H.R. 9691: 7(a) Program Risk Oversight Act

This bill would require the Small Business Administration’s Office of Credit Risk Management to provide a more detailed annual report on the SBA’s 7(a) loan guarantee program, which is the agency’s main loan-guarantee program for small businesses.

What the report would need to include

• Risk broken out by loan size — The report would have to show program risk separately for loans in several dollar ranges, from loans of $50,000 or less up to loans between $1 million and $5 million.

• Risk broken out by loan age — It would need to separate loans by how long ago they were originated: less than 1 year ago, 1 to 2 years ago, and more than 2 years ago.

• Risk broken out by borrower type — The report would need to show risk separately for loans made to:

  • borrowers using the loan to start a business,
  • businesses that have been operating for 2 years or less, and
  • businesses that have been operating for more than 2 years.

• Risk broken out by lender type — The report would need to show risk separately for loans originated by:

  • bank holding companies,
  • insured credit unions,
  • state credit unions insured by private deposit insurers,
  • small business lending companies, including Community Advantage SBLCs, and
  • non-federally regulated lenders.

• More detail on defaults and recoveries — It would require the report to show the number and dollar amount of SBA purchases of defaulted loan principal and interest, the amount recovered, and charge-offs, broken out by the type of institution that originated the loan.

• Fraud-related reporting — The report would have to include the number of enforcement actions and civil monetary penalties related to fraud, as well as the number and dollar amount of 7(a) loans that were 31 to 59 days past due, deferred, or delinquent, and loans the SBA determined were fraudulent.

Public release timing

The bill would also require the SBA to post the annual report on its website within 7 days after sending it to Congress.

Technical change

The bill makes a small wording fix in another part of the Small Business Act, changing “premise” to “premises.”

Relevant Companies

None found