[Congressional Record Volume 167, Number 64 (Wednesday, April 14, 2021)]
[House]
[Pages H1772-H1775]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           504 CREDIT RISK MANAGEMENT IMPROVEMENT ACT OF 2021

  Ms. DAVIDS of Kansas. Madam Speaker, I move to suspend the rules and 
pass the bill (H.R. 1482) 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.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1482

       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 2021''.

     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--

[[Page H1773]]

       ``(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 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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
Kansas (Ms. Davids) and the gentleman from Missouri (Mr. Luetkemeyer) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from Kansas.


                             General Leave

  Ms. DAVIDS of Kansas. Madam 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 Kansas?
  There was no objection.

                              {time}  1500

  Ms. DAVIDS of Kansas. Madam Speaker, I yield myself such time as I 
may consume.
  Madam Speaker, I rise in support of the bill before us today, H.R. 
1482, the 504 Credit Risk Management Improvement Act, which clarifies 
the oversight role of the SBA's Office of Credit Risk Management in 
respect to CDCs.
  To improve oversight of the SBA business loan programs, including the 
7(a) and 504 loan programs, the agency established the Office of Credit 
Risk Management--OCRM--within the Office of Capital Access. OCRM 
conducts periodic reviews of SBA lenders to ensure they are complying 
with program requirements.
  In 2018, Congress passed bipartisan legislation to codify the office 
and gave it the tools it needs to conduct proper oversight and hold 
noncompliant lenders accountable.
  It was our intent to boost the office's enforcement powers to help 
minimize the likelihood that business loan programs would face losses 
and reduce the need for Congress to appropriate funds.
  I should point out that these programs are designed to operate at 
zero subsidy, meaning they come at no cost to the taxpayer, and we 
intend to keep it that way.
  I am pleased that the gentleman from North Carolina, along with the 
gentlewoman from Minnesota, worked together to bring this bill to life 
last Congress. This bill clarifies OCRM's oversight role and shifts 
loan closing file review responsibilities to the office and, in turn, 
keeps the program running at a zero subsidy. I applaud their 
bipartisanship and, more importantly, their commitment to America's 
small businesses.
  Madam Speaker, I urge all of my colleagues to vote ``yes,'' and I 
reserve the balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, I yield myself such time as I may 
consume.
  I rise in support of H.R. 1482, the 504 Credit Risk Management 
Improvement Act of 2021.
  I thank the chair again for advancing all these bills that are meant 
to assist small businesses across the Nation. I also thank the 
gentleman from North Carolina (Mr. Bishop), the gentlewoman from 
California (Mrs. Kim), the gentlewoman from Kansas (Ms. Davids), the 
gentlewoman from Minnesota (Ms. Craig), as well as the gentleman from 
Ohio (Mr. Chabot) for working in a bipartisan manner to strengthen the 
504/CDC loan program.
  Government programs, especially government guaranteed loan programs, 
are only as strong as the oversight that is required.
  In order to protect and safeguard American tax dollars, executive 
branch agencies must have a watchful eye focused on these programs.
  The Office of Credit Risk Management is a division at the Small 
Business Administration that is charged with overseeing many of the 
government guaranteed lending programs that the SBA offers to small 
businesses. H.R. 1482 ensures the Office of Credit Risk Management has 
a trained eye focused on the 504/CDC loan program.
  Specifically, the legislation outlines how the office should conduct 
reviews under the lending program.
  Additionally, H.R. 1482 details the enforcement authority of the 
Office of Credit Risk Management. These enhancements will ensure the 
program operates effectively and efficiently into the future.
  Lastly, the bill requires the SBA to clearly and concisely define how 
the 504/CDC loan program operates in conjunction with the Nation's 
environmental laws and rules. Unfortunately, this process currently 
lacks certainty by the SBA.
  Simply put, Federal Government programs require robust oversight and 
the

[[Page H1774]]

programs must have clear rules for small businesses. H.R. 1482 
addresses both of these issues head on.
  Madam Speaker, I urge and recommend all my colleagues to support H.R. 
1482, and I reserve the balance of my time.
  Ms. DAVIDS of Kansas. Madam Speaker, I reserve the balance of my 
time.
  Mr. LUETKEMEYER. Madam Speaker, I yield such time as he may consume 
to the gentleman from Ohio (Mr. Chabot), the former chairman of the 
Small Business Committee.
  Mr. CHABOT. Madam Speaker, I rise today in support of H.R. 1482.
  I thank my colleague from Minnesota, Representative Angie Craig, for 
working with me on this bipartisan bill.
  I also thank the other cosponsors, Representatives Sharice Davids and 
Young Kim, for their work; as well as the full chair of the committee, 
Ms. Velazquez, who I worked with many years either with myself as chair 
and she as ranking, or her as chair and myself as ranking.
  I thank Mr. Luetkemeyer for the great job he is doing. At this point 
he is the ranking member of the committee. Hopefully he will be chair 
next time, depending on what the American people think a year and a 
half down the road.
  So what does this legislation do?
  A number of things. It streamlines the 504 loan closing process, 
clarifies the loan closing and oversight process, and enhances the 
program for small manufacturers. And small manufacturers are absolutely 
critical in the economy nowadays. And we were actually making great 
strides in bringing back more and more jobs there until COVID hit. So 
that is why programs like this are so important to give them the 
assistance that they need to get those jobs growing once again in that 
sector of the economy.
  The 504 program has been one of the more successful of the SBA--the 
Small Business Administration--loan programs over the years, and it is 
really crucial as we recover from COVID-caused hardships of the past 
year.
  The SBA CDC/504 loan program provides the Nation's smallest 
businesses with long-term and fixed-rate financing. Importantly, it 
requires that certain economic development criteria are in place to 
qualify for the program. And job creation and job retention are 
critical goals of the program.
  This bill passed the House last December in the previous Congress, 
and I am happy to see it on the floor again this Congress. Hopefully we 
will get this bill signed into law this time and help provide small 
businesses with the support they need to recover from the pandemic, and 
hopefully we will be looking at the pandemic in the rearview mirror 
sooner rather than later.
  I thank the Small Business Committee for the great work they are 
doing on behalf of America's small businesses. It is one of those 
committees that really does work in a bipartisan manner, Republicans 
and Democrats working together, and that is absolutely critical if we 
are going to get anything done.

  Madam Speaker, I urge my colleagues to support this bill.
  Ms. DAVIDS of Kansas. Madam Speaker, I reserve the balance of my 
time.
  Mr. LUETKEMEYER. Madam Speaker, I yield such time as she may consume 
to the gentlewoman from California (Mrs. Kim), a really hard worker and 
a big supporter of small businesses around this country.
  Mrs. KIM of California. Madam Speaker, I thank Ranking Member 
Luetkemeyer for yielding.
  I rise in strong support of H.R. 1482, the 504 Credit Risk Management 
Improvement Act of 2021.
  I am proud to have joined my colleagues, Representatives Angie Craig, 
 Dan Bishop, and Sharice Davids, to introduce this important bipartisan 
bill.
  The Small Business Administration's 504 loan program provides small 
businesses with affordable long-term financing to purchase major fixed 
assets, such as machinery and real estate. This bill would ensure that 
our taxpayers' hard-earned dollars are spent effectively by enhancing 
oversight responsibilities of the SBA Office of Credit Risk Management.
  Our bill will provide the SBA with the tools to enforce penalties for 
any violation of rules and regulations. By providing the SBA with these 
tools, we look to strengthen the 504 loan program for many years to 
come.
  Additionally, this bill provides consistent and clear guidance when 
requiring certain environmental certifications. This change will 
provide small businesses with certainty about requirements and uniform 
regulations across the country.
  For any Federal program to be successful, Congress and the executive 
branch must work together to ensure that we have a regulatory framework 
that is efficient and able to prevent fraud and abuse of taxpayer 
dollars. I commend my colleagues from both sides of the aisle for their 
leadership on this important issue.
  Madam Speaker, I urge my colleagues on both sides of the aisle to 
support H.R. 1482.
  Ms. DAVIDS of Kansas. Madam Speaker, I continue to reserve the 
balance of my time.
  Mr. LUETKEMEYER. Madam Speaker, I yield such time as he may consume 
to the gentleman from North Carolina (Mr. Bishop).
  Mr. BISHOP of North Carolina. Madam Speaker, I thank the gentleman 
for yielding.
  I rise in support of my legislation, the 504 Credit Risk Management 
Improvement Act of 2021.
  As you may remember, this exact bill passed unanimously last 
December, and I hope the commonsense measure can pass overwhelmingly 
again.
  For those who do not know about the 504 program, this was one of the 
first programs established at the Small Business Administration and has 
been a key tool for economic development.
  To receive financing, 504 loan recipients must create jobs or meet 
public policy goals, like aiding rural development or revitalizing a 
business district.
  In its economic development role, the 504 program has provided access 
to capital and helped build communities across the country for over six 
decades.
  To ensure the program's continued success and viability for years to 
come, I partnered with Representative Angie Craig to craft a bill that 
provides the SBA with the tools necessary to maintain the long-term 
health of the 504 program.
  This bill codifies the SBA's oversight responsibilities for the 504 
program and provides the Office of Credit Risk Management with full 
control of the review process for certified development companies, 
known as CDCs, that deliver this program.
  The legislation also establishes a formal process of communication 
between the Office of Credit Risk Management and CDCs to facilitate 
reviews to make sure the SBA is providing timely feedback to CDCs.
  Additionally, this legislation requires the SBA to provide clear 
direction to certified development companies as they navigate 
environmental rules and regulations.
  Finally, this bill will help ensure that the program continues to 
operate on the fees built into the program.
  SBA programs, including the 504 program, have been at the forefront 
of economic aid to businesses struggling as a result of the COVID-19 
pandemic. The SBA core lending programs will continue to play a key 
role in business recovery.
  I am proud to do my part to ensure the 504 program continues to be a 
lifeline to businesses and communities today and into the future.
  I thank Chairwoman Velazquez and Ranking Member Luetkemeyer for their 
leadership. I thank my colleague, Ms. Craig, for her partnership on 
this important bill. I also thank Mrs. Young Kim, Ms. Davids, Ms. 
Tenney, and Mr. Cohen for their support of this bill.
  Madam Speaker, I urge my colleagues to support this legislation.
  Ms. DAVIDS of Kansas. Madam Speaker, I have no further speakers at 
this time, and I am prepared to close.
  Mr. LUETKEMEYER. Madam Speaker, I yield myself the balance of my 
time.
  Oversight of Federal Government programs is paramount to ensure 
American taxpayer dollars are used wisely. H.R. 1482 not only increases 
the oversight capabilities of the SBA over the 504/CDC loan program, 
but also requires clear and concise guidance for small business owners 
moving forward. There are sound changes that will improve the program 
for future 504/CDC borrowers.

[[Page H1775]]

  I applaud all Members for working on this legislation and all of the 
small business bills before us today. We must continue to put our 
Nation's job creators at the forefront of this economic recovery.
  Madam Speaker, I would like to take a few moments to make a couple 
comments here with regard to all the bills that we have offered here 
today. All these bills dealt with things that deal with oversight.

  We, as legislators in this body, have two jobs. One is to provide 
legislation to improve the lives of our businesses and the people in 
this country, protect our country. Second is to provide oversight over 
all of the activities that go on within the executive branch, as well 
as the judicial branch, to whatever extent we can.
  In our committee, we oversee the legislation with regard to the Small 
Business Administration, as well as oversight of their activities. We 
have come to find over the last several weeks here that the inspector 
general reports that the SBA is not being run as well as it should. 
There is fraud rampant in some of the programs, which is verified by 
the AG reports. We have a new Administrator who has got her hands full 
because of the lack of knowledge of what goes on with all the brand-new 
things going on.
  So we have got a real problem and we, as legislators, have got to 
step up. These bills today are just one step in the process of 
providing the kind of oversight that it takes. We will continue to 
provide oversight, I can assure you. And those listening and watching 
today need to take heart in the fact that we are going to continue to 
provide the kind of oversight over the Small Business Administration 
and all of its programs that we have been tasked with and are 
responsible for.
  Madam Speaker, I urge my colleagues to support H.R. 1482, the last 
bill we will discuss today, and I yield back the balance of my time.
  Ms. DAVIDS of Kansas. Madam Speaker, in its 62-year history, the 
SBA's 504 loan program has helped thousands of entrepreneurs acquire 
heavy machinery and equipment, expand to more locations, and hire 
workers. It has long been a strong-performing SBA program and has 
enjoyed consistent bipartisanship support.
  We must continue to take all steps needed to preserve the integrity 
of the 504 program and ensure it will be an option for the next 
generation of entrepreneurs. Passing the bill before us today will help 
us do so.
  I thank Mr. Bishop and Ms. Craig for their hard work and 
collaboration in bringing this bill to the floor today. I also thank 
Mr. Luetkemeyer for his leadership today and his unwavering commitment 
to our Nation's 30 million small businesses.
  Madam 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 Kansas (Ms. Davids) that the House suspend the rules 
and pass the bill, H.R. 1482.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. WEBER of Texas. Madam Speaker, on that I demand the yeas and 
nays.
  The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 
8, the yeas and nays are ordered.
  Pursuant to clause 8 of rule XX, further proceedings on this motion 
are postponed.

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