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
PL 115-189 (H.R.4743), enacted 06/21/2018

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 Manage-
ment 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 Adminis-
tration 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 sec-
tion 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 over-
sight 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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132 STAT. 1493 
PUBLIC LAW 115–189—JUNE 21, 2018 
‘‘(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 require-
ment 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 subpara-
graph (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 regula-
tions, after opportunity for notice and comment, to carry out sub-
section (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 other-
wise 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 Con-
gress 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 sepa-
rately 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 per-
cent 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 rec-
ommended 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 dis-
approved 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 Adminis-
trator. 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 submis-
sion 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 Adminis-
tration 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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132 STAT. 1495 
PUBLIC LAW 115–189—JUNE 21, 2018 
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 Adminis-
trator 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 func-
tions as may be delegated to the Committee by the Adminis-
trator. 
‘‘(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 Com-
mittee, 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 require-
ments 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 Adminis-
trator not later than 45 business days after the date 
on which the 7(a) lender receives the report. 
Notification. 
15 USC 657t 
note. 
Recommenda- 
tions. 
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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 nec-
essary.’’. 
(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 estab-
lished 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 Administra-
tion, 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 ref-
erence to the Office of Credit Risk Management, established 
under section 47 of the Small Business Act, as added by sub-
section (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 Busi-
ness 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 condi-
tions to the individual loan applicant from non-Federal, non- 
State, or non-local government sources, considering factors asso-
ciated 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 
‘‘(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 Busi-
ness 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 commit-
ments by 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 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 Adminis-
trator 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 Serv-
ices and General Government of the Committee on Appro-
priations of the Senate; and 
‘‘(B) the Committee on Small Business and the Sub-
committee on Financial Services and General Government 
of the Committee on Appropriations of the House of Rep-
resentatives. 
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 Entrepreneur-
ship) accompanying S. 2283. 
CONGRESSIONAL RECORD, Vol. 164 (2018): 
May 8, considered and passed House. 
June 5, considered and passed Senate. 
‘‘(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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