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.) is amended by adding at the end the following:

511.

Office of Credit Risk Management oversight

(a)

Definitions

In this section—(1)the term Director means the Director of the Office; and(2)the term Office means the Office of Credit Risk Management established under section 47 of the Small Business Act (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, or any successor thereof, 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), 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; 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)

Report

Not later than 2 years after the date of enactment of this section, and annually thereafter, the Administrator of the Small Business Administration shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate and make available online a report that shall include—(A)the fees, if any, charged by the Office under this subsection;(B)a breakdown of those fees by certified development company portfolio size;(C)the number of full-time equivalent and contract employees carrying out duties related to certified development companies; and(D)an accounting of the use of fees by the Office and its employees or contractors for certified development company examinations.