business Act, as added by subsection (a). 

(d) DEEMING OF NAME.— 

(1) OFFICE OF CREDIT RISK MANAGEMENT.—Any reference 

in a law, regulation, guidance, document, paper, or other record 

of the United States to the Office of Credit Risk Management 

of the Small Business Administration shall be deemed a reference to the Office of Credit Risk Management, established 

under section 47 of the Small Business Act, as added by subsection (a). 

(2) LENDER OVERSIGHT COMMITTEE.—Any reference in a 

law, regulation, guidance, document, paper, or other record 

of the United States to the Lender Oversight Committee of 

the Small Business Administration shall be deemed a reference 

to the Lender Oversight Committee, established under section 

48 of the Small Business Act, as added by subsection (a). 

(e) TECHNICAL AMENDMENT.—Section 3(r)(2) of the Small Business Act (15 U.S.C. 632(r)(2)) is amended by striking ‘‘regulated 

SBA lender’’ each place it appears in heading and text and inserting 

‘‘regulated lender’’. 

SEC. 4. DEFINITION OF CREDIT ELSEWHERE. 

(a) IN GENERAL.—The Small Business Act (15 U.S.C. 631 et 

seq.) is amended— 

(1) by striking section 3(h) (15 U.S.C. 632(h)) and inserting 

the following: 

‘‘(h) The term ‘credit elsewhere’ means— 

‘‘(1) for the purposes of this Act (except as used in section 

7(b)), the availability of credit on reasonable terms and conditions to the individual loan applicant from non-Federal, nonState, or non-local government sources, considering factors associated with conventional lending practices, including— 

‘‘(A) the business industry in which the loan applicant 

operates; 

‘‘(B) whether the loan applicant is an enterprise that 

has been in operation for a period of not more than 2 

years; 

‘‘(C) the adequacy of the collateral available to secure 

the requested loan; 

15 USC 657u 

note. 

15 USC 657t 

note. 

15 USC 657u 

note. 

15 USC 657t 

note. 


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PUBLIC LAW 115–189—JUNE 21, 2018 132 STAT. 1497 

‘‘(D) the loan term necessary to reasonably assure the 

ability of the loan applicant to repay the debt from the 

actual or projected cash flow of the business; and 

‘‘(E) any other factor relating to the particular credit 

application, as documented in detail by the lender, that 

cannot be overcome except through obtaining a Federal 

loan guarantee under prudent lending standards; and 

‘‘(2) for the purposes of section 7(b), the availability of 

credit on reasonable terms and conditions from non-Federal 

sources taking into consideration the prevailing rates and terms 

in the community in or near where the applicant business 

concern transacts business, or the applicant homeowner resides, 

for similar purposes and periods of time.’’; and 

(2) in section 7(a)(1)(A)(i) (15 U.S.C. 636(a)(1)(A)(i)), by 

inserting ‘‘The Administrator has the authority to direct, and 

conduct oversight for, the methods by which lenders determine 

whether a borrower is able to obtain credit elsewhere.’’ before 

‘‘No financial assistance’’. 

(b) TECHNICAL AMENDMENT.—Section 18(b) of the Small Business Act (15 U.S.C. 647(b)) is amended to read as follows: 

‘‘(b) As used in this Act, the term ‘agricultural enterprises’ 

means those small business concerns engaged in the production 

of food and fiber, ranching, and raising of livestock, aquaculture, 

and all other farming and agricultural-related industries.’’. 

SEC. 5. AUTHORITY FOR ADMINISTRATOR TO INCREASE AMOUNT FOR 

GENERAL BUSINESS LOANS. 

Section 20 of the Small Business Act (15 U.S.C. 631 note) 

is amended— 

(1) by redesignating subsection (j) as subsection (f); and 

(2) by adding at the end the following new subsection: 

‘‘(g) AUTHORITY TO INCREASE AMOUNT OF GENERAL BUSINESS

LOANS.— 

‘‘(1) IN GENERAL.—Subject to paragraphs (2) and (3) and 

with respect to fiscal year 2019 and each fiscal year thereafter, 

if the Administrator determines that the amount of commitments by the Administrator for general business loans authorized under section 7(a) for a fiscal year could exceed the limit 

on the total amount of commitments the Administrator may 

make for those loans under this Act, an appropriations Act, 

or any other provision of law, the Administrator may make 

commitments for those loans for that fiscal year in an aggregate 

amount equal to not more than 115 percent of that limit. 

‘‘(2) NOTICE REQUIRED BEFORE EXERCISING AUTHORITY.— 

Not later than 30 days before the date on which the Administrator intends to exercise the authority under paragraph (1), 

the Administrator shall submit notice of intent to exercise 

the authority to— 

‘‘(A) the Committee on Small Business and 

Entrepreneurship and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the Senate; and 

‘‘(B) the Committee on Small Business and the Subcommittee on Financial Services and General Government 

of the Committee on Appropriations of the House of Representatives. 

Deadline. 

Determination. 

Definition. 


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132 STAT. 1498 PUBLIC LAW 115–189—JUNE 21, 2018 

LEGISLATIVE HISTORY—H.R. 4743 (S. 2283): 

HOUSE REPORTS: No. 115–655 (Comm. on Small Business). 

SENATE REPORTS: No. 115–265 (Comm. on Small Business and Entrepreneurship) accompanying S. 2283. 

CONGRESSIONAL RECORD, Vol. 164 (2018): 

May 8, considered and passed House. 

June 5, considered and passed Senate. 

Æ 

‘‘(3) LIMITATION.—The Administrator shall not exercise the 

authority under paragraph (1) more than once during any fiscal 

year.’’. 

SEC. 6. ESTABLISHING A PROCESS FOR WAIVERS. 

(a) IN GENERAL.—If the Administrator exercises statutory or 

regulatory authority to waive a regulation or a requirement in 

the Standard Operating Procedures Manual or Policy Notice related 

to a program or function of the Office of Capital Access of the 

Administration, the waiver shall be in writing and be maintained 

in an indexed form. 

(b) NO NEW WAIVER AUTHORITY.—Nothing in subsection (a) 

shall be construed as creating new authority for the Administrator 

to waive regulations of the Administration. 

SEC. 7. REPEAL OF SMALL BUSINESS LOAN LOSS REPORT. 

Subsection (b) of section 10 of the Small Business Act (15 

U.S.C. 639(b)) is repealed. 

Approved June 21, 2018. 

15 USC 657t 

note. 


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