Today, the U.S. House of Representatives passed H.R. 1804, known as the 7(a) Loan Agent Oversight Act, introduced by Congressman Dan Meuser from Pennsylvania’s 9th District. This bipartisan legislation aims to enhance accountability and combat fraud within the Small Business Administration’s (SBA) 7(a) Loan Program.
The bill requires the Office of Credit Risk Management to submit an annual report to Congress detailing the performance and risks associated with loans generated through loan agent activity. According to the SBA’s Inspector General, approximately 15 percent of all 7(a) loans involve a loan agent, with more than $335 million in documented loan agent fraud reported.
The legislation mandates reporting on the number of loans processed with loan agents’ assistance, default rates linked to those loans, and requires a risk analysis of agents participating in the program. Congressman Meuser emphasized that “access to capital remains one of the greatest barriers to growth for entrepreneurs,” and highlighted the need for stronger oversight due to increased fraud risks identified by the SBA’s Office of Inspector General.
In Fiscal Year 2023, the SBA’s 7(a) loan program facilitated around 47,700 loans totaling $25.7 billion. The program is a primary lending tool for small businesses unable to obtain credit elsewhere by providing loan guarantees rather than issuing direct loans.
Congressman Meuser expressed his commitment to working with SBA Administrator Loeffler to maintain the program’s success and restore underwriting standards altered under previous administrations.
