IB 
Union Calendar No. 503 
115TH CONGRESS 
2D SESSION 
H. R. 4743 
[Report No. 115–655] 
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 HOUSE OF REPRESENTATIVES 
JANUARY 9, 2018 
Mr. CHABOT (for himself and Ms. VELA´ZQUEZ) introduced the following bill; 
which was referred to the Committee on Small Business 
APRIL 26, 2018 
Additional sponsors: Mr. MARSHALL, Miss GONZA´LEZ-COLO´N of Puerto Rico, 
Mrs. RADEWAGEN, Ms. JUDY CHU of California, Mrs. MURPHY of Flor-
ida, Mr. ESPAILLAT, Mr. EVANS, Ms. CLARKE of New York, Mr. NOR-
MAN, and Mr. LAWSON of Florida 
APRIL 26, 2018 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on January 9, 2018] 
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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. 
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Be it enacted by the Senate and House of Representa-
tives 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 ‘‘Admin-
istrator’’ 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 su-
pervising— 
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‘‘(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 par-
ticipant 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. 
‘‘(d) SUPERVISION DUTIES FOR 7(a) LENDERS.—With 
respect to 7(a) lenders, an employee of the Office shall— 
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‘‘(1) be present for and supervise any such re-
view 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 con-
ducted on the premise of the 7(a) lender. 
‘‘(e) ENFORCEMENT AUTHORITY AGAINST 7(a) LEND-
ERS.— 
‘‘(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 re-
quirement 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 require-
ment under section 7(a), including a re-
quirement relating to credit elsewhere; or 
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‘‘(ii) any requirement described in a 
Standard Operating Procedures Manual or 
Policy Notice, related to a program or func-
tion of the Office of Capital Access. 
‘‘(B) ENFORCEMENT ACTIONS.—An enforce-
ment action imposed on a 7(a) lender by the Di-
rector 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
RESPONSIBIL-
ITIES.—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 main-
tain all servicing and liquidation activities delegated to the 
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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 Admin-
istration 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 re-
sults of each portfolio risk analysis conducted under 
paragraph (1) during the fiscal year preceding the 
submission of the report, which shall include— 
‘‘(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 re-
sponsible 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 
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‘‘(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 Com-
mittee established under section 48; 
‘‘(I) the number and type of enforcement ac-
tions disapproved by the Lender Oversight Com-
mittee; 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 
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submission to the Administrator. Such submission and jus-
tification 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 Execu-
tive 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— 
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‘‘(1) review reports on lender oversight activities; 
‘‘(2) review formal enforcement action rec-
ommendations of the Director of the Office of Credit 
Risk Management with respect to any lender making 
loans under section 7(a) and 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 rec-
ommend 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 in-
tegrity 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.— 
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‘‘(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 Manage-
ment with respect to a lender.’’. 
(b) SUPERVISION DUTIES FOR 7(A) LENDERS.—Effec-
tive 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 Adminis-
trator, the Administrator shall develop and im-
plement a review report timeline which shall— 
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‘‘(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 sub-
paragraph (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. 
‘‘(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 
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(2) LENDER OVERSIGHT COMMITTEE.—Any ref-
erence 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 sec-
tion 48 of the Small Business Act, as added by sub-
section (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 reason-
able terms and conditions to the individual loan ap-
plicant from non-Federal, non-State, or non-local gov-
ernment sources, considering factors associated with 
conventional lending practices, including— 
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‘‘(A) the business industry in which the 
loan applicant operates; 
‘‘(B) whether the loan applicant is an en-
terprise 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; 
‘‘(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 par-
ticular credit application, as documented in de-
tail 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 avail-
ability 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 trans-
acts 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 
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the authority to direct, and conduct oversight for, the 
methods by which lenders determine whether a bor-
rower 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 enter-
prises’ means those small business concerns engaged in the 
production of food and fiber, ranching, and raising of live-
stock, 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 sub-
section: 
‘‘(g) AUTHORITY TO INCREASE AMOUNT OF GENERAL 
BUSINESS LOANS.— 
‘‘(1) IN GENERAL.—With respect to fiscal year 
2018 and each fiscal year thereafter, if the Adminis-
trator determines that the amount of commitments by 
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the Administrator for general business loans author-
ized under section 7(a) for a fiscal year could exceed 
the limit on the total amount of commitments the Ad-
ministrator 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) APPROVAL REQUIRED BEFORE EXERCISING 
AUTHORITY.— 
‘‘(A) IN GENERAL.—Not later than 15 days 
before the date on which the Administrator in-
tends to exercise the authority under paragraph 
(1), the Administrator shall submit notice of in-
tent to exercise the authority to— 
‘‘(i) the Committee on Small Business 
and 
Entrepreneurship 
and 
the 
Sub-
committee on Financial Services and Gen-
eral Government of the Committee on Ap-
propriations of the Senate; and 
‘‘(ii) the Committee on Small Business 
and the Subcommittee on Financial Serv-
ices and General Government of the Com-
mittee on Appropriations of the House of 
Representatives. 
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‘‘(B) APPROVAL.—The Administrator may 
not exercise the authority under paragraph (1) 
unless such exercise of authority has been ap-
proved, in writing, by the Committee on Appro-
priations and the Committee on Small Business 
and Entrepreneurship of the Senate and the 
Committee on Appropriations and the Com-
mittee on Small Business of the House of Rep-
resentatives. 
‘‘(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 stat-
utory 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 sub-
section (a) shall be construed as creating new authority for 
the Administrator to waive regulations of the Administra-
tion. 
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Union Calendar No. 503 
115TH CONGRESS 
2D SESSION 
H. R. 4743 
[Report No. 115–655] 
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. 
APRIL 26, 2018 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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