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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2659 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 2659
To amend the Small Business Investment Act of 1958 to enhance the
Office of Credit Risk Management, to require the Administrator of the
Small Business Administration to issue rules relating to environmental
obligations of certified development companies, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 1, 2025
Mr. Young (for himself and Ms. Klobuchar) introduced the following
bill; which was read twice and referred to the Committee on Small
Business and Entrepreneurship
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to enhance the
Office of Credit Risk Management, to require the Administrator of the
Small Business Administration to issue rules relating to environmental
obligations of certified development companies, and for other purposes.
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 ``504 Credit Risk Management
Improvement Act of 2025''.
SEC. 2. ENHANCEMENTS TO THE OFFICE OF CREDIT RISK MANAGEMENT.
Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695
et seq.) is amended by adding at the end the following:
``SEC. 511. OFFICE OF CREDIT RISK MANAGEMENT OVERSIGHT.
``(a) Definitions.--In this section--
``(1) the term `Director' means the Director of the Office;
and
``(2) the term `Office' means the Office of Credit Risk
Management established under section 47 of the Small Business
Act (15 U.S.C. 657t).
``(b) Duties Relating to 504 Program.--The Office--
``(1) shall be responsible for--
``(A) supervising any certified development
company, as provided in subsection (d); and
``(B) conducting file reviews with respect to loan
closings under the program established under this
title, as provided in subsection (c); and
``(2) may--
``(A) take formal and informal enforcement actions
against a certified development company, as provided in
subsection (e); and
``(B) charge a certified development company a fee,
as provided in subsection (g).
``(c) Loan Closing File Reviews.--With respect to a loan closing
under the program established under this title, the Office shall be
responsible for the following:
``(1) Conducting a complete file review of a random
selection of all loan closings, the number, frequency, and
conduct of which shall be at the discretion of the Office, to
ensure program integrity, including a review of the items
listed on the Checklist for Complete File Review contained in
the appropriate form of the Administration.
``(2) Not later than 60 days after the date on which each
complete file review conducted under paragraph (1) is
completed, preparing a written report documenting the results
of that review, which the Office shall send to--
``(A) the applicable certified development company;
``(B) the designated attorney that closed the loan
for the certified development company; and
``(C) the Commercial Loan Service Center.
``(3) If a complete file review conducted under paragraph
(1) reveals a deficiency that could result in a loss to the
Administration, requiring the applicable certified development
company or the designated attorney to promptly correct the
deficiency.
``(d) Supervision of Certified Development Companies.--With respect
to the supervision of certified development companies--
``(1) an employee of the Office shall--
``(A) be present for, and supervise, the review of
any such company that is conducted by a contractor of
the Office on the premises of the company; and
``(B) supervise the review of any such company that
is conducted by a contractor of the Office that is not
conducted on the premises of the company; and
``(2) the Administrator shall--
``(A) develop a timeline for the review by the
Office of certified development companies and the
submission of reports regarding those reviews, under
which the Administrator shall--
``(i) submit to a certified development
company a written report of any review of the
company not later than 90 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 90-day
period described in clause (i)--
``(I) notify the company of the
expected date of submission of the
report and the reason for the delay;
and
``(II) submit to the company the
report; and
``(B) if a response by a certified development
company is requested in a report submitted under
subparagraph (A), require the company to submit
responses to the Administrator not later than 45
business days after the date on which the company
receives the report.
``(e) Enforcement Authority Against Certified Development
Companies.--
``(1) Informal enforcement authority.--The Director may
take an informal enforcement action against a certified
development company if the Director finds that the company has
violated a statutory or regulatory requirement or any
requirement in a Standard Operating Procedures Manual or Policy
Notice relating 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 of the
Small Business Act (15 U.S.C. 657u), the Director may
take a formal enforcement action against any certified
development company if the Director finds that the
company has violated--
``(i) a statutory or regulatory
requirement, including a requirement relating
to the necessary funds for making loans when
those funds are not made available to the
company from private sources on reasonable
terms; or
``(ii) any requirement described in a
Standard Operating Procedures Manual or Policy
Notice relating to a program or function of the
Office of Capital Access.
``(B) Enforcement actions.--The decision to take an
enforcement action against a certified development
company under subparagraph (A) shall be based on the
severity or frequency of the violation and may include
assessing a civil monetary penalty against the company
in an amount that is not greater than $250,000.
``(3) Failure to submit annual report.--With respect to a
certified development company that, as of the date that is 60
days after the date on which the company is required to submit
any report, fails to submit that report, the Director may--
``(A) suspend the company from participating in the
program established under this title for a period that
is not longer than 30 days; or
``(B) impose a penalty on the company in an amount
to be determined by the Director, except that the
amount of the penalty shall be not more than $10,000.
``(f) Portfolio Risk Analysis of 504 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 504.
``(2) Report to congress.--On December 1, 2025, 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
projects and loans approved under section 504;
``(B) an analysis of the program risk, set forth
separately by industry concentration;
``(C) without identifying individual certified
development companies by name, a consolidated analysis
of the risk created by the individual companies
responsible for not less than 1 percent of the gross
project approvals set forth separately for the year
covered by the report by--
``(i) the dollar value of the loans made by
such companies; and
``(ii) the number of loans made by such
companies;
``(D) steps taken by the Administrator to mitigate
the risks identified in subparagraphs (A), (B), and
(C);
``(E) the number of certified development
companies, the number of projects undertaken, the
number of unique third party lenders participating in
the program, and the gross and net dollar amount of
debentures guaranteed and approved projects;
``(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 of the Small Business Act (15 U.S.C.
657u);
``(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.
``(g) Fee Authority Regarding Certified Development Companies.--
``(1) In general.--On and after the date that is 1 year
after the date of enactment of the 504 Credit Risk Management
Improvement Act of 2025, the Office may collect from each
certified development company a fee as necessary to reduce to
zero the cost to the Administration of examinations, reviews,
rulemakings, and other lender oversight activities in this Act,
the amount of which--
``(A) shall be determined on a graduated scale
according to the size of the portfolio of the certified
development company with respect to the program carried
out under this title; and
``(B) shall not exceed the amount that is 1 basis
point with respect to the value of the portfolio
described in subparagraph (A).
``(2) Payment.--A certified development company on which a
fee is imposed under paragraph (1) shall pay the fee from the
servicing fees collected by the development company pursuant to
regulation.''.
SEC. 3. RULES RELATING TO OBLIGATIONS OF CERTIFIED DEVELOPMENT
COMPANIES UNDER THE NATIONAL ENVIRONMENTAL POLICY ACT.
(a) Eligible Certified Development Company Defined.--In this
section, the term ``eligible certified development company'' means a
certified development company, within the meaning under title V of the
Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), that
receives assistance pursuant to that title.
(b) Requirement To Issue Rules.--Not later than 180 days after the
date of enactment of this Act, the Administrator of the Small Business
Administration shall issue rules to clarify the procedures necessary
for an eligible certified development company to comply with the
applicable requirements under the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.).
(c) Rule of Construction.--Nothing in this section shall be
construed to modify the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.).
<all>
Introduced in Senate
Read twice and referred to the Committee on Small Business and Entrepreneurship.
Committee on Small Business and Entrepreneurship. Hearings held.
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