[House Report 118-100]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                     {      118-100

======================================================================



 
            SMALL BUSINESS 7(A) LOAN AGENT TRANSPARENCY ACT

                                _______
                                

  June 5, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Williams of Texas, from the Committee on Small Business, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 1651]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 1651) to amend the Small Business Act to establish 
requirements for 7(a) agents, and for other purposes, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                     Page
   I. Purpose and Bill Summary........................................  1
  II. Need for Legislation............................................  2
 III. Hearings........................................................  3
  IV. Committee Consideration.........................................  3
   V. Committee Votes.................................................  4
  VI. Section-by-Section of H.R. 1651.................................  7
 VII. Congressional Budget Office Cost Estimate.......................  7
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure  9
  IX. Oversight Findings & Recommendations............................  9
   X. Performance Goals and Objectives................................  9
  XI. Statement of Duplication of Federal Programs...................  10
 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
      Benefits.......................................................  10
XIII. Federal Mandates Statement.....................................  10
 XIV. Federal Advisory Committee Statement...........................  10
  XV. Applicability to Legislative Branch............................  10
 XVI. Statement of Constitutional Authority..........................  10
XVII. Changes in Existing Law, Made by the Bill, As Reported.........  10

                      I. Purpose and Bill Summary

    The purpose of H.R. 1651, the ``Small Business 7(a) Loan 
Agent Transparency Act'', is to establish a registration system 
with unique identifiers for 7(a) agents to help the Small 
Business Administration's (SBA) Office of Credit Risk 
Management (OCRM) track and evaluate the performance of 7(a) 
loans generated through loan agent activity. H.R. 1651 also 
enhances OCRM's and the SBA Lender Oversight Committee's (LOC) 
enforcements authority with respect to loan agents.

                        II. Need for Legislation

    H.R. 1651 was introduced by Rep. Dean Phillips (D-MN) and 
Rep. Dan Meuser (R-PA) on March 17, 2023 to improve SBA's 
oversight of loan agent and broker activity in the 7(a) Loan 
Guaranty Program (7(a) program). A prospective borrower or a 
lender sometimes may pay for the assistance of a loan agent to 
prepare documentation for an SBA loan application and/or refer 
the borrower to a lender. While loan agents can provide a 
useful function in bringing borrowers and lenders together and 
facilitating loan transactions, previous OIG audits and 
investigations have identified fraud schemes perpetrated by 
loan agents for hundreds of millions of dollars--showing that 
the SBA could not effectively identify and track loan agent 
involvement in its 7(a) and 504 loan portfolios. Tracking such 
agents is crucial in managing the portfolios because many 
lenders rely on the services of fee-based and other third-party 
agents to help originate, close, service, and liquidate SBA 
loans.\1\
---------------------------------------------------------------------------
    \1\U.S. Small Bus. Admin. Office of Inspector Gen., Top Management 
and Performance Challenges Facing the Small Business Administration in 
Fiscal Year 2023, 21-22 (Oct. 14, 2022).
---------------------------------------------------------------------------
    Authorized by section 7(a) of the Small Business Act, the 
SBA's 7(a) program is the agency's flagship loan program. 
Private sector lenders (mostly banks and credit unions but also 
some non-depository lenders) originate commercial and working 
capital loans of up to $5 million to small businesses who 
cannot access credit elsewhere. SBA guarantees 50 to 90 percent 
of each 7(a) loan made, depending on loan characteristics, 
assuring the lender that if a borrower defaults on the loan, 
SBA will purchase the loan and the lender will receive an 
agreed-upon portion of the outstanding balance. SBA also 
administers several subprograms within the 7(a) program that 
offer streamlined and expedited loan procedures for different 
groups of borrowers, including the SBA Express, Export Express, 
and Community Advantage Pilot programs. Although these 
subprograms have their own distinguishing eligibility 
requirements, terms, and benefits, they operate under the 7(a) 
program's authorization.
    For the majority of 7(a) loans, SBA relies on lenders with 
delegated authority to process and service loans, and ensure 
borrowers meet the program's eligibility requirements. In 
FY2022, SBA approved 47,678 7(a) loans for a total of over 
$25.7 billion, with an average loan size of $539,033.\2\ 
Increased risk to SBA's business loan programs introduced by 
loan agents and brokers has been consistently cited by SBA's 
OIG as a top management and performance challenge facing the 
agency, most recently in FY 2023.\3\ The OIG notes that further 
improvements are necessary to ensure program integrity and 
mitigate the risk of fraud and loss in the loan programs.\4\
---------------------------------------------------------------------------
    \2\Press Release, U.S. Small Business Administration, SBA Announces 
End-of-Year Capital Benchmarks (Dec. 14, 2022).
    \3\U.S. Small Bus. Admin. Office of Inspector Gen., Top Management 
and Performance Challenges Facing the Small Business Administration in 
Fiscal Year 2023, 21-22 (Oct. 14, 2022).
    \4\Id.
---------------------------------------------------------------------------
    Since loan agent involvement in the 7(a) program is 
significant, it is important for SBA to have oversight tools 
that monitor loan agent involvement in this sizeable program. A 
previous OIG analysis determined that 7(a) loans made in which 
a lender paid a referral fee to a loan agent defaulted at a 
rate 28 percent higher than loans where no referral fee was 
reported. Furthermore, OIG identified that agents have targeted 
multiple SBA lenders, who would be unaware of loan agents' past 
performance or activity with other lenders. The Committee 
agrees with OIG that though lenders bear primary responsibility 
for monitoring their agents, only SBA is positioned to 
aggregate loan agent portfolios, evaluate their performance, 
and inform lenders and policymakers about concerning program 
risks or trends. Companion legislation (H.R. 1644, the ``Small 
Business 7(a) Loan Agent Transparency Act'') would require OCRM 
to compile loan agent data using a registration system that 
assigns each agent a unique identifier. H.R. 1651 requires a 
report to Congress regarding such data, including an analysis 
of the performance, cost, and risk associated with loan agent 
activity in the 7(a) program.

                             III. Hearings

    In the 118th Congress, the Committee held three hearings 
examining the issues covered in H.R. 1651. On April 19, 2023, 
during the Subcommittee on Oversight Investigations and 
Regulations hearing, ``Office of Inspector General Reports to 
Congress on Investigations of SBA Programs'' the Inspector 
General testified to the Committee that the SBA will face 
significant challenges managing increased loan volume going 
forward, as well as significant staff shortages within the 
department overseeing SBLCs.
    On May 10, 2023, during the Full Committee Hearing ``Taking 
on More Risk: Examining the SBA's Changes to the 7(a) Lending 
Program Part I'' both Republican and Democrat members of the 
Committee expressed concerns with two recent SBA Final Rules 
that would add significant risk to the integrity of the 7(a) 
Program. Specifically, how lifting the licensing moratorium on 
SBLCs and eliminating long-standing loan underwriting criteria 
will create ripe conditions for an increase in defaulted loans. 
Further, on May 17, 2023, during the Full Committee Hearing, 
``Taking on More Risk: Examining the SBA's Changes to the 7(a) 
Lending Program Part II'' one of the witnesses noted that 
broadening access to capital is a worthy goal but that the 
SBA's proposals change too much too soon in an uncontrolled 
environment.

                      IV. Committee Consideration

    The Committee on Small Business met in open session, with a 
quorum being present, on May 23, 2023, and ordered H.R. 1651 
favorably reported to the House of Representatives. During the 
markup no amendments were offered.

                           V. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. The Committee voted to favorably report H.R. 1651 to 
the House of Representatives at 2:41 p.m.


                  VI. Section-by-Section of H.R. 1651


Section 1. Short title

    This Act may be cited as the ``Small Business 7(a) Loan 
Agent Transparency Act''.

Section 2. Requirements for 7(a) agents

    This section adds 7(a) agents as entities against whom OCRM 
and LOC may take a formal or informal enforcement action, which 
improves SBA's ability to hold noncompliant agents accountable. 
This section also requires OCRM to establish a registration 
system for 7(a) agents that assigns each a unique identifier 
and collects data to help OCRM track and evaluate loan 
performance for loans generated through loan agent activity. It 
also requires OCRM to establish and maintain a database 
featuring the types of services provided by different 7(a) 
agents. This would improve SBA's ability to assess the role 
agents and brokers play in providing access to capital through 
the 7(a) program, as well as help it monitor risk associated 
with loan agent activity. Finally, this section requires 7(a) 
agents to register in the system before providing services to a 
lender or borrower, and to pay an annual registration fee to 
OCRM.

             VII. Congressional Budget Office Cost Estimate

    Pursuant to 3(c)(3) of rule XIII of the Rules of the House 
of Representatives, the Committee adopts as its own the cost 
estimate prepared by the Director of the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974.




    The bill would:
           Require the Small Business Administration 
        (SBA) to establish a registration system for agents 
        assisting small businesses with applying for loans 
        under the SBA's 7(a) loan program
    Estimated budgetary effects would mainly stem from:
           Spending subject to appropriation to 
        establish and maintain a registration system for agents 
        working on 7(a) loans
           Collections of annual registration fees and 
        civil monetary penalties, both of which are classified 
        as revenues
           Direct spending of annual registration fees
    Bill summary: H.R. 1651 would require the Small Business 
Administration (SBA) to supervise agents that help small 
businesses to secure loans of up to $5 million that are 
guaranteed by the SBA under the 7(a) loan program and to take 
enforcement action against any of those agents that are found 
to violate the Small Business Act. Agents include attorneys, 
consultants, and accountants that assist small businesses 
during the 7(a) loan application process. Those agents would be 
required to register with the SBA and to pay annual 
registration fees. Finally, the bill would require the SBA to 
establish and maintain a database of services provided by 
agents working on 7(a) loans.
    Estimated Federal cost: The estimated budgetary effect of 
H.R. 1651 is shown in Table 1. The costs of the legislation 
fall within budget function 370 (commerce and housing credit).

               TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 1651
----------------------------------------------------------------------------------------------------------------
                                                              By fiscal year, millions of dollars--
                                                ----------------------------------------------------------------
                                                   2023     2024     2025     2026     2027     2028   2023-2028
----------------------------------------------------------------------------------------------------------------
Estimated Authorization........................        *        8        9        9        9        9        44
Estimated Outlays..............................        *        8        8        9        9        9        43
----------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.

    Basis of estimate: CBO assumes that H.R. 1651 will be 
enacted near the end of 2023. The bill would take effect six 
months after enactment.
    Spending subject to appropriation: The bill would require 
the SBA to establish and maintain a system to register agents 
that help businesses secure 7(a) loans. Using information from 
the SBA, CBO estimates that it would cost $20 million over the 
2023-2028 period to build and maintain that system. The SBA 
also would need contractors to administer the registration 
program and compile the database. CBO estimates that cost at 
$23 million over that same period. In total, CBO estimates, 
implementing H.R. 1651 would cost $43 million over the 2023-
2028 period, assuming appropriation of the estimated amounts.
    Revenues and direct spending: H.R. 1651 would increase 
revenues and direct spending by about $1 million over the 2024-
2033 period.
    Registration Fees. H.R. 1651 would require the SBA to 
collect annual registration fees from agents. Using information 
about the number of agents working on 7(a) loans and assuming 
that the fee would be similar to the $40 fee levied by the 
Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council, CBO estimates that enacting H.R. 1651 
would increase fee collections, which are treated as revenues, 
by $1 million over the 2024-2033 period. Because the bill would 
allow the SBA to set the fee amount, which would be done 
through the rulemaking process, revenues collected under the 
bill could be higher or lower than CBO estimates.
    The SBA is authorized to retain and spend some fees, 
including the registration fee that would be collected under 
H.R. 1651. As a result, CBO estimates that the bill would 
increase direct spending by about $1 million over the 2024-2033 
period and that the net effect on the deficit would be 
negligible.
    Civil Penalties. H.R. 1651 would authorize the SBA to take 
enforcement actions and levy civil monetary penalties of up to 
$250,000 against agents working on 7(a) loans if they are found 
to violate the Small Business Act. CBO estimates that this new 
authority would increase collections of civil monetary 
penalties--which are treated as revenues--by an insignificant 
amount over the 2024-2033 period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Over the 2023-2032 period, CBO estimates that 
enacting the bill would increase both direct spending and 
revenues by $1 million.
    Increase in long-term net direct spending and deficits: 
None.
    Mandates: None.
    Estimate prepared by: Federal Costs: David Hughes; 
Mandates: Rachel Austin.
    Estimate reviewed by: Justin Humphrey, Chief, Finance, 
Housing, and Education Cost Estimates Unit; Kathleen 
FitzGerald, Chief, Public and Private Mandates Unit; Ann E. 
Futrell, Senior Adviser for Budget Analysis.
    Estimate approved by: Phillip L. Swagel, Director, 
Congressional Budget Office.

VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a)(I) of the 
Congressional Budget Act of 1974, the Committee provides the 
following opinion and estimate with respect to new budget 
authority, entitlement authority, and tax expenditures. The 
Committee does not believe that there will be any additional 
costs attributable to this legislation. H.R. 1651 does not 
direct new spending, but instead reallocates funding 
independently authorized and appropriated.

                IX. Oversight Findings & Recommendations

    In accordance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the oversight findings and recommendations of the Committee on 
Small Business with respect to the subject matter contained in 
the H.R. 1651 are incorporated into the descriptive portions of 
this report.

                  X. Performance Goals and Objectives

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of H.R. 1651 is to enhance 
OCRM's ability to monitor 7(a) loan agent activity and give 
OCRM enforcement authority against noncompliant agents.

            XI. Statement of Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, no provision of H.R. 1651 is known to 
be duplicative of another Federal program, including any 
program that was included in a report to Congress pursuant to 
section 21 of Public Law 111-139 or the most recent Catalog of 
Federal Domestic Assistance.

 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee finds that the bill 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9(e), 
9(f), or 9(g) of rule XXI of the Rules of the House of 
Representatives.

                    XIII. Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

               XIV. Federal Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                XV. Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               XVI. Statement of Constitutional Authority

    Pursuant to clause 7 of rule XII of the Rules of the House, 
the Committee finds that the authority for this legislation in 
Art. I, Sec. 8, cl.1 of the Constitution of the United States.

      XVII. Changes in Existing Law, Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                           SMALL BUSINESS ACT




           *       *       *       *       *       *       *
SEC. 47. OFFICE OF CREDIT RISK MANAGEMENT.

  (a) Establishment.--There is established within the 
Administration the Office of Credit Risk Management (in this 
section referred to as the ``Office'').
  (b) Duties.--The Office shall be responsible for 
supervising--
          (1) any lender making loans under section 7(a) (in 
        this section referred to as a ``7(a) lender'');
          (2) any Lending Partner or Intermediary participant 
        of the Administration in a lending program of the 
        Office of Capital Access of the Administration; [and]
          (3) any small business lending company or a non-
        Federally regulated lender without regard to the 
        requirements of section 23[.];
          (4) any 7(a) agent.
  (c) Director.--
          (1) In general.--The Office shall be headed by the 
        Director of the Office of Credit Risk Management (in 
        this section referred to as the ``Director''), who 
        shall be a career appointee in the Senior Executive 
        Service (as defined in section 3132 of title 5, United 
        States Code).
          (2) Duties.--The Director shall be responsible for 
        oversight of the lenders and participants described in 
        subsection (b), including by conducting periodic 
        reviews of the compliance and performance of such 
        lenders and participants.
  (d) Supervision Duties for 7(a) Lenders.--
          (1) Reviews.--With respect to 7(a) lenders, an 
        employee of the Office shall--
                  (A) be present for and supervise any such 
                review that is conducted by a contractor of the 
                Office on the premise of the 7(a) lender; and
                  (B) supervise any such review that is not 
                conducted on the premise of the 7(a) lender.
          (2) Review report timeline.--
                  (A) In general.--Notwithstanding any other 
                requirements of the Office or the 
                Administrator, the Administrator shall develop 
                and implement a review report timeline which 
                shall--
                          (i) require the Administrator to--
                                  (I) deliver a written report 
                                of the review to the 7(a) 
                                lender not later than 60 
                                business 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 60-day 
                                period described in clause (i), 
                                notify the 7(a) lender of the 
                                expected date of submission of 
                                the report and the reason for 
                                the delay; and
                          (ii) if a response by the 7(a) lender 
                        is requested in a report submitted 
                        under subparagraph (A), require the 
                        7(a) lender to submit responses to the 
                        Administrator not later than 45 
                        business days after the date on which 
                        the 7(a) lender receives the report.
                  (B) Extension.--The Administrator may extend 
                the time frame described in subparagraph 
                (A)(i)(II) with respect to a 7(a) lender as the 
                Administrator determines necessary.
  (e) Enforcement Authority Against 7(a) Lenders.--
          (1) Informal enforcement authority.--The Director may 
        take an informal enforcement action against a 7(a) 
        lender or 7(a) agent if the Director finds that the 
        7(a) lender or 7(a) agent has violated a statutory or 
        regulatory requirement under section 7(a) or any 
        requirement in a Standard Operating Procedures Manual 
        or Policy Notice related 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 7(a) lender or 
                7(a) agent if the Director finds that the 7(a) 
                lender or 7(a) agent has violated--
                          (i) a statutory or regulatory 
                        requirement under section 7(a), 
                        including a requirement relating to 
                        credit elsewhere; or
                          (ii) any requirement described in a 
                        Standard Operating Procedures Manual or 
                        Policy Notice, related to a program or 
                        function of the Office of Capital 
                        Access.
                  (B) Enforcement actions.--An enforcement 
                action imposed on a 7(a) lender or 7(a) agent 
                by the Director under subparagraph (A) shall be 
                based on the severity or frequency of the 
                violation and may include assessing a civil 
                monetary penalty against the 7(a) lender or 
                7(a) agent in an amount that is not greater 
                than $250,000.
          (3) Appeal by lender.--A 7(a) lender or 7(a) agent 
        may appeal an enforcement action imposed by the 
        Director described in this subsection to the Office of 
        Hearings and Appeals established under section 5(i) or 
        to an appropriate district court of the United States.
  (f) Regulations.--Not later than 1 year after the date of the 
enactment of this section, the Administrator shall issue 
regulations, after opportunity for notice and comment, to carry 
out subsection (e).
  (g) Servicing and Liquidation Responsibilities.--During any 
period during which a 7(a) lender is suspended or otherwise 
prohibited from making loans under section 7(a), the 7(a) 
lender shall remain obligated to maintain all servicing and 
liquidation activities delegated to the lender by the 
Administrator, unless otherwise specified by the Director.
  (h) Portfolio Risk Analysis of 7(a) Loans.--
          (1) In general.--The Director shall annually conduct 
        a risk analysis of the portfolio of the Administration 
        with respect to all loans guaranteed under section 
        7(a).
          (2) Report to congress.--On December 1, 2018, and 
        every December 1 thereafter, the Director shall submit 
        to Congress a report containing the results of each 
        portfolio risk analysis conducted under paragraph (1) 
        during the fiscal year preceding the submission of the 
        report, which shall include--
                  (A) an analysis of the overall program risk 
                of loans guaranteed under section 7(a);
                  (B) an analysis of the program risk, set 
                forth separately by industry concentration;
                  (C) without identifying individual 7(a) 
                lenders by name, a consolidated analysis of the 
                risk created by the individual 7(a) lenders 
                responsible for not less than 1 percent of the 
                gross loan approvals set forth separately for 
                the year covered by the report by--
                          (i) the dollar value of the loans 
                        made by such 7(a) lenders; and
                          (ii) the number of loans made by such 
                        7(a) lenders;
                  (D) steps taken by the Administrator to 
                mitigate the risks identified in subparagraphs 
                (A), (B), and (C);
                  (E) the number of 7(a) lenders, the number of 
                loans made, and the gross and net dollar amount 
                of loans made;
                  (F) the number and dollar amount of total 
                losses, the number and dollar amount of total 
                purchases, and the percentage and dollar amount 
                of recoveries at the Administration;
                  (G) the number and type of enforcement 
                actions recommended by the Director;
                  (H) the number and type of enforcement 
                actions approved by the Lender Oversight 
                Committee established under section 48;
                  (I) the number and type of enforcement 
                actions disapproved by the Lender Oversight 
                Committee; and
                  (J) the number and dollar amount of civil 
                monetary penalties assessed.
  (i) Budget Submission and Justification.--The Director shall 
annually provide, in writing, a fiscal year budget submission 
for the Office and a justification for such submission to the 
Administrator. Such submission and justification shall--
          (1) include salaries and expenses of the Office and 
        the charge for the lender oversight fees;
          (2) be submitted at or about the time of the budget 
        submission by the President under section 1105(a) of 
        title 31; and
          (3) be maintained in an indexed form and made 
        available for public review for a period of not less 
        than 5 years beginning on the date of submission and 
        justification.
  (j) Registration System for 7(a) Agents.--
          (1) In general.--The Director shall establish a 
        registration system for 7(a) agents that assigns a 
        unique identifier to each 7(a) agent and collects data 
        necessary for the Director to submit the report 
        required under paragraph (4).
          (2) Requirements.--A 7(a) agent shall--
                  (A) register in the system established under 
                paragraph (1) before providing covered services 
                to a lender or applicant; and
                  (B) effective 1 year after the date of the 
                enactment of this subsection, submit an annual 
                fee for such registration to the Director.
          (3) Database.--The Director shall establish and 
        maintain an electronic database of the types of covered 
        services provided by each 7(a) agent.
  (k) Definitions.--In this section:
          (1) 7 7(a) agent.--The term ``7(a) agent'' means a 
        person who provides covered services on behalf of a 
        lender or applicant.
          (2) Covered services.--The term ``covered services'' 
        means--
                  (A) assistance with completing an application 
                for a loan under section 7(a) (including 
                preparing a business plan, cash flow 
                projections, financial statements, and related 
                documents); or
                  (B) consulting, broker, or referral services 
                with respect to a loan under section 7(a).

SEC. 48. LENDER OVERSIGHT COMMITTEE.

  (a) Establishment.--There is established within the 
Administration the Lender Oversight Committee (in this section 
referred to as the ``Committee'').
  (b) Membership.--The Committee shall consist of at least 8 
members selected by the Administrator, of which--
          (1) 3 members shall be voting members, 2 of whom 
        shall be career appointees in the Senior Executive 
        Service (as defined in section 3132 of title 5, United 
        States Code); and
          (2) the remaining members shall be nonvoting members 
        who shall serve in an advisory capacity on the 
        Committee.
  (c) Duties.--The Committee shall--
          (1) review reports on lender oversight activities;
          (2) review formal enforcement action recommendations 
        of the Director of the Office of Credit Risk Management 
        with respect to any lender making loans under section 
        7(a) [and any Lending Partner or Intermediary 
        participant], any 7(a) agent (as defined in section 
        47), or any Lending Partner or Intermediary participant 
        of the Administration in a lending program of the 
        Office of Capital Access of the Administration;
          (3) in carrying out paragraph (2) with respect to 
        formal enforcement actions taken under subsection (d) 
        or (e) of section 23, vote to recommend or not 
        recommend action to the Administrator or a designee of 
        the Administrator;
          (4) in carrying out paragraph (2) with respect to any 
        formal enforcement action not specified under 
        subsection (d) or (e) of section 23, vote to approve, 
        disapprove, or modify the action;
          (5) review, in an advisory capacity, any lender 
        oversight, portfolio risk management, or program 
        integrity matters brought by the Director; and
          (6) take such other actions and perform such other 
        functions as may be delegated to the Committee by the 
        Administrator.
  (d) Meetings.--
          (1) In general.--The Committee shall meet as 
        necessary, but not less frequently than on a quarterly 
        basis.
          (2) Reports.--The Committee shall submit to the 
        Administrator a report detailing each meeting of the 
        Committee, including if the Committee does or does not 
        vote to approve a formal enforcement action of the 
        Director of the Office of Credit Risk Management with 
        respect to a lender.

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