II 

Calendar No. 351 

115TH CONGRESS 

2D SESSION S. 2283 

To amend the Small Business Act to strengthen the Office of Credit Risk 

Management within the Small Business Administration, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 9, 2018 

Mr. RISCH (for himself, Mrs. SHAHEEN, Mr. ENZI, and Ms. DUCKWORTH) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship 

MARCH 19, 2018 

Reported by Mr. RISCH, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To amend the Small Business Act to strengthen the Office 

of Credit Risk Management within the Small Business 

Administration, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business 7(a) 

5 Lending Oversight Reform Act of 2018’’. 


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1 SEC. 2. DEFINITIONS. 

2 In this Act, the terms ‘‘Administration’’ and ‘‘Admin3 istrator’’ mean the Small Business Administration and the 

4 Administrator thereof, respectively. 

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

6 MANAGEMENT AND THE LENDER OVERSIGHT 

7 COMMITTEE. 

8 (a) IN GENERAL.—The Small Business Act (15 

9 U.S.C. 631 et seq.) is amended— 

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

11 and 

12 (2) by inserting after section 46 the following: 

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

14 ‘‘(a) ESTABLISHMENT.—There is established within 

15 the Administration the Office of Credit Risk Management 

16 (in this section referred to as the ‘Office’). 

17 ‘‘(b) DUTIES.—The Office shall be responsible for su18 pervising— 

19 ‘‘(1) any lender making loans under section 

20 7(a) (in this section referred to as a ‘7(a) lender’); 

21 ‘‘(2) any participant in a lending program of 

22 the Office of Capital Access of the Administration; 

23 and 

24 ‘‘(3) any small business lending company or a 

25 non-Federally regulated lender without regard to the 

26 requirements of section 23. 


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1 ‘‘(c) DIRECTOR.—The Office is headed by the Direc2 tor of the Office of Credit Risk Management (in this sec3 tion referred to as the ‘Director’), who shall— 

4 ‘‘(1) be a career appointee in a Senior Execu5 tive Service position (as defined in section 3132 of 

6 title 5, United States Code); and 

7 ‘‘(2) be responsible for oversight of the lenders 

8 and participants described in subsection (b), includ9 ing by conducting periodic reviews of the compliance 

10 and performance of those lenders and participants. 

11 ‘‘(d) SUPERVISION DUTIES FOR 7(a) LENDERS.— 

12 ‘‘(1) REVIEWS.—With respect to 7(a) lenders, 

13 an employee of the Office shall— 

14 ‘‘(A) be present for and supervise any re15 view of a 7(a) lender that is conducted by a 

16 contractor of the Office on the premises of the 

17 7(a) lender; and 

18 ‘‘(B) supervise any review of a 7(a) lender 

19 that is not conducted on the premises of the 

20 7(a) lender. 

21 ‘‘(2) REVIEW REPORT TIMELINE.—Notwith22 standing any other requirements of the Office or the 

23 Administrator, the Administrator shall develop and 

24 implement a review report timeline which shall— 

25 ‘‘(A) require the Administrator to— 


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1 ‘‘(i) deliver a written report of the re2 view to the 7(a) lender not later than 60 

3 business days after the date on which the 

4 review is conducted; or 

5 ‘‘(ii) if the Administrator expects to 

6 submit the report after the end of the 60- 

7 business-day period described in clause (i), 

8 notify the 7(a) lender in writing of the ex9 pected submission day of the report and 

10 the reason for the delay; and 

11 ‘‘(B) if a response by the 7(a) lender is re12 quested in a report submitted under subpara13 graph (A), require the 7(a) lender to submit a 

14 response to the Administrator not later than 45 

15 business days after the date on which the 7(a) 

16 lender receives the report. 

17 ‘‘(e) ENFORCEMENT AUTHORITY AGAINST 7(a) 

18 LENDERS.— 

19 ‘‘(1) INFORMAL ENFORCEMENT AUTHORITY.— 

20 The Director may take an informal enforcement ac21 tion against a 7(a) lender if the Director finds that 

22 the 7(a) lender has violated a requirement under 

23 section 7(a) or any requirement in a Standard Oper24 ating Procedures Manual or Policy Notice related to 


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1 a program or function of the Office of Capital Ac2 cess. 

3 ‘‘(2) FORMAL ENFORCEMENT AUTHORITY.— 

4 ‘‘(A) IN GENERAL.—With the approval of 

5 the Lender Oversight Committee established 

6 under section 48, the Director may take a for7 mal enforcement action against any 7(a) lender 

8 if the Director finds that the 7(a) lender has 

9 violated— 

10 ‘‘(i) a requirement under section 7(a), 

11 including a requirement relating to credit 

12 elsewhere, or any regulation implementing 

13 such section; or 

14 ‘‘(ii) any requirement described in a 

15 Standard Operating Procedures Manual or 

16 Policy Notice related to a program or func17 tion of the Office of Capital Access. 

18 ‘‘(B) ENFORCEMENT ACTIONS.— 

19 ‘‘(i) IN GENERAL.—Any enforcement 

20 action taken with respect to a 7(a) lender 

21 by the Director under subparagraph (A)— 

22 ‘‘(I) shall be based on the sever23 ity or frequency of the violation; and 

24 ‘‘(II) may include assessing a 

25 civil monetary penalty against the 


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1 7(a) lender in an amount that is not 

2 greater than $250,000. 

3 ‘‘(3) APPEAL BY LENDER.—A 7(a) lender may 

4 appeal an enforcement action imposed by the Direc5 tor described in paragraph (2) to the Office of Hear6 ings and Appeals established under section 5(i) or to 

7 an appropriate district court of the United States. 

8 ‘‘(f) REGULATIONS.—Not later than 1 year after the 

9 date of enactment of the Small Business 7(a) Lending 

10 Oversight Reform Act of 2018, the Administrator shall 

11 issue regulations, after opportunity for notice and com12 ment under section 553 of title 5, United States Code, 

13 to carry out subsection (e). 

14 ‘‘(g) SERVICING AND LIQUIDATION RESPONSIBIL15 ITIES.—During any period during which a 7(a) lender is 

16 suspended from participating under section 7(a), or if a 

17 7(a) lender is prohibited from making loans under section 

18 7(a), the 7(a) lender shall remain obligated to maintain 

19 all servicing and liquidation activities delegated to the 

20 lender by the Administrator, unless otherwise specified by 

21 the Director. 

22 ‘‘(h) PORTFOLIO RISK ANALYSIS OF 7(a) LOANS.— 

23 ‘‘(1) IN GENERAL.—The Director shall annually 

24 conduct a risk analysis of the portfolio of the AdVerDate Sep 11 2014 23:10 Mar 19, 2018 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6401 E:\BILLS\S2283.RS S2283

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1 ministration with respect to all loans guaranteed 

2 under section 7(a). 

3 ‘‘(2) REPORT TO CONGRESS.—On December 1, 

4 2018, and every December 1 thereafter, the Director 

5 shall submit to Congress an annual report con6 taining the results of each portfolio risk analysis 

7 conducted under paragraph (1) during the fiscal 

8 year preceding the submission of the report, which 

9 shall include— 

10 ‘‘(A) an analysis of the overall program 

11 risk of loans guaranteed under section 7(a); 

12 ‘‘(B) an analysis of program risk, set forth 

13 separately by industry concentration; 

14 ‘‘(C) without identifying individual 7(a) 

15 lenders by name, a consolidated analysis of the 

16 risk created by the individual 7(a) lenders re17 sponsible for not less than 1 percent of the 

18 gross loan approvals by dollar and amount of 

19 loans for the year covered by the report; 

20 ‘‘(D) steps taken by the Administrator to 

21 mitigate the risks identified in subparagraphs 

22 (A), (B), and (C); 

23 ‘‘(E) the number of 7(a) lenders, the gross 

24 and net number of loans made, and the gross 

25 and net dollar amount of loans made; 


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1 ‘‘(F) the number and dollar amount of 

2 total defaults and total repurchases, and the 

3 percentage and total amount of recoveries; 

4 ‘‘(G) the number and type of enforcement 

5 actions recommended by the Director; 

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

7 actions approved by the Lender Oversight Com8 mittee established under section 48; 

9 ‘‘(I) the number and type of enforcement 

10 actions disapproved by the Lender Oversight 

11 Committee; and 

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

13 monetary penalties assessed. 

14 ‘‘(i) BUDGET SUBMISSION AND JUSTIFICATION.—Ef15 fective for the first fiscal year occurring after the date of 

16 enactment of the Small Business 7(a) Lending Oversight 

17 Reform Act of 2018, and each fiscal year thereafter, the 

18 Director shall provide, in writing a budget submission and 

19 justification for the submission to the Administrator, 

20 which shall— 

21 ‘‘(1) include the salaries and expenses of the 

22 Office and lender oversight fees; 

23 ‘‘(2) be submitted at or about the time of the 

24 budget submission by the President under section 

25 1105(a) of title 31, United States Code; and 


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1 ‘‘(3) be maintained in an indexed form and 

2 made available for public review for a period of not 

3 less than 5 years beginning on the date of submis4 sion. 

5 ‘‘SEC. 48. LENDER OVERSIGHT COMMITTEE. 

6 ‘‘(a) ESTABLISHMENT.—There is established within 

7 the Administration the Lender Oversight Committee (in 

8 this section referred to as the ‘Committee’). 

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

10 11 members appointed by the Administrator, of whom— 

11 ‘‘(1) 3 members shall be voting members, of 

12 whom 2 shall be career appointees serving in a Sen13 ior Executive Service position (as defined in section 

14 3132 of title 5, United States Code); and 

15 ‘‘(2) 8 members shall be nonvoting members 

16 who shall serve in an advisory capacity on the Com17 mittee. 

18 ‘‘(c) DUTIES.—The Committee shall— 

19 ‘‘(1) review reports on lender oversight activi20 ties; 

21 ‘‘(2) review formal enforcement action rec22 ommendations of the Director of the Office of Credit 

23 Risk Management with respect to any lender making 

24 loans under section 7(a) and any participant in a 


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1 lending program of the Office of Capital Access of 

2 the Administration; 

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

4 to a formal enforcement action taken under sub5 section (d) or (e) of section 23, vote to recommend 

6 the action or vote to not recommend the action to 

7 the Administrator or a designee of the Adminis8 trator; 

9 ‘‘(4) in carrying out paragraph (2) with respect 

10 to any other formal enforcement action not other11 wise specified in subsection (d) or (e) of section 23, 

12 vote to approve, disapprove, or modify the action; 

13 ‘‘(5) review in an advisory capacity any lender 

14 oversight, portfolio risk management, or program in15 tegrity matters brought by the Director of the Office 

16 of Credit Risk Management; and 

17 ‘‘(6) take such other actions and perform such 

18 other functions as may be delegated to the Com19 mittee by the Administrator. 

20 ‘‘(d) MEETINGS.— 

21 ‘‘(1) IN GENERAL.—The Committee shall meet 

22 as necessary, but not less frequently than on a quar23 terly basis. 

24 ‘‘(2) REPORTS.—The Committee shall submit 

25 to the Administrator a report detailing each meeting 


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1 of the Committee, including if the Committee does 

2 or does not vote to recommend a formal enforcement 

3 action of the Director of the Office of Credit Risk 

4 Management with respect to a lender.’’. 

5 (b) TRANSFER OF FUNCTIONS.— 

6 (1) OFFICE OF CREDIT RISK MANAGEMENT.— 

7 All functions of the Office of Credit Risk Manage8 ment of the Administration, including the personnel, 

9 assets, and obligations of the Office of Credit Risk 

10 Management, as in existence on the day before the 

11 date of enactment of this Act, shall be transferred 

12 to the Office of Credit Risk Management established 

13 under section 47 of the Small Business Act, as 

14 added by subsection (a). 

15 (2) LENDER OVERSIGHT COMMITTEE.—All 

16 functions of the Lender Oversight Committee of the 

17 Administration, including the personnel, assets, and 

18 obligations of the Lender Oversight Committee, as 

19 in existence on the day before the date of enactment 

20 of this Act, shall be transferred to the Lender Over21 sight Committee established under section 48 of the 

22 Small Business Act, as added by subsection (a). 

23 (c) DEEMING OF NAME.— 

24 (1) OFFICE OF CREDIT RISK MANAGEMENT.— 

25 Any reference in a law, regulation, document, paper, 


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1 or other record of the United States to the Office of 

2 Credit Risk Management of the Administration shall 

3 be deemed a reference to the Office of Credit Risk 

4 Management of the Administration established 

5 under section 47 of the Small Business Act, as 

6 added by subsection (a). 

7 (2) LENDER OVERSIGHT COMMITTEE.—Any ref8 erence in a law, regulation, document, paper, or 

9 other record of the United States to the Lender 

10 Oversight Committee of the Administration shall be 

11 deemed a reference to the Lender Oversight Com12 mittee of the Administration established under sec13 tion 48 of the Small Business Act, as added by sub14 section (a). 

15 (d) TECHNICAL AND CONFORMING AMENDMENTS.— 

16 The Small Business Act (15 U.S.C. 631 et seq.) is amend17 ed— 

18 (1) in section 3(r)(2) (15 U.S.C. 632(r)(2))— 

19 (A) in this paragraph heading, by striking 

20 ‘‘SBA’’; and 

21 (B) in the matter preceding subparagraph 

22 (A), by striking ‘‘SBA’’; and 

23 (2) in section 18 (15 U.S.C. 647), by striking 

24 subsection (b) and inserting the following: 


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1 ‘‘(b) As used in this Act, the term ‘agricultural enter2 prises’ means those small business concerns engaged in 

3 the production of food and fiber, ranching, and raising of 

4 livestock, aquaculture, and all other farming and agricul5 tural related industries.’’. 

6 SEC. 4. DEFINITION OF CREDIT ELSEWHERE. 

7 The Small Business Act (15 U.S.C. 631 et seq.) is 

8 amended— 

9 (1) in section 3 (15 U.S.C. 632), by striking 

10 subsection (h) and inserting the following: 

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

12 ‘‘(1) for the purposes of this Act (except as 

13 used in section 7(b)), the availability of credit on 

14 reasonable terms and conditions to the individual 

15 loan applicant from non-Federal, non-State, or non16 local government sources, considering factors associ17 ated with conventional lending practices, including— 

18 ‘‘(A) the business industry in which the 

19 loan applicant operates; 

20 ‘‘(B) whether the loan applicant is an en21 terprise that has been in operation for a period 

22 of not more than 2 years; 

23 ‘‘(C) the adequacy of the collateral avail24 able to secure the requested loan; 


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

2 assure the ability of the loan applicant to repay 

3 the debt from the actual or projected cash flow 

4 of the business; and 

5 ‘‘(E) any other factor relating to the par6 ticular credit application, as documented in de7 tail by the lender, that cannot be overcome ex8 cept through obtaining a Federal loan guar9 antee under prudent lending standards; and 

10 ‘‘(2) for the purposes of section 7(b), the avail11 ability of credit on reasonable terms and conditions 

12 from non-Federal sources taking into consideration 

13 the prevailing rates and terms in the community in 

14 or near where the applicant small business concern 

15 transacts business, or the applicant homeowner re16 sides, for similar purposes and periods of time.’’; 

17 and 

18 (2) in section 7(a)(1)(A)(i) (15 U.S.C. 

19 636(a)(1)(A)(i)), by inserting ‘‘The Administrator 

20 has the authority to direct, and conduct oversight 

21 for, the methods by which lenders determine whether 

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

23 ‘‘No financial assistance’’. 


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1 SEC. 5. AUTHORITY FOR ADMINISTRATOR TO INCREASE 

2 AMOUNT FOR GENERAL BUSINESS LOANS. 

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

4 note) is amended— 

5 (1) by redesignating subsection (j) as sub6 section (f); and 

7 (2) by adding at the end the following: 

8 ‘‘(g) AUTHORITY TO INCREASE AMOUNT OF GEN9 ERAL BUSINESS LOANS.— 

10 ‘‘(1) IN GENERAL.—With respect to fiscal year 

11 2018 and each fiscal year thereafter, if the Adminis12 trator determines that the amount of commitments 

13 by the Administrator for general business loans au14 thorized under section 7(a) for a fiscal year could 

15 exceed the limit on the total amount of commitments 

16 the Administrator may make for those loans under 

17 this Act, an appropriations Act, or any other provi18 sion of law, the Administrator may make commit19 ments for those loans for that fiscal year in total 

20 amount equal to not more than 115 percent of that 

21 limit. 

22 ‘‘(2) APPROVAL REQUIRED BEFORE EXER23 CISING AUTHORITY.— 

24 ‘‘(A) IN GENERAL.—Not later than 30 

25 days before the date on which the Adminis26 trator intends to exercise the authority under 


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1 paragraph (1), the Administrator shall submit 

2 notice of the intent of the Administrator to ex3 ercise the authority to— 

4 ‘‘(i) the Committee on Small Business 

5 and Entrepreneurship and the Sub6 committee on Financial Services and Gen7 eral Government of the Committee on Ap8 propriations of the Senate; and 

9 ‘‘(ii) the Committee on Small Busi10 ness and the Subcommittee on Financial 

11 Services and General Government of the 

12 Committee on Appropriations of the House 

13 of Representatives. 

14 ‘‘(B) APPROVAL.—The Administrator may 

15 not exercise the authority under paragraph (1) 

16 unless the exercise of authority has been ap17 proved, in writing, by the Committee on Appro18 priations and the Committee on Small Business 

19 and Entrepreneurship of the Senate and the 

20 Committee on Appropriations and the Com21 mittee on Small Business of the House of Rep22 resentatives. 

23 ‘‘(3) LIMITATION.—The Administrator shall not 

24 exercise the authority under paragraph (1) more 

25 than once during any fiscal year.’’. 


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1 SEC. 6. DISCLOSURE OF WAIVERS. 

2 (a) IN GENERAL.—If the Administrator exercises 

3 statutory or regulatory authority to waive a regulation re4 lated to a program or function of the Office of Capital 

5 Access of the Administration— 

6 (1) the waiver shall be in writing and shall 

7 specify the grounds for approving the waiver; and 

8 (2) the Administrator shall notify the public of 

9 all waivers of regulations approved by the Adminis10 tration, which notice shall— 

11 (A) be published in the Federal Register 

12 not less than annually; 

13 (B) cover the period beginning on the date 

14 after the last day covered by the previous no15 tice; 

16 (C) describe the nature of the requirement 

17 that has been waived and specify the regulation 

18 involved; 

19 (D) include a brief description of the 

20 grounds for approval of the waiver; and 

21 (E) state how more information about the 

22 waiver and a copy of the request and the ap23 proval may be obtained. 

24 (b) NO NEW WAIVER AUTHORITY.—Nothing in sub25 section (a) shall be construed as creating new authority 


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1 for the Administrator to waive regulations of the Adminis2 tration. 

3 (c) GAO STUDY ON STANDARD OPERATING PROCE4 DURES MANUAL OR POLICY NOTICE WAIVER PROCESS.— 

5 Not later than 1 year after the date of enactment of this 

6 Act, the Comptroller General of the United States shall 

7 submit to the Committee on Small Business and Entrepre8 neurship of the Senate and the Committee on Small Busi9 ness of the House of Representatives a report evalu10 ating— 

11 (1) the methods and specific processes used by 

12 the Administration to waive requirements in the 

13 Standard Operating Procedures Manual or Policy 

14 Notices relating to loans made under section 7(a) of 

15 the Small Business Act (15 U.S.C. 636(a)); and 

16 (2) the number of waivers described in para17 graph (1) granted during the period of 5 fiscal years 

18 preceding the date of enactment of this Act. 

19 SECTION 1. SHORT TITLE. 

20 This Act may be cited as the ‘‘Small Business 7(a) 

21 Lending Oversight Reform Act of 2018’’. 

22 SEC. 2. DEFINITIONS. 

23 In this Act, the terms ‘‘Administration’’ and ‘‘Admin24 istrator’’ mean the Small Business Administration and the 

25 Administrator thereof, respectively. 


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

2 MANAGEMENT AND THE LENDER OVERSIGHT 

3 COMMITTEE. 

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

5 631 et seq.) is amended— 

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

7 and 

8 (2) by inserting after section 46 the following: 

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

10 ‘‘(a) ESTABLISHMENT.—There is established within 

11 the Administration the Office of Credit Risk Management 

12 (in this section referred to as the ‘Office’). 

13 ‘‘(b) DUTIES.—The Office shall be responsible for su14 pervising— 

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

16 (in this section referred to as a ‘7(a) lender’); 

17 ‘‘(2) any lending partner or intermediary par18 ticipating in a lending program of the Office of Cap19 ital Access of the Administration; and 

20 ‘‘(3) any small business lending company or a 

21 non-Federally regulated lender without regard to the 

22 requirements of section 23. 

23 ‘‘(c) DIRECTOR.—The Office is headed by the Director 

24 of the Office of Credit Risk Management (in this section 

25 referred to as the ‘Director’), who shall— 


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1 ‘‘(1) be a career appointee in a Senior Executive 

2 Service position (as defined in section 3132 of title 5, 

3 United States Code); and 

4 ‘‘(2) be responsible for oversight of the entities 

5 described in subsection (b), including by conducting 

6 periodic reviews of the compliance and performance of 

7 those entities. 

8 ‘‘(d) SUPERVISION DUTIES FOR 7(a) LENDERS.— 

9 ‘‘(1) REVIEWS.—An employee of the Office 

10 shall— 

11 ‘‘(A) be present for and supervise any re12 view of a 7(a) lender that is conducted by a con13 tractor of the Office on the premises of the 7(a) 

14 lender; and 

15 ‘‘(B) supervise any review of a 7(a) lender 

16 that is not conducted on the premises of the 7(a) 

17 lender. 

18 ‘‘(2) REVIEW REPORT TIMELINE.— 

19 ‘‘(A) IN GENERAL.—Notwithstanding any 

20 other requirements of the Office or the Adminis21 trator, with respect to a review of a 7(a) lender 

22 that is conducted on or after January 1, 2019, 

23 the Administrator shall develop and implement a 

24 review report timeline that shall— 

25 ‘‘(i) require the Administrator to— 


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1 ‘‘(I) deliver a written report of the 

2 review to the 7(a) lender not later than 

3 60 business days after the date on 

4 which the review is concluded; or 

5 ‘‘(II) if the Administrator expects 

6 to submit the report after the end of the 

7 60-business-day period described in 

8 subclause (I), notify the 7(a) lender in 

9 writing of the expected submission day 

10 of the report and the reason for the 

11 delay; and 

12 ‘‘(ii) except as provided in subpara13 graph (B), if a response by the 7(a) lender 

14 is requested in a report submitted under 

15 subparagraph (A), require the 7(a) lender to 

16 submit a response to the Administrator not 

17 later than 45 business days after the date 

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

19 ‘‘(B) EXTENSION.—The Administrator may 

20 extend the time frame described in subparagraph 

21 (A)(ii) with respect to a 7(a) lender as the Ad22 ministrator determines necessary. 

23 ‘‘(e) ENFORCEMENT AUTHORITY AGAINST 7(a) LEND24 ERS.— 


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1 ‘‘(1) INFORMAL ENFORCEMENT AUTHORITY.—The 

2 Director may take an informal enforcement action 

3 against a 7(a) lender if the Director finds that the 

4 7(a) lender has violated a statutory or regulatory re5 quirement or any requirement in a Standard Oper6 ating Procedures Manual or Policy Notice related to 

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

8 ‘‘(2) FORMAL ENFORCEMENT AUTHORITY.— 

9 ‘‘(A) IN GENERAL.—With the approval of 

10 the Lender Oversight Committee established 

11 under section 48, the Director may take a formal 

12 enforcement action against any 7(a) lender if the 

13 Director finds that the 7(a) lender has violated— 

14 ‘‘(i) a statutory or regulatory require15 ment, including a requirement relating to 

16 credit elsewhere; or 

17 ‘‘(ii) any requirement described in a 

18 Standard Operating Procedures Manual or 

19 Policy Notice related to a program or func20 tion of the Office of Capital Access. 

21 ‘‘(B) ENFORCEMENT ACTIONS.—Any en22 forcement action taken with respect to a 7(a) 

23 lender by the Director under subparagraph 

24 (A)— 


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1 ‘‘(i) shall be based on the severity or 

2 frequency of the violation; and 

3 ‘‘(ii) may include assessing a civil 

4 monetary penalty against the 7(a) lender in 

5 an amount that is not greater than 

6 $250,000. 

7 ‘‘(3) APPEAL BY LENDER.—A 7(a) lender may 

8 appeal an enforcement action imposed by the Director 

9 under paragraph (1) or (2) to the Office of Hearings 

10 and Appeals established under section 5(i) or to an 

11 appropriate district court of the United States. 

12 ‘‘(f) REGULATIONS.—Not later than 1 year after the 

13 date of enactment of the Small Business 7(a) Lending Over14 sight Reform Act of 2018, the Administrator shall issue reg15 ulations, after opportunity for notice and comment under 

16 section 553 of title 5, United States Code, to carry out sub17 section (e). 

18 ‘‘(g) SERVICING AND LIQUIDATION RESPONSIBIL19 ITIES.—During any period during which a 7(a) lender is 

20 suspended from participating under section 7(a), or if a 

21 7(a) lender is prohibited from making loans under section 

22 7(a), the 7(a) lender shall remain obligated to maintain 

23 all servicing and liquidation activities delegated to the lend24 er by the Administrator, unless otherwise specified by the 

25 Director. 


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1 ‘‘(h) PORTFOLIO RISK ANALYSIS OF 7(a) LOANS.— 

2 ‘‘(1) IN GENERAL.—The Director shall annually 

3 conduct a risk analysis of the portfolio of the Admin4 istration with respect to all loans guaranteed under 

5 section 7(a). 

6 ‘‘(2) REPORT TO CONGRESS.—On December 1, 

7 2018, and every December 1 thereafter, the Director 

8 shall submit to Congress an annual report containing 

9 the results of each portfolio risk analysis conducted 

10 under paragraph (1) during the fiscal year preceding 

11 the submission of the report, which shall include— 

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

13 of loans guaranteed under section 7(a); 

14 ‘‘(B) an analysis of program risk, set forth 

15 separately by industry concentration; 

16 ‘‘(C) without identifying individual 7(a) 

17 lenders by name, a consolidated analysis of the 

18 risk created by the individual 7(a) lenders re19 sponsible for not less than 1 percent of the gross 

20 loan approvals by dollar and amount of loans 

21 for the year covered by the report; 

22 ‘‘(D) steps taken by the Administrator to 

23 mitigate the risks identified in subparagraphs 

24 (A), (B), and (C); 


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1 ‘‘(E) the number of 7(a) lenders, the gross 

2 and net number of loans made, and the gross 

3 and net dollar amount of loans made; 

4 ‘‘(F) the number and dollar amount of total 

5 losses and total purchases, and the percentage 

6 and total amount of recoveries by the Adminis7 tration; 

8 ‘‘(G) the number and type of enforcement 

9 actions recommended by the Director; 

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

11 actions approved by the Lender Oversight Com12 mittee established under section 48; 

13 ‘‘(I) the number and type of enforcement ac14 tions disapproved by the Lender Oversight Com15 mittee; and 

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

17 monetary penalties assessed. 

18 ‘‘(i) BUDGET SUBMISSION AND JUSTIFICATION.—Ef19 fective for the first fiscal year beginning after the date of 

20 enactment of the Small Business 7(a) Lending Oversight 

21 Reform Act of 2018, and each fiscal year thereafter, the Di22 rector shall provide to the Administrator in writing a budg23 et submission and justification for the Office, which shall— 

24 ‘‘(1) include the salaries and expenses of the Of25 fice and lender oversight fees; 


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1 ‘‘(2) be submitted at or about the time of the 

2 budget submission by the President under section 

3 1105(a) of title 31, United States Code; and 

4 ‘‘(3) be maintained in an indexed form and 

5 made available for public review for a period of not 

6 less than 5 years beginning on the date of submission. 

7 ‘‘SEC. 48. LENDER OVERSIGHT COMMITTEE. 

8 ‘‘(a) ESTABLISHMENT.—There is established within 

9 the Administration the Lender Oversight Committee (in 

10 this section referred to as the ‘Committee’). 

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

12 not less than 8 members appointed by the Administrator, 

13 of whom— 

14 ‘‘(1) 3 members shall be voting members, of 

15 whom 2 shall be career appointees serving in a Senior 

16 Executive Service position (as defined in section 3132 

17 of title 5, United States Code); and 

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

19 members who shall serve in an advisory capacity on 

20 the Committee. 

21 ‘‘(c) DUTIES.—The Committee shall— 

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

23 ‘‘(2) review formal enforcement action rec24 ommendations of the Director of the Office of Credit 

25 Risk Management with respect to any lender making 


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1 loans under section 7(a) and any lending partner or 

2 intermediary participating in a lending program of 

3 the Office of Capital Access of the Administration; 

4 ‘‘(3) in carrying out paragraph (2) with respect 

5 to a formal enforcement action taken under subsection 

6 (d) or (e) of section 23, vote to recommend the action 

7 or vote to not recommend the action to the Adminis8 trator or a designee of the Administrator; 

9 ‘‘(4) in carrying out paragraph (2) with respect 

10 to any other formal enforcement action not taken 

11 under subsection (d) or (e) of section 23, vote to ap12 prove, disapprove, or modify the action; 

13 ‘‘(5) review in an advisory capacity any lender 

14 oversight, portfolio risk management, or program in15 tegrity matters brought by the Director of the Office 

16 of Credit Risk Management; and 

17 ‘‘(6) take such other actions and perform such 

18 other functions as may be delegated to the Committee 

19 by the Administrator. 

20 ‘‘(d) MEETINGS.— 

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

22 necessary, but not less frequently than on a quarterly 

23 basis. 

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

25 the Administrator a report detailing each meeting of 


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1 the Committee, including if the Committee does or 

2 does not vote to approve a formal enforcement action 

3 of the Director of the Office of Credit Risk Manage4 ment with respect to a lender.’’. 

5 (b) TRANSFER OF FUNCTIONS.— 

6 (1) OFFICE OF CREDIT RISK MANAGEMENT.—All 

7 functions of the Office of Credit Risk Management of 

8 the Administration, including the personnel, assets, 

9 and obligations of the Office of Credit Risk Manage10 ment, as in existence on the day before the date of en11 actment of this Act, shall be transferred to the Office 

12 of Credit Risk Management established under section 

13 47 of the Small Business Act, as added by subsection 

14 (a). 

15 (2) LENDER OVERSIGHT COMMITTEE.—All func16 tions of the Lender Oversight Committee of the Ad17 ministration, including the personnel, assets, and ob18 ligations of the Lender Oversight Committee, as in ex19 istence on the day before the date of enactment of this 

20 Act, shall be transferred to the Lender Oversight Com21 mittee established under section 48 of the Small Busi22 ness Act, as added by subsection (a). 

23 (c) DEEMING OF NAME.— 

24 (1) OFFICE OF CREDIT RISK MANAGEMENT.— 

25 Any reference in a law, regulation, document, paper, 


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1 or other record of the United States to the Office of 

2 Credit Risk Management of the Administration shall 

3 be deemed a reference to the Office of Credit Risk 

4 Management of the Administration established under 

5 section 47 of the Small Business Act, as added by 

6 subsection (a). 

7 (2) LENDER OVERSIGHT COMMITTEE.—Any ref8 erence in a law, regulation, document, paper, or other 

9 record of the United States to the Lender Oversight 

10 Committee of the Administration shall be deemed a 

11 reference to the Lender Oversight Committee of the 

12 Administration established under section 48 of the 

13 Small Business Act, as added by subsection (a). 

14 (d) TECHNICAL AND CONFORMING AMENDMENTS.— 

15 The Small Business Act (15 U.S.C. 631 et seq.) is amend16 ed— 

17 (1) in section 3(r)(2) (15 U.S.C. 632(r)(2))— 

18 (A) in the paragraph heading, by striking 

19 ‘‘SBA’’; and 

20 (B) in the matter preceding subparagraph 

21 (A), by striking ‘‘SBA’’; and 

22 (2) in section 18 (15 U.S.C. 647), by striking 

23 subsection (b) and inserting the following: 

24 ‘‘(b) As used in this Act, the term ‘agricultural enter25 prises’ means those small business concerns engaged in the 


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1 production of food and fiber, ranching, and raising of live2 stock, aquaculture, and all other farming and agricultural 

3 related industries.’’. 

4 SEC. 4. DEFINITION OF CREDIT ELSEWHERE. 

5 The Small Business Act (15 U.S.C. 631 et seq.) is 

6 amended— 

7 (1) in section 3 (15 U.S.C. 632), by striking sub8 section (h) and inserting the following: 

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

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

11 in section 7(b)), the availability of credit on reason12 able terms and conditions to the individual loan ap13 plicant from non-Federal, non-State, or non-local gov14 ernment sources, considering factors associated with 

15 conventional lending practices, including— 

16 ‘‘(A) the business industry in which the 

17 loan applicant operates; 

18 ‘‘(B) whether the loan applicant is an en19 terprise that has been in operation for a period 

20 of not more than 2 years; 

21 ‘‘(C) the adequacy of the collateral available 

22 to secure the requested loan; 

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

24 assure the ability of the loan applicant to repay 


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1 the debt from the actual or projected cash flow of 

2 the business; and 

3 ‘‘(E) any other factor relating to the par4 ticular credit application, as documented in de5 tail by the lender, that cannot be overcome except 

6 through obtaining a Federal loan guarantee 

7 under prudent lending standards; and 

8 ‘‘(2) for the purposes of section 7(b), the avail9 ability of credit on reasonable terms and conditions 

10 from non-Federal sources taking into consideration 

11 the prevailing rates and terms in the community in 

12 or near where the applicant business concern trans13 acts business, or the applicant homeowner resides, for 

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

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

16 636(a)(1)(A)(i)), by inserting ‘‘The Administrator has 

17 the authority to direct, and conduct oversight for, the 

18 methods by which lenders determine whether a bor19 rower is able to obtain credit elsewhere.’’ before ‘‘No 

20 financial assistance’’. 

21 SEC. 5. AUTHORITY FOR ADMINISTRATOR TO INCREASE 

22 AMOUNT FOR GENERAL BUSINESS LOANS. 

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

24 note) is amended— 


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1 (1) by redesignating subsection (j) as subsection 

2 (f); and 

3 (2) by adding at the end the following: 

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

5 BUSINESS LOANS.— 

6 ‘‘(1) IN GENERAL.—With respect to fiscal year 

7 2018 and each fiscal year thereafter, if the Adminis8 trator determines that the amount of commitments by 

9 the Administrator for general business loans author10 ized under section 7(a) for a fiscal year could exceed 

11 the limit on the total amount of commitments the Ad12 ministrator may make for those loans under this Act, 

13 an appropriations Act, or any other provision of law, 

14 the Administrator may make commitments for those 

15 loans for that fiscal year in a total amount equal to 

16 not more than 115 percent of that limit. 

17 ‘‘(2) APPROVAL REQUIRED BEFORE EXERCISING

18 AUTHORITY.— 

19 ‘‘(A) IN GENERAL.—Not later than 15 days 

20 before the date on which the Administrator in21 tends to exercise the authority under paragraph 

22 (1), the Administrator shall submit notice of the 

23 intent of the Administrator to exercise the au24 thority to— 


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1 ‘‘(i) the Committee on Small Business 

2 and Entrepreneurship and the Sub3 committee on Financial Services and Gen4 eral Government of the Committee on Ap5 propriations of the Senate; and 

6 ‘‘(ii) the Committee on Small Business 

7 and the Subcommittee on Financial Serv8 ices and General Government of the Com9 mittee on Appropriations of the House of 

10 Representatives. 

11 ‘‘(B) APPROVAL.—The Administrator may 

12 not exercise the authority under paragraph (1) 

13 unless the exercise of authority has been ap14 proved, in writing, by the Committee on Appro15 priations and the Committee on Small Business 

16 and Entrepreneurship of the Senate and the 

17 Committee on Appropriations and the Com18 mittee on Small Business of the House of Rep19 resentatives. 

20 ‘‘(3) LIMITATION.—The Administrator shall not 

21 exercise the authority under paragraph (1) more than 

22 once during any fiscal year.’’. 

23 SEC. 6. ESTABLISHING A PROCESS FOR WAIVERS. 

24 (a) IN GENERAL.—If the Administrator exercises stat25 utory or regulatory authority to waive a regulation or reVerDate Sep 11 2014 23:10 Mar 19, 2018 Jkt 079200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6203 E:\BILLS\S2283.RS S2283

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1 quirement in a Standard Operating Procedures Manual or 

2 Policy Notice related to a program or function of the Office 

3 of Capital Access of the Administration, the waiver shall 

4 be maintained in an indexed form. 

5 (b) NO NEW WAIVER AUTHORITY.—Nothing in sub6 section (a) shall be construed as creating new authority for 

7 the Administrator to waive regulations of the Administra8 tion. 

9 SEC. 7. IMPROVED OVERSIGHT OF 7(A) LOANS TO POULTRY 

10 FARMS. 

11 The Director of the Office of Credit Risk Management 

12 of the Administration shall, in the first report submitted 

13 to Congress under section 47(h)(2) of the Small Business 

14 Act (as added by section 3 of this Act), include information 

15 on how the Office of Capital Access of the Administration 

16 has addressed the recommendations in the report issued by 

17 the Office of Inspector General of the Administration enti18 tled ‘‘Evaluation of SBA 7(a) Loans Made to Poultry 

19 Farmers’’, dated March 6, 2018. 


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Calendar No. 351 

115TH CONGRESS 

2D SESSION S. 2283 

A BILL 

To amend the Small Business Act to strengthen the 

purposes. Small Business Administration, and for other Office of Credit Risk Management within the 

MARCH 19, 2018 

Reported with an amendment 


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