S. 2659: 504 Credit Risk Management Improvement Act of 2025

This bill, titled the 504 Credit Risk Management Improvement Act of 2025, proposes several amendments to the existing Small Business Investment Act of 1958 aimed at enhancing oversight and assessment processes related to certified development companies (CDCs). Here’s a breakdown of the main provisions in layman's terms:

Enhancements to the Office of Credit Risk Management

The Act aims to improve the Office of Credit Risk Management (CRM) within the Small Business Administration (SBA) in the following ways:

• Supervision of Certified Development Companies: The Office will supervise CDCs more effectively. It will carry out file reviews on loans to ensure compliance with regulations and integrity within the loan program.
• Authority for Enforcement: The CRM will have the authority to take action against CDCs that violate rules. This includes both informal and formal actions, which may involve penalties up to $250,000 for serious violations.
• File Reviews: The Office will conduct reviews of loan closing files, ensuring all required documentation is complete and correct. Any deficiencies found during these reviews will need to be promptly addressed by the relevant parties.
• Annual Risk Analysis: The CRM will perform an annual risk analysis of all loans guaranteed under the program. This will help identify risks associated with the loans and evaluate the overall performance and risk landscape of the program.

Fee Structure for Certified Development Companies

Beginning one year after the passage of the Act, the CRM will be allowed to charge fees to certified development companies to cover the costs of its oversight activities. The fees will be based on the size of the CDC's loan portfolio but will not exceed a certain limit.

Rules for Environmental Compliance

The bill also requires the SBA to establish rules to help CDCs comply with the environmental obligations set forth in the National Environmental Policy Act (NEPA). These rules will need to be issued within 180 days after the bill becomes law.

Reporting Requirements

The CRM will be required to submit an annual report to Congress detailing the results of its risk analyses, including:

• Overall program risk assessments
• Industry concentration risks
• Consolidated risk analyses for significant lenders
• Mitigation steps taken
• Data on loans, enforcement actions, and penalties imposed

Conclusion

Overall, this legislation aims to strengthen the oversight of loan programs provided to small businesses through certified development companies, enhance compliance with environmental regulations, and improve the accountability of these financial entities.

Relevant Companies

• None found