504 Program Risk Oversight Act
This bill, introduced as the 504 Program Risk Oversight Act, would amend Title V of the Small Business Investment Act of 1958 to require the SBA Administrator to annually conduct a portfolio risk analysis of all loans guaranteed under the 504 program (the SBA’s real estate–focused loan program). It also requires the Administrator to submit a comprehensive annual report to Congress detailing risk across the program, including several targeted breakdowns (by industry concentration, by development company impact, by loan size, by origination timing, by borrower type, and by property type), steps taken to mitigate identified risks, and information on defaults, collections, charge-offs, enforcement actions, and penalties. The report must be published publicly on the SBA website within 7 days of submission to Congress. The bill also defines “limited or special purpose property” consistently with a specific SBA policy SOP. The short title of the act would be the “504 Program Risk Oversight Act.”
Key Points
- 1Annual portfolio risk analysis: The SBA Administrator must annually analyze the risk of the entire portfolio of 504 loans guaranteed under Title V.
- 2Annual Congress-facing report with detailed metrics: By December 1 each year (starting after passage), the Administrator must provide Congress a report with comprehensive risk data, including overall program risk, industry concentration, and risk analyses by development companies responsible for at least 1% of approvals, plus various loan-size and borrower-type breakdowns.
- 3Public availability: The annual risk report must be made publicly accessible on the SBA website within 7 days after it’s submitted to Congress.
- 4Detailed breakdowns and risk factors: The report must include:
- 5- Industry concentration and overall program risk
- 6- Development-company–level analyses (without naming companies) for those with ≥1% of gross loan approvals, including loan counts and dollar values, and risk by loan size buckets
- 7- Origination timing (loans originated within 1 year, 1–2 years, or more than 2 years before the report)
- 8- Borrower-type analyses (new business openings; newer businesses ≤2 years; established businesses >2 years)
- 9- Limited or special purpose properties
- 10- Risk mitigation steps taken
- 11- Data on lenders/development companies, defaults, recoveries, charge-offs, enforcement actions, and penalties
- 12Definition referenced: The act uses the existing SBA guidance SOP 50 10 8 to define “limited or special purpose property.”