[House Report 119-112]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-112
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AMERICAN ENTREPRENEURS FIRST ACT OF 2025
_______
May 21, 2025.--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
together with
MINORITY VIEWS
[To accompany H.R. 2966]
The Committee on Small Business, to whom was referred the
bill (H.R. 2966) to require the Administrator of the Small
Business Administration to require an applicant for certain
loans of the Administration to provide certain citizenship
status documentation, and for other purposes, having considered
the same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Bill Summary........................................ 2
II. Need for Legislation............................................ 2
III. Hearings........................................................ 3
IV. Committee Consideration......................................... 3
V. Committee Votes................................................. 3
VI. Section-by-Section of H.R. 2966................................. 5
VII. Congressional Budget Office Cost Estimate....................... 5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure 5
IX. Oversight Findings & Recommendations............................ 5
X. Performance Goals and Objectives................................ 5
XI. Statement of Duplication of Federal Programs.................... 6
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits........................................................ 6
XIII. Federal Mandates Statement...................................... 6
XIV. Federal Advisory Committee Statement............................ 6
XV. Applicability to Legislative Branch............................. 6
XVI. Statement of Constitutional Authority........................... 6
XVII. Minority Views.................................................. 7
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Entrepreneurs First Act of
2025''.
SEC. 2. REQUIREMENTS FOR CITIZENSHIP STATUS DOCUMENTATION FOR CERTAIN
LOAN PROGRAMS OF THE SMALL BUSINESS ADMINISTRATION.
(a) In General.--The Administrator of the Small Business
Administration shall ensure that any application for a loan submitted
under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) or
title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et
seq.) includes the following information:
(1) The date of birth for each individual applicant for such
loan or for each individual owner of an applicant concern.
(2) Certification that--
(A) an individual applicant for such loan is a
citizen of the United States, a national of the United
States, or a lawful permanent resident of the United
States; or
(B) an applicant concern for such loan or a guarantor
for such loan is 100 percent beneficially owned by
individuals who are either citizens of the United
States, nationals of the United States, or lawful
permanent residents of the United States.
(3) Certification that no direct or indirect owner of an
applicant concern for such loan is an ineligible person.
(4) Documentation of the alien registration number of any
lawful permanent resident who is--
(A) an individual applicant for such loan; or
(B) an owner of an applicant concern.
(b) Prohibition.--An applicant for a loan under section 7(a) of the
Small Business Act (15 U.S.C. 636(a)) or title V of the Small Business
Investment Act of 1958 (15 U.S.C. 695 et seq.) is ineligible for such
loan if--
(1) the applicant submits the application for such loan after
the date of the enactment of this Act and such application does
not contain the information required under subsection (a);
(2) in the case such applicant is an applicant concern, any
direct or indirect owner of such applicant concern is an
ineligible person; or
(3) in the case such applicant is an individual applicant,
such applicant is an ineligible person.
(c) Ineligible Person Defined.--In this Act, the term ``ineligible
person'' means--
(1) an asylee;
(2) a refugee;
(3) an individual issued a visa to remain in the United
States;
(4) an alien classified as a nonimmigrant under any
subparagraph of section 101(a)(15) of the Immigration and
Nationality Act (8 U.S.C. 1101(a)(15));
(5) an alien to whom deferred action has been granted
pursuant to the Deferred Action for Childhood Arrivals policy
announced by the Secretary of Homeland Security on June 15,
2012; or
(6) an alien present in the United States without lawful
status under the immigration laws (as such term is defined in
section 101(a) of the Immigration and Nationality Act (8 U.S.C.
1101(a))).
I. PURPOSE AND BILL SUMMARY
On April 17, 2025, Rep. Van Duyne, along with Rep. Cloud,
introduced H.R. 2966, the American Entrepreneurs First Act.
H.R. 2966 requires citizenship verification for Small Business
Administration (SBA) loan applications.
II. NEED FOR LEGISLATION
Under the Biden-Harris Administration, criminal illegal
immigrants jeopardized the lives of citizens throughout the
country, including small business owners. At the same time, the
Biden-Harris SBA loosened guardrails and approved loans for
ineligible applicants. This bill is needed to ensure that zero
taxpayer dollars fund SBA assistance and loans for illegal
immigrants and ineligible applicants.
On March 6, 2025, SBA Administrator Loeffler announced that
the agency found that the Biden-Harris SBA approved a $783,000
SBA loan application in June 2024 for a small business that was
49 percent owned by an illegal immigrant.\1\ Thankfully,
Administrator Loeffler halted the loan to the illegal immigrant
prior to it being disbursed. Through SBA Policy Notice 5000-
865754, the SBA implemented new citizenship verification
requirements on SBA loans to end taxpayer benefits to illegal
immigrants.\2\
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\1\News Release, U.S. Small Bus. Admin., Administrator Loeffler
Announces SBA Reforms to Put American Citizens First (Mar. 6, 2025),
https://www.sba.gov/article/2025/03/06/administrator-loeffler-
announces-sba-reforms-put-american-citizens-first.
\2\U.S. Small Bus. Admin., Policy Notice No. 5000-865754 (Mar. 7,
2025).
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Additionally, H.R. 2966 codifies President Trump's
Executive Order (EO) 14218, ``Ending Taxpayer Subsidization of
Open Borders,'' and EO 14159, ``Protecting the American People
Against Invasion.''\3\
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\3\Exec Order No. 14,218, 90 Fed. Reg. 10581 (2025).
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III. HEARINGS
On March 11, 2025, the Subcommittee on Oversight,
Investigations, and Regulations of the Committee on Small
Business held a hearing examining matters related to H.R. 2966,
entitled ``Restoring the SBA: Putting Main Street America
First.''
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on April 30, 2025, and ordered H.R. 2966,
as amended, to be reported favorably to the House of
Representatives. During the markup, the Committee adopted an
amendment in the nature of a substitute offered by Rep. Van
Duyne by voice vote.
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. 2966, as
amended, to the House of Representatives at 6:13 PM.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
VI. SECTION-BY-SECTION OF H.R. 2966
Section 1--Short title
This Act may be cited as the ``American Entrepreneurs First
Act.''
Section 2--Requirements for citizenship status documentation for
certain loan programs of the Small Business Administration
This section requires the submission of the date of birth
for each individual applicant or business owner; certification
that each applicant is a U.S. citizen, U.S. national, or lawful
permanent resident; the alien registration numbers for lawful
permanent residents; and certification that no direct or
indirect business owner is an ``ineligible person,'' including
asylees, refugees, visa holders, Deferred Action for Childhood
Arrivals (DACA) recipients, or undocumented individuals.
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 Committee has requested but not received from the
Director of the Congressional Budget Office a cost estimate for
the Committee's provisions.
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. While
the Committee has not received an estimate of new budget
authority contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to Sec.
402 of the Congressional Budget Act of 1974, the Committee does
not believe that there will be any additional costs
attributable to this legislation. H.R. 2966 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
H.R. 2966 are incorporated into the descriptive portions of
this report.
X. PERFORMANCE GOALS AND OBJECTIVES
With respect to the requirements of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, there are no
specific performance goals and objectives of H.R. 2966
applicable.
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. 2966 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. MINORITY VIEWS
H.R. 2966, the ``American Entrepreneurs First Act''
introduced by Representatives Beth Van Duyne (R, TX) and
Michael Cloud (R, TX) mandates that the Administrator of the
Small Business Administration (``SBA'') verify the age and
citizenship status of each individual applicant or business
owner in order for the applicant business to receive financing
under either the SBA's 7(a) or 504 programs.
The legislation follows President Donald Trump's Executive
Order 14159\1\ (E.O. 14159) issued on January 20, directing the
White House Office of Management and Budget (OMB) to ensure all
federal agencies identify and stop the provision of any public
benefit to any illegal alien not authorized to receive them
under the Immigration and Nationality Act\2\ and a subsequent
Policy Notice released by the SBA on March 7, announcing policy
updates and citizenship requirements for applicants to obtain a
7(a) or 504 loan in order to comply with E.O. 14159.\3\
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\1\EXEC. Order. 14159, 90 Fed. Reg. 8443.
\2\8 U.S.C. Sec. 1101(a)(15).
\3\U.S. SMALL BUSINESS ADMINISTRATION. ``Policy updates to comply
with Executive Order 14159 regarding citizenship requirements for
obtaining 7(a) and 504 loans.'' Policy Notice-5000-865754 (March 7,
2025).
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H.R. 2966 is solution in search of a problem and seems to
be premised on the notion that certain segments of the American
population are receiving SBA 7(a) and 504 loans when they
otherwise shouldn't. For example, during the Committee's markup
session, Chairman Williams stated that the Biden Administration
``approved [SBA] loans for illegal immigrants.'' However, as
Ranking Member Velazquez rightly stated, the Committee has not
received ``any shred of evidence that undocumented immigrants
have been given any [SBA] loans.'' Committee Democrats have
never received any evidence, credible or otherwise, that large
numbers of individuals in the U.S. without legal authorization
are receiving access to SBA financing and loan products.
During the markup debate, the Republican-majority also
argued that passage of H.R. 2966 is necessary in order to
ensure SBA loans are made to American entrepreneurs and
businesses. Yet, the Republican-majority failed to recognize
that previous rules issued by the SBA prior to President
Trump's E.O. 14159 already required a business applicant to
need at least a 51 percent ownership stake be held by a U.S.
citizen, U.S. national, or permanent resident in order to
receive SBA financing.\4\ The Republican-majority also
referenced a loan approval made by the SBA in June 2024 for a
small business that was 49 percent owned by an undocumented
individual. Yet, again, the Republican-majority only told half
the story and failed to also acknowledge that the internal
processes the SBA had in place at the time identified the
individual as an ineligible borrower and prevented the loan
from being originated.
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\4\OFF. OF FIN. ASSISTANCE. ``SOP 50 10 7.1.'' U.S. SMALL BUS.
ADMIN. (NOV. 15, 2023).
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The bill moves both the 7(a) and the 504 programs away from
their original purposes and their use of prudent underwriting
standards to evaluate originations. The main purpose of the
7(a) program is to provide creditworthy small business
borrowers that demonstrate an ability to repay, and who cannot
find credit elsewhere, with access to loans and loan
guarantees. The legal status of a borrower has no bearing on
their creditworthiness or their ability to repay and should not
be used as a proxy for prudent underwriting determinations.
Moreover, the credit elsewhere provision of the 7(a) program
creates a situation where small businesses, either partially-
or fully-owned by individuals already legally permitted to be
in the U.S., with nowhere else to turn for their credit needs
threatening the livelihoods of these small businesses and the
communities they serve.
This bill also prevents U.S. majority-owned small
businesses with minority-ownership from participating in SBA
lending programs. One prominent SBA program lender has already
expressed to Committee Democrats that their institution was
unable to modify a loan for a small business owned by a husband
and wife, in which the business was majority owned by a U.S.
citizen, shortly after the SBA's new policy notice was issued
solely because one of the individuals in the couple was a
citizen of a European country.\5\ If H.R. 2966 were to become
law, the Committee Democrats expect examples like these to
become more pervasive.
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\5\Example is on file with Committee and is available for review
upon request.
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In some ways it's ironic that the Majority is marking up
this bill now. Under the terms of this bill and the recent SBA
policy changes that were issued in March, banks, credit unions,
and other SBA-lenders will need to create new compliance
regimes to certify the citizenship status of individuals and
comply with the 100 percent U.S. beneficial ownership
requirements in the bill. Ironically, these questions and
compliance procedures are similar to the ones the Majority and
Republicans across the House Caucus have argued for years are
either too complex, too costly, or too invasive for lenders to
comply with the CFPB's Section 1071 rule,\6\ in order to ensure
institutions' compliance with fair lending requirements, and
the Corporate Transparency Act's Beneficial Ownership
requirement,\7\ to ensure anonymous shell companies in the U.S.
are not being used to facilitate terrorism, sex trafficking,
money laundering, and other illicit schemes. Both the Section
1071 rule and the Beneficial Ownership rule have safe harbors,
remedies for good faith mistakes, and, in some situations,
opportunities for applicants to decline to provide their
information altogether. H.R. 2966 is silent on all of these and
seems to require maximum compliance from all applicants at all
times with no exceptions.
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\6\12 C.F.R. Part 1002.
\7\15 U.S.C. Sec. 5336.
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The bill as written also creates practical challenges for
program lenders and threatens future operations of both
programs. For example, the Equal Credit Opportunity Act\8\
(``ECOA'') prohibits creditors from discriminating against
credit applicants on the basis of race, color, religion,
national origin, sex, marital status, or age. H.R. 2966 seems
to make both age and national origin a threshold requirement in
order for the borrower to qualify for a 7(a) or 504 loan. As
such, some program lenders have already expressed to Committee
Democrats that verifying a borrower's date of birth and
citizenship status in order to comply with H.R. 2966 could
expose their institutions to legal violations under ECOA.
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\8\15 U.S.C. Sec. 1691.
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Further, the SBA recently issued a new Standard Operating
Procedure (SOP), 50 10-8,\9\ in April 2025, which becomes
effective on June 1. The new SOP specifically precludes 7(a)
Preferred Lender Program (PLP) participants from reaching out
to the SBA's general processing center regarding questions
pertaining to a borrower's application and to confirm SBA
policy requirements. The citizenship verification requirements
contained in H.R. 2966, coupled with the new SOP procedure
precluding SBA PLP participants from contacting SBA's general
processing center, are likely to cause questions from lenders
to go unanswered and create uncertainty regarding the
institution's ability to originate the loan. Instead of
exposing their institution to possible legal violations,
lenders will instead choose to pull back and stop issuing new
originations under both programs in order to avoid liability.
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\9\OFF. OF FIN. ASSISTANCE. ``SOP 50 10 8.'' U.S. SMALL BUS. ADMIN.
(Jun. 1, 2025).
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As practical matter, in order for the SBA Administrator to
ensure the citizenship status of each borrower individual and
comply with the 100 percent U.S. beneficial ownership
requirements in the bill, in the 7(a) program, the lender will
be required to upload the citizenship information the borrower
has certified to the lender in the SBA's electronic loan
submission platform, E-Tran. Yet, the E-Tran system currently
only enables lenders to submit up to 81 percent of a business'
beneficial ownership information for loan approval, not 100
percent as required in bill. In this very uncertain
environment, 7(a) lenders have already expressed concern that
the inability of the E-Tran System to accept submissions of the
remaining 19 percent of a business borrower's beneficial
ownership information could, again, open them up to legal
liability and cause them to decrease their SBA-lending order to
avoid exposure. The 504 program will seem to suffer a similar
fate under the terms of H.R. 2966. Most 504 program loans are
non-delegated loans and require additional processing and
review by the SBA. Requiring the Administration to 100-percent
certify the business borrower's ownership by US citizens,
nationals, or lawful permanent residents is expected to result
in additional processing times, delays, and costs, not only for
the SBA, but for the lender and the small business borrower as
well.
Finally, concern has already been expressed to Committee
Democrats that the SBA could sign a memorandum of understanding
with the U.S. Department of Homeland Security (DHS), similar to
the agreement that DHS recently signed with the Internal
Revenue Services (IRS),\10\ to share the citizenship
information an individual borrower or business applicant has
provided to the SBA under the terms of H.R. 2966. A partnership
between the SBA and DHS to share small business borrowers'
citizenship information is without unprecedent and could
weaponize the SBA and SBA-program lenders as immigration
enforcement officers, threatening the safety of thousands of
small business owners.
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\10\ROSE, JOEL. ``The IRS finalizes a deal to share tax information
with immigration authorities.'' NPR. (Apr. 8, 2025).
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Small businesses are the backbone of our nation's economy.
Access to capital has been a major challenge for American small
businesses for decades and SBA's capital access programs have
tried to bridge the gap for the small businesses left behind by
the conventional markets. Yet, H.R. 2966 takes us back and
creates operational challenges for program participants.
Instead of denying more American small businesses access to the
affordable capital that so many of them need, Democrats believe
the Committee should be working to strengthen SBA's capital
access programs and increase financing opportunities for more
small businesses in order to improve our local economies and
our nation's Gross Domestic Product overall.
Nydia M. Velazquez,
Ranking Member.
[all]