Enhancements to the Office of Credit Risk Management

Section 47 of the Small Business Act (15 U.S.C. 657t) is amended—(1)by striking subsection (b) and inserting the following:

(b)

Duties

The Office—(1)shall be responsible for—(A)supervising—(i)any lender making loans under section 7(a) (in this section referred to as a 7(a) lender);(ii)any Lending Partner or Intermediary participant of the Administration in a lending program of the Office of Capital Access of the Administration;(iii)any small business lending company or a non-Federally regulated lender without regard to the requirements of section 23; and(iv)any certified development company described under the program established under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) (referred to in this section as a certified development company), as provided in subsection (k); and(B)conducting file reviews with respect to loan closings under the program established under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), as provided in subsection (j); and(2)may—(A)take formal and informal enforcement actions against a certified development company, as provided in subsection (l); and(B)charge a certified development company a fee, as provided in subsection (m).

; and

(2)by adding at the end the following:

(j)

Loan closing file reviews

With respect to a loan closing under the program established under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), 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 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.(k)

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), notify the company of the expected date of submission of the report and the reason for the delay; and(B)if a response by a certified development company is requested in a report submitted under subparagraph (A)(i), 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.(l)

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, 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, including a requirement relating to the necessary funds for making loans when those funds are not made available to the company from private sources on reasonable terms; 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 30 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 title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) 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.(m)

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 subsection, 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 title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); 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.