504 Credit Risk Management Improvement Act of 2023

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. 1. Short title This Act may be cited as the 504 Credit Risk Management Improvement Act of 2023 2. Enhancements to the Office of Credit Risk Management Section 47 of the Small Business Act ( 15 U.S.C. 657t (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 ( 15 U.S.C. 695 et seq. certified development company (B) conducting file reviews with respect to loan closings under the program established under title V of the Small Business Investment Act of 1958 ( 15 U.S.C. 695 et seq. (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: (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 ( 15 U.S.C. 695 et seq. (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 ( 15 U.S.C. 695 et seq. (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 On and after the date that is 1 year after the date of 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 ( 15 U.S.C. 695 et seq. (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. . 3. Rules relating to obligations of certified development companies under the National Environmental Policy Act (a) Eligible certified development company defined In this section, the term eligible certified development company 15 U.S.C. 695 et seq. (b) Requirement To issue rules Not later than 180 days after the date of 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. (c) 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. 1. Short title This Act may be cited as the 504 Credit Risk Management Improvement Act of 2023 2. Enhancements to the Office of Credit Risk Management Title V of the Small Business Investment Act of 1958 ( 15 U.S.C. 695 et seq. 511. Office of Credit Risk Management oversight (a) Definitions In this section— (1) the term Director (2) the term Office 15 U.S.C. 657t (b) Duties relating to 504 program The Office— (1) shall be responsible for— (A) supervising any certified development company, as provided in subsection (d); and (B) conducting file reviews with respect to loan closings under the program established under this title, as provided in subsection (c); and (2) may— (A) take formal and informal enforcement actions against a certified development company, as provided in subsection (e); and (B) charge a certified development company a fee, as provided in subsection (f). (c) Loan closing file reviews With respect to a loan closing under the program established under this title, 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. (d) 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)— (I) notify the company of the expected date of submission of the report and the reason for the delay; and (II) submit to the company the report; and (B) if a response by a certified development company is requested in a report submitted under subparagraph (A), 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. (e) 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 of the Small Business Act ( 15 U.S.C. 657u (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 60 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 this title 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. (f) Fee authority regarding certified development companies (1) In general On and after the date that is 1 year after the date of enactment of this section, 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 this title; 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. . 3. Rules relating to obligations of certified development companies under the National Environmental Policy Act (a) Eligible certified development company defined In this section, the term eligible certified development company 15 U.S.C. 695 et seq. (b) Requirement To issue rules Not later than 180 days after the date of 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. (c) 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. 4. Extension of sunset for delegated authority for accredited lenders Section 328(b)(2) of division N of the Consolidated Appropriations Act, 2021 ( 15 U.S.C. 697d 2023 2025 July 25, 2023 Reported with an amendment

Summary: 504 Credit Risk Management Improvement Act of 2023 This bill revises the duties of the Office of Credit Risk Management to include oversight of a certified development company (CDC) that participates in the 504 Loan Program of the Small Business Administration (SBA), and it requires the SBA to issue rules related to certain environmental requirements. The 504 Loan Program provides a small business with SBA financing&#8212;through a CDC intermediary&#8212;for expansion or modernization. Specifically, the bill requires the office to oversee any CDC that participates in the program and to conduct file reviews with respect to loan closings under the program. Further, the bill authorizes the office to take formal and informal enforcement actions against a CDC for specified violations and to charge each CDC a fee. The SBA must issue rules to clarify the procedures necessary for an eligible CDC to comply with certain environmental requirements. The bill also extends, with respect to certain loans, the temporary authorities of a local development company that is designated as an accredited lender.