S 2283 — Small Business 7(a) Lending Oversight Reform Act of 2018

631 et seq.) is amended--</DELETED> <DELETED> (1) in section 3 (15 U.S.C.

632), by striking subsection (h) and inserting the following:</DELETED> <DELETED> ``(h) The term `credit elsewhere' means--</DELETED> <DELETED> ``(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--</DELETED> <DELETED> ``(A) the business industry in which the loan applicant operates;</DELETED> <DELETED> ``(B) whether the loan applicant is an enterprise that has been in operation for a period of not more than 2 years;</DELETED> <DELETED> ``(C) the adequacy of the collateral available to secure the requested loan;</DELETED> <DELETED> ``(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</DELETED> <DELETED> ``(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</DELETED> <DELETED> ``(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 small business concern transacts business, or the applicant homeowner resides, for similar purposes and periods of time.'';

and</DELETED> <DELETED> (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''.</DELETED> <DELETED>SEC.

5.

AUTHORITY FOR ADMINISTRATOR TO INCREASE AMOUNT FOR GENERAL BUSINESS LOANS.</DELETED> <DELETED> Section 20 of the Small Business Act (15 U.S.C.

631 note) is amended--</DELETED> <DELETED> (1) by redesignating subsection (j) as subsection (f);

and</DELETED> <DELETED> (2) by adding at the end the following:</DELETED> <DELETED> ``(g) Authority To Increase Amount of General Business Loans.--</DELETED> <DELETED> ``(1) In general.--With respect to fiscal year 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 total amount equal to not more than 115 percent of that limit.</DELETED> <DELETED> ``(2) Approval required before exercising authority.--</DELETED> <DELETED> ``(A) In general.--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 the intent of the Administrator to exercise the authority to--</DELETED> <DELETED> ``(i) 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</DELETED> <DELETED> ``(ii) the Committee on Small Business and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the House of Representatives.</DELETED> <DELETED> ``(B) Approval.--The Administrator may not exercise the authority under paragraph (1) unless the exercise of authority has been approved, in writing, by the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and the Committee on Small Business of the House of Representatives.</DELETED> <DELETED> ``(3) Limitation.--The Administrator shall not exercise the authority under paragraph (1) more than once during any fiscal year.''.</DELETED> <DELETED>SEC.

6.

DISCLOSURE OF WAIVERS.</DELETED> <DELETED> (a) In General.--If the Administrator exercises statutory or regulatory authority to waive a regulation related to a program or function of the Office of Capital Access of the Administration-- </DELETED> <DELETED> (1) the waiver shall be in writing and shall specify the grounds for approving the waiver;

and</DELETED> <DELETED> (2) the Administrator shall notify the public of all waivers of regulations approved by the Administration, which notice shall--</DELETED> <DELETED> (A) be published in the Federal Register not less than annually;</DELETED> <DELETED> (B) cover the period beginning on the date after the last day covered by the previous notice;</DELETED> <DELETED> (C) describe the nature of the requirement that has been waived and specify the regulation involved;</DELETED> <DELETED> (D) include a brief description of the grounds for approval of the waiver;

and</DELETED> <DELETED> (E) state how more information about the waiver and a copy of the request and the approval may be obtained.</DELETED> <DELETED> (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.</DELETED> <DELETED> (c) GAO Study on Standard Operating Procedures Manual or Policy Notice Waiver Process.--Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report evaluating--</DELETED> <DELETED> (1) the methods and specific processes used by the Administration to waive requirements in the Standard Operating Procedures Manual or Policy Notices relating to loans made under section 7(a) of the Small Business Act (15 U.S.C.

636(a));

and</DELETED> <DELETED> (2) the number of waivers described in paragraph (1) granted during the period of 5 fiscal years preceding the date of enactment of this Act.</DELETED> SECTION 1.

``(2) any participantlending partner or intermediary participating in a lending program of the Office of Capital Access of the Administration;

and ``(2) be responsible for oversight of the lendersentities and participants described in subsection (b), including by conducting periodic reviews of the compliance and performance of those lendersentities. and participants.

``(d) Supervision Duties for 7(a) Lenders.-- ``(1) Reviews.--WithReviews.--An respect to 7(a) lenders, an employee of the Office shall-- ``(A) be present for and supervise any review of a 7(a) lender that is conducted by a contractor of the Office on the premises of the 7(a) lender;

``(2) Review report timeline.--Notwithstandingtimeline.-- ``(A) In general.--Notwithstanding any other requirements of the Office or the Administrator, with respect to a review of a 7(a) lender that is conducted on or after January 1, 2019, the Administrator shall develop and implement a review report timeline whichthat shall-- ``(A)``(i) require the Administrator to-- ``(i)``(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 conducted;concluded;

or ``(ii)``(II) if the Administrator expects to submit the report after the end of the 60-60-business-day business-day period described in clausesubclause (i),(I), notify the 7(a) lender in writing of the expected submission day of the report and the reason for the delay;

and ``(B)``(ii) except as provided in subparagraph (B), if a response by the 7(a) lender is requested in a report submitted under subparagraph (A), require the 7(a) lender to submit a response to the Administrator not later than 45 business days after the date on which the 7(a) lender receives the report.

``(e)``(B) EnforcementExtension.--The AuthorityAdministrator Against 7(a) Lenders.-- ``(1) Informal enforcement authority.--The Director may takeextend an informal enforcement action against a 7(a) lender if the Directortime findsframe thatdescribed the 7(a) lender has violated a requirement under section 7(a) or any requirement in asubparagraph Standard(A)(ii) Operatingwith Proceduresrespect Manual or Policy Notice related to a program7(a) orlender functionas of the OfficeAdministrator ofdetermines Capitalnecessary. Access.

``(2)``(e) FormalEnforcement enforcementAuthority authority.--Against ``(A)7(a) InLenders.-- general.--With``(1) theInformal approvalenforcement ofauthority.--The the Lender Oversight Committee established under section 48, the Director may take aan formalinformal enforcement action against anya 7(a) lender if the Director finds that the 7(a) lender has violated--violated ``(i) a statutory or regulatory requirement underor sectionany 7(a),requirement includingin a requirementStandard relatingOperating Procedures Manual or Policy Notice related to credita elsewhere,program or anyfunction regulationof implementingthe suchOffice section;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, including a requirement relating to credit elsewhere;

``(B) Enforcement actions.--actions.--Any ``(i) In general.--Any enforcement action taken with respect to a 7(a) lender by the Director under subparagraph (A)-- ``(I)``(i) shall be based on the severity or frequency of the violation;

and ``(II)``(ii) 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 describedunder in paragraph (1) or (2) to the Office of Hearings and Appeals established under section 5(i) or to an appropriate district court of the United States.

``(F) the number and dollar amount of total defaultslosses and total repurchases,purchases, and the percentage and total amount of recoveries;recoveries by the Administration;

``(i) Budget Submission and Justification.--Effective for the first fiscal year occurringbeginning after the date of enactment of the Small Business 7(a) Lending Oversight Reform Act of 2018, and each fiscal year thereafter, the Director shall provide,provide to the Administrator in writing a budget submission and justification for the submissionOffice, to the Administrator, which shall-- ``(1) include the salaries and expenses of the Office and lender oversight fees;

``(b) Membership.--The Committee shall consist of 11not less than 8 members appointed by the Administrator, of whom-- ``(1) 3 members shall be voting members, of whom 2 shall be career appointees serving in a Senior Executive Service position (as defined in section 3132 of title 5, United States Code);

and ``(2) 8the remaining members shall be nonvoting members who shall serve in an advisory capacity on the Committee.

``(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 participantlending partner or intermediary participating in a lending program of the Office of Capital Access of the Administration;

``(4) in carrying out paragraph (2) with respect to any other formal enforcement action not otherwisetaken specifiedunder in subsection (d) or (e) of section 23, vote to approve, disapprove, or modify the action;

``(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 recommendapprove a formal enforcement action of the Director of the Office of Credit Risk Management with respect to a lender.''.

632(r)(2))-- (A) in thisthe paragraph heading, by striking ``SBA'';

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 small business concern transacts business, or the applicant homeowner resides, for similar purposes and periods of time.'';

``(g) Authority Toto Increase Amount of General Business Loans.-- ``(1) In general.--With respect to fiscal year 2018 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 a total amount equal to not more than 115 percent of that limit.

``(2) Approval required before exercising authority.-- ``(A) In general.--Not later than 3015 days before the date on which the Administrator intends to exercise the authority under paragraph (1), the Administrator shall submit notice of the intent of the Administrator to exercise the authority to-- ``(i) the Committee on Small Business and Entrepreneurship and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the Senate;

DISCLOSUREESTABLISHING OFA PROCESS FOR WAIVERS.

(a) In General.--If the Administrator exercises statutory or regulatory authority to waive a regulation or requirement in a Standard Operating Procedures Manual or Policy Notice related to a program or function of the Office of Capital Access of the Administration--Administration, (1) the waiver shall be maintained in writingan andindexed shallform. specify the grounds for approving the waiver;

and (2) the Administrator shall notify the public of all waivers of regulations approved by the Administration, which notice shall-- (A) be published in the Federal Register not less than annually;

(B) cover the period beginning on the date after the last day covered by the previous notice;

(C) describe the nature of the requirement that has been waived and specify the regulation involved;

(D) include a brief description of the grounds for approval of the waiver;

and (E) state how more information about the waiver and a copy of the request and the approval may be obtained.

(c)SEC. GAO Study on Standard Operating Procedures Manual or Policy Notice Waiver Process.--Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report evaluating-- (1) the methods and specific processes used by the Administration to waive requirements in the Standard Operating Procedures Manual or Policy Notices relating to loans made under section 7(a) of the Small Business Act (15 U.S.C.

636(a));7.

andIMPROVED (2)OVERSIGHT theOF number7(A) ofLOANS waiversTO describedPOULTRY inFARMS. paragraph (1) granted during the period of 5 fiscal years preceding the date of enactment of this Act.

<all>The Director of the Office of Credit Risk Management of the Administration shall, in the first report submitted to Congress under section 47(h)(2) of the Small Business Act (as added by section 3 of this Act), include information on how the Office of Capital Access of the Administration has addressed the recommendations in the report issued by the Office of Inspector General of the Administration entitled ``Evaluation of SBA 7(a) Loans Made to Poultry Farmers'', dated March 6, 2018.

Calendar No.

351 115th CONGRESS 2d Session S.

2283 _______________________________________________________________________ A BILL To amend the Small Business Act to strengthen the Office of Credit Risk Management within the Small Business Administration, and for other purposes.

_______________________________________________________________________ March 19, 2018 Reported with an amendment