H.R. 4743House115th Congress (2017-2019)Enacted

Small Business 7(a) Lending Oversight Reform Act of 2018

Introduced January 9, 2018

AI-Generated Summary

Updated April 15, 2026 at 7:55 PM UTC

The Small Business 7(a) Lending Oversight Reform Act of 2018 amends the Small Business Act to create a new Office of Credit Risk Management and a Lender Oversight Committee within the SBA. These bodies are tasked with supervising lenders that make loans under the SBA’s 7(a) program, conducting regular risk analyses, and enforcing compliance, including the ability to levy civil penalties. The bill also expands the SBA’s authority to increase loan commitments and clarifies the definition of “credit elsewhere.”

Key Provisions

  • Establishes the Office of Credit Risk Management, headed by a senior career director, to oversee 7(a) lenders, lending partners, and other small‑business lenders.
  • Gives the director authority to conduct on‑site reviews, issue informal enforcement actions, and, with committee approval, impose formal actions and civil penalties up to $250,000.
  • Creates a Lender Oversight Committee (minimum 8 members) to review oversight reports, vote on formal enforcement actions, and report to the SBA administrator.
  • Requires the director to perform an annual risk analysis of the 7(a) loan portfolio and submit detailed reports to Congress each December.
  • Sets timelines for review reports (60 business days to deliver, 45 days for lender response) and mandates public availability of the office’s budget justification.
  • Adds a definition of “credit elsewhere” to guide lender assessments of borrower eligibility.
  • Allows the SBA administrator to increase the total amount of 7(a) loan commitments up to 115% of the statutory limit, with prior notice to congressional committees and a one‑time‑per‑year limit.
  • Repeals the existing Small Business Loan Loss Report requirement.

Legislative Activity

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22 earlier actions
Became Law Latest Action

Became Public Law No: 115-189.

June 21, 2018

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HouseIntro Referral

Introduced in House

January 9, 2018

HouseIntro Referral

Referred to the House Committee on Small Business.

January 9, 2018

HouseCommittee

Committee Consideration and Mark-up Session Held.

March 14, 2018

HouseCommittee

Ordered to be Reported (Amended) by Voice Vote.

March 14, 2018

HouseCommittee

Reported (Amended) by the Committee on Small Business. H. Rept. 115-655.

April 26, 2018

HouseCalendars

Placed on the Union Calendar, Calendar No. 503.

April 26, 2018

HouseFloor

Mr. Chabot moved to suspend the rules and pass the bill, as amended.

May 8, 2018 • 2:58 PM

HouseFloor

Considered under suspension of the rules. (consideration: CR H3812-3815)

May 8, 2018 • 2:58 PM

HouseFloor

DEBATE - The House proceeded with forty minutes of debate on H.R. 4743.

May 8, 2018 • 2:58 PM

HouseFloor

Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote.(text: CR H3812-3814)

May 8, 2018 • 3:09 PM

HouseFloor

On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3812-3814)

May 8, 2018 • 3:09 PM

HouseFloor

Motion to reconsider laid on the table Agreed to without objection.

May 8, 2018 • 3:09 PM

SenateCalendars

Received in the Senate. Read twice. Placed on Senate Legislative Calendar under General Orders. Calendar No. 403.

May 9, 2018

HouseFloor

House requested return of papers pursuant to H.Res. 899. (consideration: CR H4008)

May 16, 2018 • 3:11 PM

SenateFloor

Senate vitiated previous actions by Unanimous Consent. (consideration: CR S2838)

May 22, 2018

SenateFloor

Senate returned papers to the House by Unanimous Consent.

May 22, 2018

SenateFloor

Message on Senate action sent to the House.

May 23, 2018

SenateCalendars

Received in the Senate. Read twice. Placed on Senate Legislative Calendar under General Orders. Calendar No. 431.

May 23, 2018

SenateFloor

Passed Senate without amendment by Unanimous Consent. (consideration: CR S2998)

June 5, 2018

SenateFloor

Message on Senate action sent to the House.

June 6, 2018

President

Presented to President.

June 13, 2018

Became Law

Signed by President.

June 21, 2018

Became Law

Became Public Law No: 115-189.

June 21, 2018

Floor Debate

13 members

What members said about H.R. 4743 on the floor

9 Republicans4 Democrats
James P. McGovern
Rep. James P. McGovernD-MA-2 · May 23, 2018

Mr. Speaker, I yield myself such time as I may consume. (Mr. McGOVERN asked and was given permission to revise and extend his remarks.) Mr. Speaker, I want to thank the gentleman from Alabama (Mr.…

Bradley Byrne
Rep. Bradley ByrneR-AL-1 · May 23, 2018

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 908 and ask for its immediate consideration. Mr. Speaker, for the purpose of debate only, I yield the customary 30…

Paul Mitchell
Rep. Paul MitchellR-MI-10 · May 23, 2018

Mr. Speaker, I thank the gentleman for yielding. I am pleased to have the opportunity to join the House Armed Services Committee in time to participate in the review and markup of the fiscal year…

Michael B. Enzi
Sen. Michael B. EnziR-WY · Jul 18, 2018

Mr. President, I rise to submit to the Senate the budget scorekeeping report for July 2018. The report compares current-law levels of spending and revenues with the amounts the Senate agreed to in…

Liz Cheney
Rep. Liz CheneyR-WY · May 23, 2018

Mr. Speaker, I would like to thank my colleague, Mr. Byrne, for his tremendous work on this issue on the Rules Committee as well as on the Armed Services Committee. Mr. Speaker, I rise today in…

Show 8 more
Steve Chabot
Rep. Steve ChabotR-OH-1 · May 8, 2018

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4743) to amend the Small Business Act to strengthen the Office of Credit Risk Management within the Small Business Administration, and…

Barbara Lee
Rep. Barbara LeeD-CA-13 · May 23, 2018

Mr. Speaker, I want to thank our ranking member for yielding and for his tremendous leadership on defense issues and so many other issues that are critical to our national and domestic security. Mr.…

Nydia M. Velázquez
Rep. Nydia M. VelázquezD-NY-7 · May 8, 2018

Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of H.R. 4743, a bipartisan, bicameral bill that will improve oversight of the 7(a) Loan Program, the SBA's…

Robert C. "Bobby" Scott
Rep. Robert C. "Bobby" ScottD-VA-3 · May 23, 2018

Mr. Speaker, I thank the gentleman for yielding. As the Representative of Hampton Roads, Virginia, I support the significant increase in Navy shipbuilding in the NDAA. But while we consider national…

John J. Duncan, Jr.
Rep. John J. Duncan, Jr.R-TN-2 · May 23, 2018

Mr. Speaker, I thank the gentleman from Alabama for yielding me this time. He is one of the great leaders in this Congress, and it is an honor to serve with him. Mr. Speaker, I have always heard that…

Trent Kelly
Rep. Trent KellyR-MS-1 · May 8, 2018

Mr. Speaker, I thank the chairman for yielding. In my district, the Small Business Administration has made tremendous and direct impact with the 7(a) Loan Program by helping small businesses that are…

Marco Rubio
Sen. Marco RubioR-FL · May 22, 2018

Madam President, I ask unanimous consent that notwithstanding rule XXII, following leader remarks on Wednesday, May 23, the Senate proceed to executive session to consider the Montgomery nomination,…

Michael B. Enzi
Sen. Michael B. EnziR-WY · Nov 15, 2018

Mr. President, I wish to submit to the Senate the budget scorekeeping report for November 2018. The report compares current-law levels of spending and revenues with the amounts the Senate agreed to…

Show 2 more
Mitch McConnell
Sen. Mitch McConnellR-KY · Jun 5, 2018

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 431, H.R. 4743. I ask unanimous consent that the bill be considered read a third time and…

Steve Chabot
Rep. Steve ChabotR-OH-1 · May 16, 2018

Mr. Speaker, I send to the desk a privileged resolution, and ask for its immediate consideration in the House.

Bill Text

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One Hundred Fifteenth Congress of the United States of America

At the Second Session

Begun and held at the City of Washington on Wednesday, the third day of January, two thousand and eighteen

H. R. 4743

AN ACT

To amend the Small Business Act to strengthen the Office of Credit Risk Management within the Small Business Administration, and for other purposes.

1.

Short title

This Act may be cited as the Small Business 7(a) Lending Oversight Reform Act of 2018.

2.

Definitions

In this Act, the terms Administration and Administrator mean the Small Business Administration and the Administrator thereof, respectively.

3.

Codification of the Office of Credit Risk Management and the Lender Oversight Committee

(a)

In general

The Small Business Act (15 U.S.C. 631 et seq.) is amended—

(1)

by redesignating section 47 as section 49; and

(2)

by inserting after section 46 the following new sections:

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.

(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

With respect to 7(a) lenders, an employee of the Office shall—

(1)

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

(2)

supervise any such review that is not conducted on the premise of the 7(a) lender.

(e)

Enforcement authority against 7(a) lenders

(1)

Informal enforcement authority

The Director may take an informal enforcement action against a 7(a) lender if the Director finds that the 7(a) lender 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 if the Director finds that the 7(a) lender 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 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 in an amount that is not greater than $250,000.

(3)

Appeal by lender

A 7(a) lender 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.

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 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.

.

(b)

Supervision duties for 7(a) lenders

Effective January 1, 2019, subsection (d) of section 47 (as added by subsection (a)) is amended to read as follows:

(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.

.

(c)

Transfer of functions

(1)

Office of Credit Risk Management

All functions of the Office of Credit Risk Management of the Small Business Administration, including the personnel, assets, and obligation of the Office of Credit Risk Management, as in existence on the day before the date of the enactment of this Act, shall be transferred to the Office of Credit Risk Management established under section 47 of the Small Business Act, as added by subsection (a).

(2)

Lender Oversight Committee

All functions of the Lender Oversight Committee of the Small Business Administration, including the personnel, assets, and obligations of the Lender Oversight Committee, as in existence on the day before the date of the enactment of this Act, shall be transferred to the Lender Oversight Committee established under section 48 of the Small Business Act, as added by subsection (a).

(d)

Deeming of name

(1)

Office of Credit Risk Management

Any reference in a law, regulation, guidance, document, paper, or other record of the United States to the Office of Credit Risk Management of the Small Business Administration shall be deemed a reference to the Office of Credit Risk Management, established under section 47 of the Small Business Act, as added by subsection (a).

(2)

Lender Oversight Committee

Any reference in a law, regulation, guidance, document, paper, or other record of the United States to the Lender Oversight Committee of the Small Business Administration shall be deemed a reference to the Lender Oversight Committee, established under section 48 of the Small Business Act, as added by subsection (a).

(e)

Technical amendment

Section 3(r)(2) of the Small Business Act (15 U.S.C. 632(r)(2)) is amended by striking regulated SBA lender each place it appears in heading and text and inserting regulated lender.

4.

Definition of credit elsewhere

(a)

In general

The Small Business Act (15 U.S.C. 631 et seq.) is amended—

(1)

by striking section 3(h) (15 U.S.C. 632(h)) and inserting the following:

(h)

The term credit elsewhere means—

(1)

for the purposes of this Act (except as used in section 7(b)), the availability of credit on reasonable terms and conditions to the individual loan applicant from non-Federal, non-State, or non-local government sources, considering factors associated with conventional lending practices, including—

(A)

the business industry in which the loan applicant operates;

(B)

whether the loan applicant is an enterprise that has been in operation for a period of not more than 2 years;

(C)

the adequacy of the collateral available to secure the requested loan;

(D)

the loan term necessary to reasonably assure the ability of the loan applicant to repay the debt from the actual or projected cash flow of the business; and

(E)

any other factor relating to the particular credit application, as documented in detail by the lender, that cannot be overcome except through obtaining a Federal loan guarantee under prudent lending standards; and

(2)

for the purposes of section 7(b), the availability of credit on reasonable terms and conditions from non-Federal sources taking into consideration the prevailing rates and terms in the community in or near where the applicant business concern transacts business, or the applicant homeowner resides, for similar purposes and periods of time.

; and

(2)

in section 7(a)(1)(A)(i) (15 U.S.C. 636(a)(1)(A)(i)), by inserting The Administrator has the authority to direct, and conduct oversight for, the methods by which lenders determine whether a borrower is able to obtain credit elsewhere. before No financial assistance.

(b)

Technical amendment

Section 18(b) of the Small Business Act (15 U.S.C. 647(b)) is amended to read as follows:

(b)

As used in this Act, the term agricultural enterprises means those small business concerns engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries.

.

5.

Authority for Administrator to increase amount for general business loans

Section 20 of the Small Business Act (15 U.S.C. 631 note) is amended—

(1)

by redesignating subsection (j) as subsection (f); and

(2)

by adding at the end the following new subsection:

(g)

Authority To increase amount of general business loans

(1)

In general

Subject to paragraphs (2) and (3) and with respect to fiscal year 2019 and each fiscal year thereafter, if the Administrator determines that the amount of commitments by the Administrator for general business loans authorized under section 7(a) for a fiscal year could exceed the limit on the total amount of commitments the Administrator may make for those loans under this Act, an appropriations Act, or any other provision of law, the Administrator may make commitments for those loans for that fiscal year in an aggregate amount equal to not more than 115 percent of that limit.

(2)

Notice required before exercising authority

Not later than 30 days before the date on which the Administrator intends to exercise the authority under paragraph (1), the Administrator shall submit notice of intent to exercise the authority to—

(A)

the Committee on Small Business and Entrepreneurship and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the Senate; and

(B)

the Committee on Small Business and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the House of Representatives.

(3)

Limitation

The Administrator shall not exercise the authority under paragraph (1) more than once during any fiscal year.

.

6.

Establishing a process for waivers

(a)

In general

If the Administrator exercises statutory or regulatory authority to waive a regulation or a requirement in the Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access of the Administration, the waiver shall be in writing and be maintained in an indexed form.

(b)

No new waiver authority

Nothing in subsection (a) shall be construed as creating new authority for the Administrator to waive regulations of the Administration.

7.

Repeal of Small Business Loan Loss Report

Subsection (b) of section 10 of the Small Business Act (15 U.S.C. 639(b)) is repealed.

Speaker of the House of Representatives.

Vice President of the United States and President of the Senate.