November 10, 2021
C-Suite Wednesday – 7(a) Loan Agent Transparency and Oversight Acts are Being Reviewed by the Senate
At the beginning of the month, the House passed six bipartisan bills, and of those bills, two centered around collecting and data and submitting annual reports on 7(a) loan agents. The bills would increase controls over 7(a) loan agents and lower risk and potential fraud in the 7(a) program if passed in the Senate. It would also further the SBA’s progress with the issues identified in the Office of Inspector General’s reports.
The Small Business 7(a) Loan Agent Transparency Act, H.R. 4481, would require the SBA to establish a registration system for all 7(a) agents and assign each agent a unique identifier. All 7(a) loan agents would have to register in the system before providing services and pay an annual registration fee after the first year. The system will collect data on the loan agents so the SBA Director can submit a required report.
H. R. 4531, the 7(a) Loan Agent Oversight Act, will necessitate an annual report from the SBA covering 7(a) agent activity for the calendar year. Information such as the number and type of 7(a) agents assisting applicants, the Administrator’s purchase rate for loans that used the services of a 7(a) agent, the dollar value of referral fees paid to 7(a) agents, an analysis of interest rates on loans worked on by an agent, and a description of how the Administrator communicates with the agents are some of the requirements in the report.
If the bill passes, the report will also need data on the number of fraudulent loans that used services from a 7(a) agent on the application and consolidated analysis of the risk created by each individual 7(a) agent that is responsible for at least one percent of the dollar value and/or the number of loans made with the assistance of 7(a) loan agents.
Each of the bills have been received by the Senate. They were each read twice by the Senate and have been referred to the Committee on Small Business and Entrepreneurship.