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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— 
‘‘(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
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of the Office of Capital Access of the Administra-
tion; 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 Manage-
ment (in this section referred to as the ‘Director’), 
who shall be a career appointee in the Senior Execu-
tive Service (as defined in section 3132 of title 5, 
United States Code). 
‘‘(2) DUTIES.—The Director shall be respon-
sible for oversight of the lenders and participants de-
scribed 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— 
‘‘(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.
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‘‘(e) ENFORCEMENT
AUTHORITY
AGAINST
7(a) 
LENDERS.— 
‘‘(1) INFORMAL ENFORCEMENT AUTHORITY.— 
The Director may take an informal enforcement ac-
tion 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 Pol-
icy 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 for-
mal 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 
‘‘(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.
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‘‘(B) ENFORCEMENT
ACTIONS.—An en-
forcement action imposed on a 7(a) lender by 
the Director under subparagraph (A) shall be 
based on the severity or frequency of the viola-
tion 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 Direc-
tor 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 maintain all servicing and liquidation activities dele-
gated to the lender by the Administrator, unless otherwise 
specified by the Director. 
‘‘(h) PORTFOLIO RISK ANALYSIS OF 7(a) LOANS.—
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‘‘(1) IN GENERAL.—The Director shall annually 
conduct a risk analysis of the portfolio of the Ad-
ministration 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 
‘‘(ii) the number of loans made by 
such 7(a) lenders;