[Pages H2398-H2399]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     7(a) LOAN AGENT OVERSIGHT ACT

  Mr. WILLIAMS of Texas. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 1804) to amend the Small Business Act to require a 
report on 7(a) agents, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1804

       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 ``7(a) Loan Agent Oversight 
     Act''.

     SEC. 2. REPORT ON 7(A) AGENTS.

       Section 47 of the Small Business Act (15 U.S.C. 657t) is 
     amended by adding at the end the following new subsection:
       ``(j) Annual Report.--
       ``(1) In general.--The Director shall submit to Congress, 
     in addition to the report required under subsection (h)(2), 
     an annual report including, for the calendar year covered by 
     the report--
       ``(A) the number of 7(a) agents assisting applicants for 
     loans under section 7(a), disaggregated by the type of 7(a) 
     agents consistent with information reported on the Fee 
     Disclosure and Compensation Agreement, or any subsequent 
     agreement forms that collect such information;
       ``(B) the number of fraudulent loans made for which an 
     applicant used services of a 7(a) agent;
       ``(C) the purchase rate by the Administrator of loans for 
     which an applicant used services of a 7(a) agent;
       ``(D) the number and aggregate dollar value of referral 
     fees paid to 7(a) agents, disaggregated by whether the 
     applicant or 7(a) lender paid such fees;
       ``(E) without identifying individual 7(a) agents by name, a 
     consolidated analysis of the risk created by the individual 
     7(a) agents responsible for not less than 1 percent of--
       ``(i) the dollar value of loans made with the assistance of 
     7(a) agents; and
       ``(ii) the number of loans made with the assistance of 7(a) 
     agents;
       ``(F) an analysis of interest rates on loans for which an 
     applicant or 7(a) lender used services of an agent; and
       ``(G) a description of how the Administrator communicates 
     with 7(a) agents.
       ``(2) Definitions.--In this subsection:
       ``(A) 7(a) agent.--The term `7(a) agent' means a person who 
     provides covered services on behalf of a lender or applicant.
       ``(B) Covered services.--The term `covered services' 
     means--
       ``(i) 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
       ``(ii) consulting, broker, or referral services with 
     respect to a loan under section 7(a).''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Williams) and the gentleman from Kentucky (Mr. McGarvey) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. WILLIAMS of Texas. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days in which to revise and extend their 
remarks and include extraneous material on the bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. WILLIAMS of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of H.R. 1804, the 7(a) Loan 
Agent Oversight Act, introduced by Representatives Meuser and McIver.
  H.R. 1804 is an important piece of legislation that brings an 
additional layer of transparency in the fight against fraud in the 
Small Business Administration's flagship 7(a) loan program.
  This bill would require the SBA Office of Credit Risk Management to 
submit annual reports to Congress on the 7(a) loan program. The reports 
would include the number and dollar value of fraudulent loans 
associated with loan agents. The SBA already collects this information, 
and an annual reporting requirement would allow for more effective 
oversight.
  Similar versions of this bill have passed on the House floor with 
bipartisan support in both the 117th and 118th Congresses. I look 
forward to seeing the Senate take swift action on this bill, which 
supports President Trump's agenda to root out fraud and abuse.
  Mr. Speaker, I urge my colleagues to support H.R. 1804, and I reserve 
the balance of my time.
  Mr. McGARVEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 1804, the 7(a) Loan Agent 
Oversight Act.
  The 7(a) loan program is the SBA's largest traditional lending 
program, providing access to capital for small businesses that cannot 
find it elsewhere. In fiscal year 2024, SBA approved more than 70,000 
loans, totaling more than $31 billion.
  Loan agents are an integral part of the 7(a) lending program, helping 
to facilitate access to capital for small businesses by connecting 
borrowers with SBA lenders or by offering other products. As of 2020, 
these agents helped facilitate 11 percent of the loans administered.
  Unfortunately, some dishonest loan agents can contribute to fraud, 
casting a stain on the SBA's largest lending program and, ultimately, 
hurting borrowers and lenders alike.
  As SBA increases its reliance on loan agents, it is essential that 
the agency have proper oversight of their involvement to minimize 
fraud. This will ensure that competent and honest agents can help 
screen borrowers, prepare forms, and better reach communities that need 
this capital most.
  That is why this bill is so essential. The 7(a) Loan Agent Oversight 
Act would require SBA to establish a registration system that collects 
data on 7(a) loan agents to better track and evaluate the performance 
of loans for each individual agent.
  Mr. Speaker, I thank Mr. Meuser and Mrs. McIver for their bipartisan 
collaboration on this bill, and I reserve the balance of my time.
  Mr. WILLIAMS of Texas. Mr. Speaker, I yield such time as he may 
consume to the gentleman from the great State of Pennsylvania (Mr. 
Meuser).
  Mr. MEUSER. Mr. Speaker, I thank our chairman, Chairman Williams, for 
his continued leadership.
  Mr. Speaker, I rise today along with my colleague, Democratic Member 
Mrs. McIver, in support of my bill, H.R. 1804, the 7(a) Loan Agent 
Oversight Act, which provides the Small Business Administration with 
the oversight capabilities to monitor its flagship loan program 
responsibly. This bipartisan legislation requires the SBA Office of 
Credit Risk Management to report on fraudulent loans made by a loan 
agent as well as the overall default rate on loans issued by those 
agents.
  Loan agents are often the middlemen between the SBA, a 7(a) lender, 
and a small business. This legislation is necessary due to the 
increased role of loan agents in facilitating 7(a) loans to American 
small businesses.
  The SBA inspector general reported that nearly one out of every seven 
loans involved a loan agent. Unfortunately, the inspector general also 
noted that there has been over $335 million in documented loan agent 
fraud. This, of course, needs to be corrected and changed, Mr. Speaker.
  Additionally, my legislation requires the SBA to submit their 
findings to Congress, which allows us to conduct proper oversight of 
the 7(a) loan program, ensuring it remains a successful public-private 
partnership that helps small businesses thrive.
  Though Administrator Loeffler is bringing a lot to this office and 
has reined in the Biden administration's weakening, frankly, of 
underwriting

[[Page H2399]]

standards in the 7(a) program, this bill advances good governance 
policies that will protect taxpayer dollars and uphold the program's 
record of success well beyond the next 4 years.
  Mr. Speaker, I urge the passage of my bill.
  Mr. McGARVEY. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
New Jersey (Mrs. McIver).
  Mrs. McIVER. Mr. Speaker, I rise today in support of H.R. 1804, 
commonsense and bipartisan legislation, which I am proud to co-lead 
with my colleague, Congressman Meuser, to bring better oversight and 
real accountability to one of the Small Business Administration's most 
important loan programs, 7(a).
  Mr. Speaker, small business owners aren't asking for easy. They are 
asking for a fair shake and a real shot. That is what the 7(a) loan 
program is supposed to do: help turn grit and a good idea into a 
successful business.
  This program is the reason that someone with a solid plan or a good 
business but without a big investor or family money can still open up 
shop.
  When small business owners step up with a vision, a diner on the 
corner, a new chapter for the family plumbing business, or a pet supply 
store, it is on the government to make sure the tools we have to 
support them actually work. Right now, they don't.

                              {time}  1600

  There hasn't been sufficient oversight of this program, and that 
means we haven't been doing all that we can to protect small business 
owners from fraud.
  Over the last decade, there has been more than $335 million in 
documented loan agent fraud. That is why this bill matters.
  It tackles this problem in two ways.
  First, it creates accountability for loan agents by making sure that 
the people who connect businesses to resources don't operate in the 
dark.
  Second, by requiring information on loan performance, default rates, 
and risk analysis, it gives Congress the data we need to do our jobs, 
making sure the 7(a) program works as intended, and protects small 
business owners.
  It is on us to make sure that the programs we use to support small 
businesses actually work and work honestly.
  Ensuring 7(a) loans work is important because the program is a 
lifeline. It is a way to make sure that when people go to apply for a 
loan, they are walking into a fair process, not a rigged one.
  Whether it is the mom in Newark who wants to open up a store or the 
first-generation American in Bloomsburg, Pennsylvania, who wants to 
bring a taste of home to town, small businesses create good jobs. They 
give back. They reinvest, and they show us what is possible in our 
communities.
  H.R. 1804, our 7(a) Loan Agent Oversight Act, is a smart, targeted 
fix and will help make sure that small business owners' dreams stay 
attainable.
  Mr. Speaker, once again, I thank my colleague for co-leading this 
bill with me, and I also thank our ranking member and our chairman for 
their support. I urge my colleagues to support this bill.
  Mr. WILLIAMS of Texas. Mr. Speaker, I reserve the balance of my time.
  Mr. McGARVEY. Mr. Speaker, I thank my colleagues, Mr. Meuser and Mrs. 
McIver, for working together in a bipartisan way on behalf of 
strengthening the SBA's flagship 7(a) loan program.
  For too long, a few bad actors have damaged one of the most 
successful small business capital access programs in the Federal 
Government. By giving the SBA the tools and authority it needs, we can 
root out bad behavior and minimize fraud without punishing loan agents 
that are acting in good faith on behalf of their clients and helping 
small businesses access the capital they need to grow.
  I urge my colleagues to vote ``yes'' on H.R. 1804, and I yield back 
the balance of my time.
  Mr. WILLIAMS of Texas. Mr. Speaker, I urge my colleagues to support 
this commonsense legislation, and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Sessions.) The question is on the motion 
offered by the gentleman from Texas (Mr. Williams) that the House 
suspend the rules and pass the bill, H.R. 1804.
  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. WILLIAMS of Texas. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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