504 Program Risk Oversight Act
Officially: “504 Program Risk Oversight Act” Read the full text
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1Short title
This section would let the Act be called the "504 Program Risk Oversight Act."
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1. Short title This Act may be cited as the 504 Program Risk Oversight Act .
2Portfolio risk analysis of loans guaranteed under the 504 program
This section would add a new section 511 to title V of the Small Business Investment Act of 1958, which covers the Small Business Administration's 504 loan guarantee program. The new section would require the Administrator to conduct a risk analysis of the Administration's entire portfolio of loans guaranteed under title V every year. Not later than December 1, 2025, and every year after that, the Administrator would have to submit a report to Congress on the results of the risk analysis done during the prior fiscal year. The report would have to include: an analysis of overall program risk; a separate analysis of program risk broken out by industry concentration; a consolidated analysis (without naming any individual development company) of the risk created by development companies that are each responsible for at least 1 percent of gross loan approvals under the program, broken out by the dollar value of their loans, the number of their loans, and the program risk for loans in four size bands (up to $500,000; over $500,000 up to $1,000,000; over $1,000,000 up to $2,000,000; and over $2,000,000 up to $5,500,000); an analysis of program risk by how long ago the loans were originated (less than one year before the report; one to two years before the report; and more than two years before the report); an analysis of program risk by borrower type (borrowers who used the loan to open a business; other borrowers whose business had been operating two years or less at origination; and borrowers whose business had been operating more than two years at origination); an analysis of program risk for loans made on limited or special purpose properties; the steps the Administrator has taken to address the risks identified in those analyses; the number of development companies, the number of loans made, and the total dollar amount of loans made under the program; the number and total dollar amount of defaulted loans whose principal and interest the Administrator has purchased, the total dollar amount recovered on those purchases, and the number and total dollar amount of charge-offs; the number and type of enforcement actions the Administrator has recommended concerning loans made by development companies; and the number and dollar amount of any civil monetary penalties assessed under those enforcement actions. The Administrator would have to post the report on an Administration website for the public within 7 days of submitting it to Congress. For purposes of this new section, "limited or special purpose property" would have the meaning given by the Administrator in the SBA guidance document titled "Lender and Development Company Loan Programs" (SOP 50 10 8), as that guidance stood on June 1, 2025.
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2. Portfolio risk analysis of loans guaranteed under the 504 program 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: 511. Portfolio risk analysis (a) In general The Administrator shall annually conduct a risk analysis of the portfolio of the Administration with respect to all loans guaranteed under this title. (b) Report to Congress Not later than December 1, 2025, and annually thereafter, the Administrator shall submit to Congress a report containing the results of each portfolio risk analysis conducted under subsection (a) during the fiscal year preceding the submission of the report, which shall include— (1) an analysis of the overall program risk of loans guaranteed under this title; (2) an analysis of the program risk, set forth separately by industry concentration; (3) without identifying individual development companies by name, a consolidated analysis of the risk created by development companies making loans under this title that are responsible for not less than 1 percent of gross loan approvals under this title, set forth separately by— (A) the dollar value of the loans made by such development companies; (B) the number of loans made by such development companies; and (C) an analysis of the program risk for such loans with a dollar value— (i) less than or equal to $500,000; (ii) greater than $500,000 and less than or equal to $1,000,000; (iii) greater than $1,000,000 and less than or equal to $2,000,000; and (iv) greater than $2,000,000 and less than or equal to $5,500,000; (4) an analysis of the program risk for loan guarantees made under this title for loans that were originated— (A) less than one year before the date of submission of the report; (B) at least one year, but not more than two years before such date; and (C) more than two years before such date; (5) an analysis of the program risk for loan guarantees made under this title for loans that were originated— (A) to a borrower that uses such loan to open a business; (B) to a borrower not described in subparagraph (A) that is a business concern that has been in operation for less than or equal to two years before the date of origination; and (C) to a borrower that is a business concern that has been in operation for more than two years on the date of origination; (6) an analysis of the program risk for loan guarantees made under this title for loans that were originated for limited or special purpose properties; (7) steps taken by the Administrator to mitigate the risks identified in paragraphs (1), (2), (3), (4), (5), and (6); (8) the number of development companies, the number of loans made, and the gross dollar amount of the loans made under this title; (9) the number and total dollar amount of purchases by the Administrator of the principal and interest of loans guaranteed under this title that are in default, the total dollar amount of collections recovered on such purchases, and the number and total dollar amount of charge-offs for such purchases; (10) the number and type of enforcement actions with respect to a loan made by a development company under this title recommended by the Administrator; and (11) the number and dollar amount of any civil monetary penalty assessed pursuant to an enforcement action described in paragraph (10). (c) Availability of report The Administrator shall make available to the public on a website of the Administration the report required under subsection (b) not later than 7 days after the Administrator submits such report to Congress. (d) Limited or special purpose property defined In this section, the term limited or special purpose property has the meaning given by the Administrator in the guidance titled Lender and Development Company Loan Programs (SOP 50 10 8; as in effect on June 1, 2025). .
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