7(a) Loan Agent Oversight Act
The 7(a) Loan Agent Oversight Act would add a new annual reporting requirement to the SBA Small Business Act. Specifically, it directs the SBA Administrator (referred to as “the Director” in the bill) to produce an annual report for Congress on activities related to 7(a) loan agents—those who assist or advise applicants and lenders in the SBA’s 7(a) loan program. The report would collect and disclose data on the number and types of agents, fraud tied to agent involvement, loan purchase rates by the SBA, fees paid to agents, risk analysis of top agent contributors, interest-rate trends for loans involving agents, and how the SBA communicates with agents. The purpose is increased transparency and oversight of agents who influence 7(a) loan outcomes. If enacted, the bill would enhance Congress’s visibility into agent practices and borrower protections, potentially affecting how agencies and lenders engage with brokers and consultants, and possibly influencing agent compensation practices and borrower disclosures.
Key Points
- 1Adds an annual congressional report (Section 47(j)) required in addition to existing reporting requirements, focusing on 7(a) agents and their role in the program.
- 2Data disaggregation by agent type: The report must break out the number of 7(a) agents assisting applicants by agent type, using categories aligned with the Fee Disclosure and Compensation Agreement (or successor forms).
- 3Fraud and performance metrics:
- 4- (B) The number of fraudulent loans involving services from a 7(a) agent.
- 5- (C) The loan purchase rate by the SBA for loans where an agent was used.
- 6- (D) The number and total dollar value of referral fees paid to 7(a) agents, including who paid (the applicant or the lender).
- 7Risk analysis (E): An anonymized review of risk from the agents responsible for at least 1% of the dollar value and/or number of 7(a) loans, without naming individuals.
- 8Interest rates and communication (F–G):
- 9- (F) Analysis of interest rates on loans where an agent was used.
- 10- (G) Description of how the SBA Administrator communicates with 7(a) agents.
- 11Definitions (Section 2): Clarifies that a “7(a) agent” is someone providing covered services on behalf of a lender or applicant, and defines “covered services” as either assistance with completing a 7(a) loan application (business plans, cash flow projections, financials, etc.) or consulting, brokering, or referral services related to a 7(a) loan.