7(a) Loan Agent Oversight Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4531) to amend the Small Business Act to require a report on 7(a) agents, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the measure under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of the bill before us today, H.R. 4531, the 7(a) Loan Agent Oversight Act, companion legislation to H.R. 4481, the Small Business 7(a) Loan Agent Transparency Act.

While H.R. 4481 would establish a registration system for 7(a) loan agents, this bill requires SBA to submit a report to Congress assessing and analyzing the performance of 7(a) loans generated through loan agent activity.

This analysis will include SBA's purchase rate for loans generated through loan agent activity, the aggregate dollar value of referral fees paid to agents either by borrowers or lenders, and the interest rates associated with these loans.

The report will also include an analysis--without naming individual agents--of the risk created by individual agents responsible for generating at least 1 percent of the 7(a) portfolio.

SBA's Office of Inspector General has repeatedly identified the increased risks to the 7(a) loan portfolio created by loan agents as the top agency management challenge and recommended the agency develop a system to register loan agents and monitor their performance.

The IG's findings about loan agent activity are particularly troubling. In one instance a loan agent fraudulently originated $90 million in 7(a) loans and received compensation from at least 19 different lenders.

Today's bills on 7(a) loan agent registration and oversight will go a long way in providing transparency and are long overdue.

Once again, I want to sincerely thank Mr. Phillips and Mr. Meuser for identifying this issue and collaborating on a sensible solution.

Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I have no further speakers, and I am prepared to close. I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

The two bills we are considering today go hand in hand and will also go a long way to enhance transparency in the 7(a) program.

Over the last year, our committee has focused on relief programs, but we never lost sight of our traditional lending programs. Today, we turn our attention to the core SBA loan programs and ensure they are working as best as they can.

The report required under this bill will help Congress and the public better understand the role loan agents play in the 7(a) program, whether they improve access to capital for entrepreneurs, and the impact of potential bad actors in this space, especially as it relates to portfolio risk.

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.

Once again, I want to salute the work of the gentleman from Minnesota (Mr. Phillips) and the gentleman from Pennsylvania (Mr. Meuser). I encourage all of my colleagues to vote ``yes,'' and I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume and rise in support of H.R. 4531, the 7(a) Loan Agent Oversight Act.

On October 15, 2021, the SBA's inspector general published a report titled ``Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2022.''

In this report, the inspector general listed increased risks introduced by loan agents as one of the top issues the agency faces. Specifically, the report outlines approximately $335 million in documented and confirmed loan agent fraud within the program. This is unacceptable, Mr. Speaker, and Members of Congress must have more visibility into this program.

H.R. 4531, the 7(a) Loan Agent Oversight Act, requires the SBA to perform a portfolio risk analysis on loans associated with agents. When this risk analysis is completed, Members will have more visibility into how loan agents interact with a government guaranteed loan program. American tax dollars must be protected, and H.R. 4531 makes important improvements to be able to do just that.

I thank the gentleman from Pennsylvania (Mr. Meuser) and the gentleman from Minnesota (Mr. Phillips) for tackling this legislation head on.

With my support and the Chair's support, H.R. 4531 was favorably reported out of our committee, and I encourage all Members to support this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Pennsylvania (Mr. Meuser).

Mr. Speaker, I yield myself the balance of my time to close.

Continued and ongoing fraud within any government program is unacceptable and must be addressed immediately. H.R. 4531 is a step in the right direction and will provide crucial information for Members of Congress as well as committee members as they continue to exercise necessary oversight of programs directed at small businesses and entrepreneurs.

Mr. Speaker, I urge my colleagues to support H.R. 4531, and I yield back the balance of my time.

Mr. Speaker, I rise in support of my bill, H.R. 4531, the 7(a) Loan Agent Oversight Act.

First, I would like to thank Chairwoman Velazquez and Ranking Member Luetkemeyer for advancing this bill to the House floor. I would also like to thank the gentleman from Minnesota (Mr. Phillips) for working together on this important legislation.

The 7(a) loan program is considered the flagship program of the SBA. It is an important tool for helping small firms gain access to capital. Unfortunately, the SBA's Office of Inspector General has highlighted a need for improved oversight of the 7(a) loan agents due to increased risk of fraud associated with these agents.

To ensure that Congress can properly address these issues, we must have the information necessary to determine how to mitigate these risks. Without accurate information, we cannot perform the proper oversight that is needed to safeguard and protect American taxpayer dollars.

My bill will ensure that Congress receives the data it needs to conduct proper oversight of the 7(a) loan program by requiring the SBA to develop and publish an annual portfolio risk analysis for Congress on loan agents that operate within the program. Specifically, the analysis will examine the number of fraudulent loans that are associated with the loan agents as well as the default rate of the loans associated with these agents.

At the end of the day, these are government programs that were developed to assist small businesses in gaining access to capital. Given this important mission, Congress and the SBA must conduct the appropriate level of oversight.

The information that will be provided to Congress under H.R. 4531 will be paramount as we measure the effectiveness of these programs and whether the SBA has the correct oversight requirements in place to administer such a significant program.

For that reason, I urge my colleagues to support H.R. 4531, the 7(a) Loan Agent Oversight Act.

Madam Speaker, I was regrettably unable to vote on November 2, 2021. Had I been present, I would have voted ``yes'' on all the day's legislation: rollcall No. 342 (H.R. 1975), rollcall No. 343 (H.R. 5221), rollcall No. 344 (H.R. 3616), rollcall No. 345 (S. 108), rollcall No. 346 (H.R. 4881), rollcall No. 347 (H.R. 2088), rollcall No. 348 (H.R. 3469), rollcall No. 349 (H.R. 4256), rollcall No. 350 (H.R. 3462), rollcall No. 351 (H.R. 4481), rollcall No. 352 (H.R. 4531), and rollcall No. 353 (H.R. 4515).

Members Recorded Pursuant to House Resolution 8, 117th Congress

Axne (Spanberger)

Barragan (Gallego)

Bowman (Tlaib)

Brown (Mfume)

Cardenas (Gomez)

Cohen (Beyer)

Crist (Castor (FL))

Davids (KS) (Cleaver)

DeFazio (Blumenauer)

Deutch (Rice (NY))

Doggett (Raskin)

Fletcher (Escobar)

Gaetz (Greene (GA))

Gonzalez, Vicente (Gomez)

Gottheimer (Panetta)

Hagedorn (Carl)

Kirkpatrick (Stanton)

Larsen (WA) (Connolly)

Lawson (FL) (Evans)

Meng (Jeffries)

Morelle (Rice (NY))

Ocasio-Cortez (Garcia (IL))

Palazzo (Fleischmann)

Payne (Pallone)

Pingree (Kuster)

Rush (Underwood)

Schiff (Thompson (CA))

Sires (Pallone)

Smucker (Joyce (PA))

Speier (Scanlon)

Steube (Franklin, C. Scott)

Strickland (Jeffries)

Swalwell (Gomez)

Thompson (MS) (Butterfield)

Thompson (PA)

(Reschenthaler)

Titus (Connolly)

Trone (Beyer)

Wilson (FL) (Hayes)

Madam Speaker, had I been present, I would have voted ``yea'' on rollcall No. 352.

Members Recorded Pursuant to House Resolution 8, 117th Congress

Axne (Spanberger)

Barragan (Gallego)

Bowman (Tlaib)

Brown (Mfume)

Cardenas (Gomez)

Cohen (Beyer)

Crist (Castor (FL))

Davids (KS) (Cleaver)

DeFazio (Blumenauer)

Deutch (Rice (NY))

Doggett (Raskin)

Fletcher (Escobar)

Gaetz (Greene (GA))

Gonzalez, Vicente (Gomez)

Hagedorn (Carl)

Kirkpatrick (Stanton)

Larsen (WA) (Connolly)

Lawson (FL) (Evans)

Meng (Jeffries)

Morelle (Rice (NY))

Ocasio-Cortez (Garcia (IL))

Palazzo (Fleischmann)

Payne (Pallone)

Pingree (Kuster)

Rush (Underwood)

Schiff (Thompson (CA))

Sires (Pallone)

Smucker (Joyce (PA))

Speier (Scanlon)

Steube (Franklin, C. Scott)

Strickland (Jeffries)

Swalwell (Gomez)

Thompson (MS) (Butterfield)

Thompson (PA)

(Reschenthaler)

Titus (Connolly)

Trone (Beyer)

Wilson (FL) (Hayes)