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119-s-2659119th CongressWALLET

504 Credit Risk Management Improvement Act of 2025

Sponsored By: Senator Young, Todd [R-IN]

In Committee

Summary

Stronger oversight of the SBA's 504 loan program. This bill would create an Office of Credit Risk Management inside the Small Business Administration to supervise certified development companies and tighten review and enforcement of 504 loan closings while also requiring SBA rules that clarify CDCs' National Environmental Policy Act obligations.

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  • Certified Development Companies (CDCs) would face routine, random file reviews and on-site supervision. They could face formal enforcement actions, civil penalties up to $250,000, suspensions up to 30 days, and penalties up to $10,000 for late annual reports.
  • The new Office would run a loan-closing file review program and produce an annual portfolio risk analysis for Congress with a Dec. 1, 2025 baseline and yearly updates. The Office must prepare written reports within 60 days after each complete file review and SBA reviewers must deliver CDC reports within 90 days or notify of delays.
  • Loan-closing attorneys and the SBA Commercial Loan Service Center would receive review reports and must see prompt correction of any deficiencies found in reviews.
  • After one year, the Office could collect graduated oversight fees from CDCs to cover exam and review costs, capped at 1 basis point of a CDC's portfolio and paid from servicing fees.
  • The SBA would have 180 days to issue rules clarifying how eligible CDCs comply with NEPA, while not changing NEPA requirements.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 0 benefits, 2 costs, 1 mixed.

New oversight and penalties for CDCs

This bill would create an Office of Credit Risk Management inside the SBA to supervise CDCs and the 504 program. The Office would do random "complete file" reviews of 504 loan closings and prepare written reports within 60 days. The SBA would send review reports to CDCs within 90 days or explain delays. CDCs would have 45 business days to respond to requested reports. The Director could use informal enforcement and, with the Lender Oversight Committee, take formal actions that could include civil fines up to $250,000. If a CDC is 60 days late filing a required report, the Director could suspend it up to 30 days or fine up to $10,000. The Office would also do an annual portfolio risk analysis starting December 1, 2025 and report findings to Congress.

New oversight fees on CDCs

If enacted, starting one year after enactment the Office could charge each CDC an annual oversight fee tied to the CDC's 504 portfolio size. The fee would be paid from CDC servicing fees. The fee scale would be graduated by portfolio size but could not exceed 1 basis point (0.01%) of portfolio value. The statute expresses that fee revenue should, where practicable, offset oversight costs.

Rules clarifying NEPA for CDCs

Not later than 180 days after enactment, the SBA Administrator would issue rules explaining how eligible CDCs must comply with the National Environmental Policy Act. The rules would apply to CDCs that receive Title V assistance. The provision says the rulemaking would not change NEPA's substantive requirements.

Sponsors & CoSponsors

Sponsor

Young, Todd [R-IN]

IN • R

Cosponsors

  • Sen. Klobuchar, Amy [D-MN]

    MN • D

    Sponsored 8/1/2025

Roll Call Votes

No roll call votes available for this bill.

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