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HR 7401

Small Business Lending Fraud Prevention Act

119th Congress Introduced by Maggie Goodlander and 1 co-sponsor

SBA loan staff must certify no conflicts of interest before processing loans, and must disclose or recuse if conflicts arise.

Motion to reconsider laid on the table Agreed to without objection.
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Bill Summary · HR 7401

Purpose and intent

  • HR 7401, the Small Business Lending Fraud Prevention Act, aims to strengthen conflicts of interest rules for Small Business Administration (SBA) loan processing. It requires SBA employees who personally and substantially participate in loan origination, review, or approval to certify, before participation, that they have no prohibited conflicts of interest. The bill also establishes ongoing duties to disclose and recuse if conflicts arise and to understand applicable conflict-of-interest rules.

Key provisions and changes

  • Certification requirement: Beginning 270 days after enactment, SBA employees involved in originating, reviewing, or approving an SBA loan must certify in writing to the Administrator that they have no conflict of interest prohibited by:
    • 18 U.S.C. § 208 (criminal conflict of interest statute)
    • 5 C.F.R. Part 2635 (Standards of Ethical Conduct)
  • Post-certification duties: If an employee later learns of a conflict, they must immediately disclose it to their supervisor and recuse themselves from the loan.
  • Understanding and compliance: Employees must acknowledge their understanding of the applicable conflict-of-interest rules.
  • Regulations: The Administrator must issue implementing regulations within 180 days of enactment.
  • Definitions: The act clarifies terms, including “Administration” as the SBA and “Administrator” as SBA’s head.

Who/what is affected

  • Targeted group: SBA employees who personally and substantially participate in SBA loan processes (origination, review, or approval).
  • Affected activities: Any SBA loan handling in which the employee participates after the certification date.

Procedural and timeline aspects

  • Effective date: Certification requirement begins 270 days after enactment.
  • Regulatory timeline: SBA must promulgate implementing regulations within 180 days after enactment.
  • Legislative history: The bill passed the House of Representatives under suspension of the rules with unanimous or near-unanimous support (Roll call 225) and is supported by committee reports (House Small Business Committee) and a bipartisan sponsor duo (Rep. Dan Meuser and Rep. Maggie Goodlander).

Potential impact and oversight considerations

  • Accountability: The certification creates a formal, attributable record linking loan decisions to a declared absence of conflicts, aiding enforcement if false statements are made.
  • Deterrence of improper loans: By requiring recusal upon discovery of conflicts, the bill reduces the risk of loans processed under improper influence.
  • Administrative burden: The certification and ongoing disclosure/recusal requirements add compliance steps for SBA staff and may necessitate updated training and procedures.
  • Cost considerations: The accompanying committee report notes no anticipated new budgetary authority; a CBO cost estimate would inform any potential administrative costs of implementing regulations and training.

Compiled from official sources — confirm details with the bill’s official record.

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