[Congressional Record Volume 166, Number 204 (Thursday, December 3, 2020)]
[House]
[Pages H6076-H6078]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           504 CREDIT RISK MANAGEMENT IMPROVEMENT ACT OF 2020

  Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 8199) to amend the Small Business Act to enhance the Office 
of Credit Risk Management, to require the Administrator of the Small 
Business Administration to issue rules relating to environmental 
obligations of certified development companies, and for other purposes, 
as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 8199

       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 ``504 Credit Risk Management 
     Improvement Act of 2020''.

     SEC. 2. 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 (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, 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 new subsections:
       ``(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, 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--

[[Page H6077]]

       ``(A) suspend the company from participating in the program 
     established under title V of the Small Business Investment 
     Act of 1958 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.--Effective one year after the date of the 
     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; 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.''.

     SEC. 3. RULES RELATING TO OBLIGATIONS OF CERTIFIED 
                   DEVELOPMENT COMPANIES UNDER THE NATIONAL 
                   ENVIRONMENTAL POLICY ACT.

       (a) In General.--Not later than 180 days after the date of 
     the enactment of this Act, the Administrator of the Small 
     Business Administration shall issue rules to clarify the 
     procedures necessary for an eligible certified development 
     company to comply with the applicable requirements under 
     National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
     seq.).
       (b) Rule of Construction.--Nothing in this section shall be 
     construed to modify the requirements of the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
       (c) Eligible Certified Development Company Defined.--In 
     this section, the term ``eligible certified development 
     company'' means a certified development company defined under 
     title V of the Small Business Investment Act of 1958 (15 
     U.S.C. 695 et seq.) that receives assistance pursuant to such 
     title.

     SEC. 4. DETERMINATION OF BUDGETARY EFFECTS.

       The budgetary effects of this Act, for the purpose of 
     complying with the Statutory Pay-As-You-Go Act of 2010, shall 
     be determined by reference to the latest statement titled 
     ``Budgetary Effects of PAYGO Legislation'' for this Act, 
     submitted for printing in the Congressional Record by the 
     Chairman of the House Budget Committee, provided that such 
     statement has been submitted prior to the vote on passage.

  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. 
8199, which clarifies the role of SBA's Office of Credit Risk 
Management with respect to the 504 loan program.
  In 2018, Congress passed bipartisan legislation to codify SBA's 
Office of Credit Risk Management, which conducts periodic reviews of 
SBA lenders to ensure they are complying with program requirements and, 
ultimately, safeguarding the integrity of SBA's loan programs.
  That legislation focused on the 7(a) loan program, giving the office 
the regulatory and enforcement tools it needed to conduct oversight 
over SBA's largest lending partners and hold them accountable.
  Today's legislation takes that oversight work one step further by 
increasing the office's responsibilities in supervising the 504 
program, bringing much-needed consistency and clarity for all 504 
program participants.
  The bill will shift loan closing file review responsibilities for the 
504 loan program to the Office of Credit Risk Management, streamlining 
and standardizing an important process. By increasing SBA's 
responsibilities in overseeing the 504 loan program, we are improving 
the long-term sustainability of the program, ensuring it will be 
available for the next generation of entrepreneurs.
  I applaud Mr. Bishop and Ms. Craig for all of their diligence and 
perseverance on this issue and, more importantly, their commitment to 
America's small businesses.
  I urge all my colleagues to support this bill, and I reserve the 
balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  I rise in support of H.R. 8199, the 504 Credit Risk Management 
Improvement Act of 2020.
  The SBA's 504/CDC Loan Program provides lending assistance to 
thousands of small businesses year in and year out. This assistance 
translates into supporting tens of thousands of jobs on an annual 
basis. This economic development program is and has been making a 
difference in neighborhoods and communities all across this great 
Nation.
  With any successful government program, oversight must remain a 
significant factor. H.R. 8199 places an important focus on oversight 
and ensures the SBA has the appropriate capabilities to oversee the 
504/CDC Loan Program.
  Beyond oversight, H.R. 8199 also ensures that the 504/CDC Loan 
Program participants have the rules and guidance to comply with the 
National Environmental Policy Act and successfully operate within that 
program.
  I want to thank the gentleman from North Carolina (Mr. Bishop) and 
the gentlewoman from Minnesota (Ms. Craig) for their leadership and for 
working together to craft this legislation, once again, in a bipartisan 
manner.
  I want to thank the chair, Ms. Velazquez also for encouraging that 
cooperation between both sides.
  Mr. Speaker, I urge my colleagues to support this, 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 North Carolina (Mr. Bishop) and, again, thank him for 
his leadership in working across party lines with the gentlewoman from 
Minnesota (Ms. Craig). I want to commend her as well.
  Mr. BISHOP of North Carolina. Mr. Speaker, I thank the gentleman from 
Ohio for yielding.
  Mr. Speaker, I rise in support of H.R. 8199, the 504 Credit Risk 
Management Improvement Act of 2020.
  Small businesses are the core of our Nation's entrepreneurship, 
innovation, and creative activity. It is paramount that Congress invest 
its resources into empowering small businesses to fuel job growth and 
transform communities.
  The 504 program gives small businesses necessary resources, and this 
legislation will bolster and improve the implementation of that 
program. By giving small businesses access to fixed-rate financing, 
through the 504 program, small businesses that have limited capital are 
able to afford costly down payments.

  This program has made Queen City Catering a success story. When the 
company needed financing for a larger location, they turned to Business 
Expansion Funding Corporation, a certified development company in 
Charlotte that helped them secure a 504 loan. These funds led to a new 
state-of-the-art kitchen for high-quality food preparation, management 
offices, high-tech conference areas, and warehouse space for rental 
items.
  Better yet, since receiving this 504 loan, Queen City Catering has 
grown astronomically. This small business investment allowed the 
business to grow, while creating jobs for North Carolinians.
  Fellow Members of Congress, I implore you to imagine the impact that 
504 loans have on small businesses in your communities. That is exactly 
what my colleague, Congresswoman Craig, did with me when we crafted the 
504 Credit Risk Management Improvement Act.
  While the existing loan program has offered financial tools to help 
small businesses, we must act today and improve the program so it can 
help businesses serve their communities for years to come.
  The bill before us outlines important capabilities of the SBA's 
Office of Credit Risk Management pertaining to the 504/CDC Loan 
Program. Importantly, the changes will ensure the program's

[[Page H6078]]

longevity by detailing how it should supervise a file review.
  Additionally, this legislation requires the SBA to provide clear 
direction to certified development companies as they navigate 
environmental rules and regulations.
  Lastly, this will help ensure that the program continues to operate 
on the fees built into the program.
  I am confident that these improvements will strengthen the program 
for both small businesses and the program's lending partners. This 
legislation is a step in the right direction to ensure that small 
businesses can thrive as they bring innovative goods and services to 
consumers around the country.
  I want to, again, thank Congresswoman Craig, Chairwoman Velazquez, 
and Ranking Member Chabot for their work and their help on this 
legislation. I urge my colleagues to support it.

                              {time}  1545

  Mr. CHABOT. Mr. Speaker, I have no further speakers on my side, so I 
am happy to close.
  Mr. Speaker, Congress must continue to work together to strengthen 
the SBA's existing guaranteed loan programs. The SBA's programs must 
work for the Nation's smallest firms and the Nation's taxpayers. H.R. 
8199 meets both objectives by applying appropriate oversight 
requirements to the SBA's 504/CDC loan program. Therefore, I urge my 
colleagues to support this bipartisan legislation.
  Mr. Speaker, I, once again, thank Ms. Craig and Mr. Bishop for their 
leadership, and I thank the chairwoman for her leadership on this. I 
yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, since its inception, SBA's 504 program has enabled 
thousands of businesses to hire employees, grow to more locations, and 
expand operations. These 504 loans are some of the most affordable for 
commercial real estate projects, and most only require a 10 percent 
down payment from small business owners. In its 62-year history, it has 
proven to be a strong-performing SBA program that has helped 
entrepreneurs create jobs in every corner of our country.
  Thanks to Mr. Bishop and Ms. Craig's efforts, the bill before us 
today will make commonsense improvements to this important program. By 
shifting all loan closing file review responsibilities to the Office of 
Credit Risk Management, program integrity will be preserved, and the 
504 program will be an affordable financing option for the next 
generation of entrepreneurs.
  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. 8199, 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.

                          ____________________