504 Program Risk Oversight Act
Summary
The "504 Program Risk Oversight Act" amends the Small Business Investment Act of 1958. It mandates an annual portfolio risk analysis of loans guaranteed under Title V, which pertains to the 504 loan program. The Administrator (likely of the Small Business Administration) is required to conduct this analysis and submit a report to Congress annually.
The report must include a detailed breakdown of program risks, including industry concentration, risks associated with specific development companies, and loan origination characteristics. The Act also requires the Administrator to make the report publicly available on the Administration's website.
This aims to increase transparency and oversight of the 504 loan program, potentially leading to better risk management and more informed lending practices.
Expected Effects
The Act will likely lead to increased scrutiny of the SBA's 504 loan program. This increased scrutiny will hopefully lead to more responsible lending and better risk management.
Development companies may face more oversight and potentially stricter lending guidelines. The public will have access to more information about the program's performance and risks.
Potential Benefits
- Enhanced transparency in the 504 loan program through public reporting.
- Improved risk management practices by the SBA.
- More informed decision-making by lenders and borrowers.
- Potential for reduced loan defaults and losses to taxpayers.
- Greater accountability of development companies.
Potential Disadvantages
- Increased administrative burden on the SBA to conduct and report on the risk analysis.
- Potential for increased compliance costs for development companies.
- Possible chilling effect on lending if risk analysis is overly conservative.
- The definition of "limited or special purpose property" relies on existing guidance, which may not be consistently applied or understood.
- The report's usefulness depends on the accuracy and completeness of the data collected and analyzed.
Constitutional Alignment
The Act appears to align with the Constitution, particularly Article I, Section 8, which grants Congress the power to regulate commerce and to make all laws necessary and proper for carrying out its enumerated powers. The Act's focus on oversight and risk management in a federal loan program falls within this scope.
The requirement for the Administrator to report to Congress is consistent with Congress's oversight responsibilities. The Act does not appear to infringe on any individual liberties or rights protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).