,,ii #aadth ,,congress #b;d ,session ,s4 #biib ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,may #be1 #bjaf ,mr4 ,vitter 7for himself1 ,mrs4 ,shaheen1 ,mr4 ,risch1 ,ms4 ,ayotte1 and ,mr4 ,peters7 introduced the following bill2 which was read twice and referred to the ,committee on ,small ,business and ,entrepreneurship ,a ,,bill ,to amend the ,small ,business ,act to strengthen the ,office of ,credit ,risk ,management of the ,small ,business ,administration1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,small ,business ,lending ,oversight ,act of #bjaf4 #b4 ,office of ,credit ,risk ,management2 stress analyses ,the ,small ,business ,act 7#ae ,u4,s4,c4 #fca et seq47 is amended-- 7#a7 by redesignating section #dg as section #di2 and 7#b7 by inserting after section #df the following3 #dg4 ,office of ,credit ,risk ,management 7a7 ,in general ,there is within the ,administration the ,office of ,credit ,risk ,management 7in this section referred to as the ,office74 7b7 ,director ,the ,office is headed by the ,director of the ,office of ,credit ,risk ,management 7in this section referred to as the ,director74 7c7 ,supervision 7#a7 ,final reports ,the ,director shall issue any final report relating to a review of any entity authorized to issue a loan or loan guarantee under section #g or under title ,v of the ,small ,business ,investment ,act of #aieh 7#ae ,u4,s4,c4 #fie et seq474 7#b7 ,reviews ,an employee of the ,office shall be present for and supervise any full review conducted by a contractor of the ,administration4 7d7 ,enforcement authority of the ,director 7#a7 ,in general ,in addition to other enforcement actions authorized under regulations promulgated by the ,administration1 the ,director shall impose penalties on any lender that finances loans under section #g7;a7 if the lender knowingly and repeatedly-- 7,a7 fails to properly determine and document that a loan is eligible for financing under this ,act and regulations promulgated under this ,act1 including a failure to document that a loan is eligible for financing under section #g7;a7 because the applicant is unable to obtain credit elsewhere2 7,b7 sells the guaranteed portion of a loan under section #e7;f7 when the proceeds of the loan have not been fully disbursed in accordance with program requirements2 7,c7 imposes on an applicant for a loan under section #g7;a7 a fee that the ,administration has not specifically authorized2 or 7,d7 re-amortizes a loan solely to make the loan appear current4 7#b7 ,penalties ,in addition to the authority of the ,administrator to deny liability for a loan1 the ,director may impose a penalty on a lender that knowingly and repeatedly violates the requirements of section #g7;a7 and the regulations promulgated under that section1 including by committing violations described in paragraph 7#a71 which-- 7,a7 shall be based on-- 7i7 the severity of the violations2 and 7ii7 the frequency with which the lender fails to comply with the requirements2 and 7,b7 may include-- 7i7 issuing the lender a warning and an order to comply2 7ii7 if the lender is a participant in the ,preferred ,lenders ,program 7in this subsection referred to as the program71 as defined in section #g7;a77#b77;,c77iii71 suspending the lender from participating in the program for a period of not less than #ij days and not more than #a year1 which shall include the right of the lender to appeal the decision of the ,director to the ,office of ,hearings and ,appeals2 7iii7 prohibiting the lender from issuing loans under section #g7;a7 under processes determined by the ,administrator through regulation1 which shall include the right of the lender to appeal the decision of the ,director to the ,office of ,hearings and ,appeals2 7iv7 assessing a civil monetary penalty against the lender in an amount that is not less than #e1jjj and not greater than #bej1jjj1 which shall include the right of the lender to appeal the decision of the ,director to the ,office of ,hearings and ,appeals2 7v7 prohibiting a lender from selling in the secondary market1 under section #e7;f71 the guaranteed portion of any loan made by the lender2 and 7vi7 any other penalty that the ,director determines to be appropriate after considering the severity and the frequency of the violations of the lender4 7#c7 ,regulations ,with respect to the penalties described in clauses 7ii71 7iii71 and 7iv7 of paragraph 7#b77;,b71 the ,administrator shall-- 7,a7 not later than #ahj days after the date of enactment of this section1 propose amendments to any regulations in effect on the date of enactment of this section2 and 7,b7 not later than #a year after the date of enactment of this section1 publish a final regulation4 7#d7 ,servicing and liquidation responsibilities ,during any period in which a lender is suspended from participating in the program1 or if a lender is prohibited from issuing loans under section #g7;a71 the lender shall remain obligated to maintain all servicing and liquidation activities delegated to the lender by the ,administrator4 7e7 ,report to ,congress ,not later than ,december #ca of each year1 the ,office shall submit to ,congress a report detailing the subject matter and frequency of actions taken by the ,office during the year preceding the submission of the report4 #dh4 ,portfolio risk analyses 7a7 ,in general ,the ,administrator shall annually conduct a risk analysis of the portfolio of the ,administration with respect to all loans issued under section #g7;a74 7b7 ,report 7#a7 ,in general ,beginning on ,april #a1 #bjah1 and annually thereafter1 the ,director of the ,office of ,credit ,risk ,management shall submit to ,congress a report containing the results of each portfolio risk analysis conducted under subsection 7a74 7#b7 ,contents ,a report submitted under paragraph 7#a7 shall include-- 7,a7 an analysis of overall program risk2 7,b7 an analysis of program risk-- 7i7 by industry concentration2 7ii7 by geography2 and 7iii7 by program loan interest rates2 7,c7 without identifying individual lenders by name1 a consolidated analysis of the risk created by the individual lenders responsible for not less than #a percent of the gross loan approvals for the year covered by the report2 and 7,d7 a summary of the steps taken by the ,administration to mitigate the risks identified in subparagraphs 7,a71 7,b71 and 7,c74 4 #c4 ,credit elsewhere ,the ,small ,business ,act 7#ae ,u4,s4,c4 #fca et seq47 is amended-- 7#a7 by striking section #c7;h7 7#ae ,u4,s4,c4 #fcb7;h77 and inserting the following3 7h7 ,the term credit elsewhere means-- 7#a7 for the purposes of this ,act1 except for section #g7;b71 the availability of credit to the individual loan applicant on reasonable terms and conditions from non-,federal1 non-,state1 or non-local government sources1 taking into consideration factors associated with conventional lending practices1 including but not limited to-- 7,a7 the business industry in which the loan applicant operates2 7,b7 whether the loan applicant is an enterprise that has been in operation for a period of less than #b years2 7,c7 the adequacy of the collateral available to secure the requested loan2 and 7,d7 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 business2 and 7#b7 for the purposes of section #g7;b71 the availability of credit from non-,federal sources on reasonable terms and conditions taking into consideration the prevailing rates and terms in the community in or near where the concern transacts business1 or the homeowner resides1 for similar purposes and periods of time4 2 and 7#b7 by striking section #ah7;b7 7#ae ,u4,s4,c4 #fdg7;b77 and inserting the following3 7b7 ,as used in this ,act1 the term agricultural enterprises means those businesses engaged in the production of food and fiber1 ranching1 and raising of livestock1 aquaculture1 and all other farming and agricultural related industries4 4 #d4 ,oversight fees 7a7 ,fees for the operation of the ,office of ,credit ,risk ,management ,section #g7;a77#bc7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcf7;a77#bc77 is amended-- 7#a7 in subparagraph 7,a7-- 7,a7 by striking ,with respect to and inserting the following3 7i7 ,reduction of ,administration costs ,with respect to 2 and 7,b7 by adding at the end the following3 7ii7 ,office of ,credit ,risk ,management ,the ,administration shall assess and collect a fee equal to #j4jc percent per year of the outstanding balance of the deferred participation share of each loan approved under this subsection1 the proceeds of which shall be used solely to support the operations of the ,office of ,credit ,risk ,management4 2 and 7#b7 in subparagraph 7,b71 by striking fee assessed and inserting fees assessed4 7b7 ,secondary market sales ,section #e7;g77#d77;,a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcd7;g77#d77;,a77 is amended by striking the first sentence and inserting ,the ,administrator shall collect a fee for any loan guarantee sold into the secondary market under subsection 7f7 in an amount equal to #ej percent of the portion of the sale price that exceeds #ajh percent of the outstanding principal amount of the portion of the loan guaranteed by the ,administration44 #e4 ,reduction of risk 7a7 ,lender concentration ,section #g7;a77#a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcf7;a77#a77 is amended by adding at the end the following3 7,d7 ,portfolio concentrations 7i7 ,concentration of loans made with no equity contribution 7,i7 ,in general ,not later than ,december #ca of each year1 the ,administrator shall calculate1 as of ,september #cj of the year in which the calculation is made and for each lender that issues loans under this section1 the percentage of loans in the portfolio of the lender that were made without a contribution of equity by the borrower when the purpose of the loan was to establish a new small business concern1 to effectuate a change of ownership of a small business concern1 or to purchase real estate4 7,,ii7 ,approval ,if1 after making the calculation required under subclause 7,i71 the ,administrator determines that more than #ae percent of the loans of a lender are as described in that subclause1 any loan application submitted to the lender that would provide financing without a contribution of equity by the borrower and for one of the purposes described in that subclause may not be approved under the authority delegated to a lender as a participant in the ,preferred ,lenders ,program1 as defined in paragraph 7#b77;,c77iii7 and if applicable4 7,,iii7 ,exemptions ,subclause 7,,ii7 shall not apply to any lender that originates loans under section #g7;a71 the aggregate amount of which equals less than #a percent of the annual total program authorization1 based upon gross loan approvals for the fiscal year preceding the year in which the calculation is made under subclause 7,i74 7ii7 ,industry concentration 7,i7 ,in general ,not later than ,december #ca of each year1 the ,administrator shall calculate1 as of ,september #cj of the year in which the calculation is made1 for each lender that issues loans under this section1 and using the applicable #f-;digit classification code under the ,north ,american ,industry ,classification ,system1 industry concentrations for each lender4 7,,ii7 ,approval ,if1 after making the calculation required under subclause 7,i71 the ,administrator determines that more than #bj percent of the loans of a lender are concentrated in a single industry1 any loan application submitted to the lender from a small business concern operating in that industry may not be approved under the authority delegated to the lender as a participant in the ,preferred ,lenders ,program1 as defined in paragraph 7#b77;,c77iii7 and if applicable4 7,,iii7 ,exemptions ,subclause 7,,ii7 shall not apply to any lender that originates loans under section #g7;a71 the aggregate amount of which equals less than #a percent of the annual total program authorization1 based upon gross loan approvals for the fiscal year preceding the year in which the calculation is made under subclause 7,i74 7,e7 ,financing in excess of #ajj percent ,the ,administrator may not approve a loan under subparagraph 7,d7 if the loan provides financing in an amount that is more than #ajj percent of the project costs4 4 7b7 ,regulations 7#a7 ,in general ,the ,administrator of the ,small ,business ,administration shall-- 7,a7 not later than #ahj days after the date of enactment of this ,act1 issue proposed regulations to implement this section and the amendments made by this section2 and 7,b7 not later than #a year after the date of enactment of this ,act1 publish final regulations implementing this section and the amendments made by this section4 7#b7 ,content ,the regulations described in subparagraphs 7,a7 and 7,b7 of paragraph 7#a7 shall include factors1 such as the balance sheet equity of a borrower1 that a lender may consider when determining whether and how much equity will be required to ensure that a loan is creditworthy4 #f4 ,issues with respect to loans to small business concerns ,section #g7;a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcf7;a77 is amended by adding at the end the following3 7#ce7 ,accuracy requirement ,any lender that is required to report information to the ,administration with respect to a loan guaranteed under this subsection on ,form #aejb1 or any successor form that contains the information in ,form #aejb as in effect on ,january #a1 #bjaf1 and has been approved by the ,director of the ,office of ,management and ,budget under section #cejg of title #dd1 ,united ,states ,code1 shall ensure that the information on such form is complete and accurate4 7#cf7 ,use of outside agents 7,a7 ,in general ,for a loan made under this subsection1 a lender may use an outside agent or lender service provider to assist in identifying potential applicants and with processing1 disbursing1 servicing1 and liquidating the loan1 except that the lender1 and not any agent1 shall be wholly responsible for-- 7i7 the accuracy of all information submitted with respect to the loan2 7ii7 all decisions with respect to the eligibility and creditworthiness of the loan applicant2 and 7iii7 any actions taken with respect to the loan4 7,b7 ,enforcement authority of the ,administration ,nothing in subparagraph 7,a7 shall be construed to limit the authority of the ,administrator that was in effect on the day before the date of enactment of this paragraph to bring an enforcement action against an outside agent or a lender service provider4 7#cg7 ,retaining ownership ,with respect to a loan made under this subsection1 a lender may not sell or pledge an amount that is more than the greater of-- 7,a7 #he percent of the loan2 or 7,b7 the percentage of the loan that is guaranteed by the ,administration4 4 #g4 ,regulations ,in addition to the regulations required under section #e7;b71 the ,administrator of the ,small ,business ,administration shall-- 7#a7 not later than #ahj days after the date of enactment of this ,act1 issue proposed regulations that-- 7,a7 implement all other provisions of this ,act and the amendments made by this ,act2 and 7,b7 provide definitions and requirements with respect to the concepts of-- 7i7 equity injections2 and 7ii7 loans that are #ajj percent financed2 and 7#b7 not later than #a year after the date of enactment of this ,act1 publish final versions of the regulations described in paragraph 7#a74