[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.
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