Today, Congressman Dan Meuser (PA-09) released the following statement after the U.S. House of Representatives passed his Small Business 7(a) Loan Agent Oversight Act.
"The Small Business Administration's (SBA) 7(a) Loan Program is an important tool for helping small businesses gain access to capital. Unfortunately, the SBA's Office of Inspector General has highlighted the need for improved oversight of 7(a) loan agents due to increased risk of fraud associated with these agents," said Congressman Dan Meuser. "My bill will address these issues by requiring the SBA to develop and publish an annual portfolio risk analysis for Congress on loan agents that operate within the program. This analysis will ensure that both Congress and the SBA remain good stewards of taxpayer dollars and ensure that American small businesses can continue to benefit from the SBA's flagship loan program."
BACKGROUND…
H.R. 4531, 7(a) Loan Agent Oversight Act
The bill requires the Small Business Administration (SBA) Office of Credit Risk Management (OCRM) to submit an annual report to Congress regarding the performance of and risk associated with loans generated through loan agent activity.
The bill will ensure that Congress receives the data it needs to conduct proper oversight. It will provide information on how many loans have been processed with the assistance of loan agents and default rates of loans that are associated with the loan agents. Additionally, the legislation requires the SBA to perform a risk analysis on agents who operate within the program.
7(a) Loan Program Overview
In FY20, SBA's 7(a) loan program made approximately 42,000 7(a) loans totaling $22.55 billion. The loan program is considered the flagship program at SBA. It provides creditworthy small firms that cannot obtain credit elsewhere the opportunity to access capital from private lenders. SBA does not offer direct lending to small businesses; rather, SBA guarantees the repayment of loans issued by lenders for general business purposes.
The House also passed H.R. 4481, Small Business 7(a) Loan Agent Transparency Act – the companion bill to 7(a) Loan Agent Oversight Act. The Congressman cosponsored HR 4481 with Congressman Dean Phillips (D-MN) that requires the SBA to establish a registration system for 7(a) agents that assigns each agent a unique identifier and collects data to help the SBA track and evaluate loan performance for loans generated through loan agent activity. The SBA will establish a database with the type of services performed by loan agents & require their registration before an agent provides services to a lender or borrower.
Original source can be found here.
