[Congressional Record Volume 166, Number 158 (Monday, September 14, 2020)]
[House]
[Pages H4347-H4348]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]





         MICROLOAN TRANSPARENCY AND ACCOUNTABILITY ACT OF 2020

  Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 6078) to amend the Small Business Act to increase 
transparency and to enhance the use of microloans in rural areas, and 
for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 6078

       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 ``Microloan Transparency and 
     Accountability Act of 2020''.

     SEC. 2. ASSISTANCE FOR INTERMEDIARIES SERVING RURAL AREAS.

       Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) 
     is amended--
       (1) by amending paragraph (4)(C)(i) to read as follows:
       ``(i) Each intermediate shall be eligible to receive a 
     grant equal to 5 percent of the total outstanding balance of 
     loans made to the intermediary under this subsection, in 
     addition to grants made under subparagraph (A), if the 
     intermediary has either--

       ``(I) a portfolio of loans made under this subsection that 
     averages not more than $10,000 during the period of the 
     intermediary's participation in the program;
       ``(II) a portfolio of loans made under this subsection of 
     which not less than 25 percent are made to small business 
     concerns located in or owned by one or more residents of an 
     economically distressed area; or
       ``(III) a portfolio of loans made under this subsection of 
     which not less than 25 percent is serving rural areas during 
     the period of the intermediary's participation in the 
     program.''; and

       (2) in paragraph (11)--
       (A) in subparagraph (C)(ii), by striking all after the 
     semicolon and inserting ``and''; and
       (B) by striking all after subparagraph (C), and inserting 
     the following:
       ``(D) the term `economically distressed area', as used in 
     paragraph (4), means a county or equivalent division of local 
     government of a State in which the small business concern is 
     located, in which, according to the most recent data 
     available from the Bureau of the Census, Department of 
     Commerce, not less than 40 percent of residents have an 
     annual income that is at or below the poverty level.''.

     SEC. 3. PORTFOLIO RISK ANALYSIS OF MICROLOANS.

       Section 7(m)(10) of the Small Business Act (15 U.S.C. 
     636(m)(10)) is amended--
       (1) by redesignating subparagraphs (A) through (F) as 
     clauses (i) through (vi), respectively, and adjusting the 
     margins accordingly;
       (2) by amending clause (iv), as so redesignated, to read as 
     follows:
       ``(vi) the number, amount, and percentage of microloans 
     made by intermediaries to small business concerns--

       ``(I) that went into default in the previous year; and
       ``(II) that were charged off in the previous year by such 
     intermediaries;'';

       (3) in clause (vi), as so redesignated, by striking ``and'' 
     at the end;
       (4) by redesignating subparagraph (G) as clause (xviii), 
     and adjusting the margin accordingly;
       (5) by striking ``On November 1, 1995,'' and all that 
     follows through ``the following:'' and inserting the 
     following:
       ``(A) In general.--Beginning on February 1, 2021, and 
     annually thereafter, the Administrator shall submit to the 
     Committee on Small Business and Entrepreneurship of the 
     Senate and the Committee on Small Business of the House of 
     Representatives, and make available to the public on the 
     website of the Administration, a report on the effectiveness 
     of the microloan program during the fiscal year preceding the 
     date of the report. Such report shall include--'';
       (6) in subparagraph (A), as so designated, by inserting 
     after clause (vi) the following new clauses:
       ``(vii) the number and type of enforcement actions taken by 
     the Administrator against noncompliant intermediaries;
       ``(viii) an analysis of compliance by intermediaries with 
     the credit availability requirements of paragraph (3)(E) for 
     loans in an amount greater than $20,000;
       ``(ix) the extent to which microloans are provided to small 
     business concerns in rural areas;
       ``(x) the number of underserved borrowers, as defined by 
     the Administration, participating in the microloan program;
       ``(xi) the average rate of interest for each microloan;
       ``(xii) the average amount of fees charged for each 
     microloan;
       ``(xiii) the average size of each microloan, including--

       ``(I) the number of loans made in an amount greater than 
     $20,000; and
       ``(II) the average size and charge-off rate of such loans;

       ``(xiv) the subsidy cost to the Administration;
       ``(xv) the number and percentage of microloans that were 
     made to refinance other loans;
       ``(xvi) the number and percentage of microloans made to new 
     program participants and the number and percentage of 
     microloans made to previous program participants;
       ``(xvii) the average amount of technical assistance grant 
     monies spent on each loan; and''; and
       (7) by adding at the end the following:
       ``(B) Privacy.--Each report submitted under subparagraph 
     (A) shall not contain any personally identifiable information 
     of any borrower.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New York (Ms. Velazquez) and the gentleman from Ohio (Mr. Chabot) each 
will control 20 minutes.
  The Chair recognizes the gentlewoman from New York.


                             General Leave

  Ms. VELAZQUEZ. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on the measure under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of the bill before us today, H.R. 
6078, the Microloan Transparency and Accountability Act, which makes it 
easier for rural-serving microloan intermediaries to provide technical 
and management assistance to entrepreneurs.
  One of the key components of the microloan program, and what I 
believe makes it so successful, is that intermediaries offer 
technology, management, and marketing assistance to business owners in 
conjunction with affordable financing. However, when our Committee held 
hearings on the program, we heard about the challenges that 
intermediaries in rural areas face in providing technical assistance.
  These nonprofit, mission-based lenders must sometimes drive 2 or 3 
hours, or even more, to a borrower's place of business to conduct 
training. These expenses all come out of the intermediary's bottom 
line.
  The measure Mr. Burchett and Mr. Kim have put forward to make 
intermediaries with at least 25 percent of their loans in a rural area 
eligible for a bonus technical assistance grant is a necessary one that 
I support and would encourage all of my colleagues to support.
  Mr. Speaker, I applaud our bipartisanship and, more importantly, our 
commitment to America's small businesses. I urge all of my colleagues 
to vote ``yes,'' and I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I want to again thank the chair, Ms. Velazquez, for 
working in a bipartisan manner on all four of these bills, and that is 
why both Republicans and Democrats support all four, because we really 
are working together, and that is good for the country.
  Mr. Speaker, to enhance the dissemination of microloans in rural 
areas and to increase transparency, this bill, H.R. 6078, the Microloan 
Transparency and Accountability Act of 2020, was introduced by the 
gentleman from Tennessee (Mr. Burchett) and the gentleman from New 
Jersey (Mr. Kim).
  In order to meet the needs of low-dollar borrowers, the SBA offers 
the microloan program. As with all the SBA financial assistance 
program, the SBA does not make a microloan directly to a small 
business. Rather, it makes direct loans to a nonprofit, called a 
microloan intermediary. The intermediary, in turn, makes loans of up to 
$50,000 to borrowers and is required to provide technical assistance to 
its borrowers through a technical assistance grant.
  The average loan within the microloan program is approximately 
$14,500, and the program has grown from approving over 3,500 loans for 
a total of $52 million in fiscal year 2015 to approving over 5,000 
loans--5,532, to be exact--for over $81 million in fiscal year 2019.
  H.R. 6078, the Microloan Transparency Act of 2020, increases 
transparency for the growing microloan program and enhances microloan 
options for rural areas. Specifically, H.R. 6078 requires the SBA to 
perform an annual portfolio risk analysis to examine defaults and 
charge-off rates to ensure taxpayer money is safeguarded.

[[Page H4348]]

  Additionally, to enhance the dissemination of rural loans, the bill 
introduces an opportunity for an intermediary that currently makes at 
least 25 percent of its loans to a small business serving rural areas 
the ability to receive a 5 percent bonus technical assistance grant.
  Mr. Speaker, I would again like to thank Mr. Burchett and Mr. Kim for 
working together to protect American taxpayer dollars and to ensure our 
rural communities have the ability to utilize this program to its 
fullest.
  Mr. Speaker, I fully support this bipartisan legislation. I urge my 
colleagues to vote ``yes,'' and I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Tennessee (Mr. Burchett). I thank him for his leadership 
in pushing this legislation.
  Mr. BURCHETT. Mr. Speaker, I thank Chairwoman Velazquez and Ranking 
Member Chabot for this opportunity as a freshman. It doesn't escape me 
that you all have allowed me to move forward with a meaningful piece of 
legislation as a freshman, and I can assure you that the people I 
represent thank you all very much.
  Mr. Speaker, small businesses, whether in urban centers or rural 
areas, deserve access to small business administration resources.
  The Microloan Transparency and Accountability Act is strong, 
bipartisan legislation that improves rural access to the SBA microloan 
program and will help ensure that community-based businesses, and not 
just the heavy hitters, have access to needed resources.

                              {time}  1445

  As a former local mayor, I know the difference that easy access to 
loans, even small ones, can make for our American mom-and-pop shops.
  Unfortunately, Mr. Speaker, rural small businesses often don't get 
enough consideration from microloan providers. To incentivize interest 
in supporting our rural small businesses, this legislation would 
establish a 5 percent technical assistance grant for intermediaries who 
make 25 percent of their loans to these small businesses. Rural small 
businesses will have more opportunity to grow and innovate with the 
help of this legislation.
  This bill also improves transparency within the SBA microloan program 
so American taxpayers know their dollars are being invested 
responsibly. Under this legislation, Mr. Speaker, the SBA would update 
Congress with a portfolio risk analysis of microloans on an annual 
basis.
  Mr. Speaker, I encourage my colleagues to support this bill and the 
steps it takes to promote fair access to financial resources for every 
American small business. I am proud to work with my friend 
Representative Kim on this bill, and I thank him for his efforts to get 
it across the finish line. I also thank the chairwoman and the ranking 
member.
  Ms. VELAZQUEZ. Mr. Speaker, I have no further speakers. I reserve the 
balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself the balance of my time.
  The recent growth of the SBA's microloan program has shown how 
beneficial it can be to small-dollar borrowers. Not only does this bill 
make the program more valuable to small firms located in rural areas, 
it also increases transparency and allows future Congresses with 
important information to help guide policy decisions.
  This is a bipartisan, good government piece of legislation that 
deserves each Member's support.
  I thank Mr. Burchett and Mr. Kim for their leadership. I once again 
thank Representative Velazquez for, as always, working together with us 
in a bipartisan fashion. I very much appreciate that.
  Mr. Speaker, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself the balance of my time.
  Oftentimes, the biggest barrier to entrepreneurship is accessing 
affordable capital. But for many entrepreneurs, access to expert advice 
can give them an added boost and the skills needed to grow a 
sustainable business.
  To that end, the microloan program leverages the network of nonprofit 
intermediary lenders, many of them CDFIs, who have deep roots in the 
local community, are committed to economic development, and offer 
technical business and marketing assistance for these small businesses.
  This bill will go a long way in helping these microlenders reach more 
small businesses in rural areas, which, in turn, will stimulate the 
local economies. It also mandates reporting on the program's 
effectiveness so our committee can continue to oversee the program and 
make necessary modifications to further improve the program.
  Again, thank you to Representative Burchett and Representative Kim 
for collaborating on the bill before us today. I also thank the ranking 
member, Mr. Chabot, and his staff for working with us in a bipartisan 
manner, not just on this piece of legislation, but on all the bills we 
have brought to the floor today.
  Mr. Speaker, I urge my colleagues to vote ``yes,'' and I yield back 
the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from New York (Ms. Velazquez) that the House suspend the 
rules and pass the bill, H.R. 6078, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________