Microloan Transparency and Accountability Act of 2020
Floor Speech
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Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6078) to amend the Small Business Act to increase transparency and to enhance the use of microloans in rural areas, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 6078
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Microloan Transparency and Accountability Act of 2020''. SEC. 2. ASSISTANCE FOR INTERMEDIARIES SERVING RURAL AREAS.
Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) is amended--
(1) by amending paragraph (4)(C)(i) to read as follows:
``(i) Each intermediate shall be eligible to receive a grant equal to 5 percent of the total outstanding balance of loans made to the intermediary under this subsection, in addition to grants made under subparagraph (A), if the intermediary has either--
``(I) a portfolio of loans made under this subsection that averages not more than $10,000 during the period of the intermediary's participation in the program;
``(II) a portfolio of loans made under this subsection of which not less than 25 percent are made to small business concerns located in or owned by one or more residents of an economically distressed area; or
``(III) a portfolio of loans made under this subsection of which not less than 25 percent is serving rural areas during the period of the intermediary's participation in the program.''; and
(2) in paragraph (11)--
(A) in subparagraph (C)(ii), by striking all after the semicolon and inserting ``and''; and
(B) by striking all after subparagraph (C), and inserting the following:
``(D) the term `economically distressed area', as used in paragraph (4), means a county or equivalent division of local government of a State in which the small business concern is located, in which, according to the most recent data available from the Bureau of the Census, Department of Commerce, not less than 40 percent of residents have an annual income that is at or below the poverty level.''. SEC. 3. PORTFOLIO RISK ANALYSIS OF MICROLOANS.
Section 7(m)(10) of the Small Business Act (15 U.S.C. 636(m)(10)) is amended--
(1) by redesignating subparagraphs (A) through (F) as clauses (i) through (vi), respectively, and adjusting the margins accordingly;
(2) by amending clause (iv), as so redesignated, to read as follows:
``(vi) the number, amount, and percentage of microloans made by intermediaries to small business concerns--
``(I) that went into default in the previous year; and
``(II) that were charged off in the previous year by such intermediaries;'';
(3) in clause (vi), as so redesignated, by striking ``and'' at the end;
(4) by redesignating subparagraph (G) as clause (xviii), and adjusting the margin accordingly;
(5) by striking ``On November 1, 1995,'' and all that follows through ``the following:'' and inserting the following:
``(A) In general.--Beginning on February 1, 2021, and annually thereafter, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives, and make available to the public on the website of the Administration, a report on the effectiveness of the microloan program during the fiscal year preceding the date of the report. Such report shall include--'';
(6) in subparagraph (A), as so designated, by inserting after clause (vi) the following new clauses:
``(vii) the number and type of enforcement actions taken by the Administrator against noncompliant intermediaries;
``(viii) an analysis of compliance by intermediaries with the credit availability requirements of paragraph (3)(E) for loans in an amount greater than $20,000;
``(ix) the extent to which microloans are provided to small business concerns in rural areas;
``(x) the number of underserved borrowers, as defined by the Administration, participating in the microloan program;
``(xi) the average rate of interest for each microloan;
``(xii) the average amount of fees charged for each microloan;
``(xiii) the average size of each microloan, including--
``(I) the number of loans made in an amount greater than $20,000; and
``(II) the average size and charge-off rate of such loans;
``(xiv) the subsidy cost to the Administration;
``(xv) the number and percentage of microloans that were made to refinance other loans;
``(xvi) the number and percentage of microloans made to new program participants and the number and percentage of microloans made to previous program participants;
``(xvii) the average amount of technical assistance grant monies spent on each loan; and''; and
(7) by adding at the end the following:
``(B) Privacy.--Each report submitted under subparagraph (A) shall not contain any personally identifiable information of any borrower.''.
Mr. Speaker, I rise in support of the bill before us today, H.R. 6078, the Microloan Transparency and Accountability Act, which makes it easier for rural-serving microloan intermediaries to provide technical and management assistance to entrepreneurs.
One of the key components of the microloan program, and what I believe makes it so successful, is that intermediaries offer technology, management, and marketing assistance to business owners in conjunction with affordable financing. However, when our Committee held hearings on the program, we heard about the challenges that intermediaries in rural areas face in providing technical assistance.
These nonprofit, mission-based lenders must sometimes drive 2 or 3 hours, or even more, to a borrower's place of business to conduct training. These expenses all come out of the intermediary's bottom line.
The measure Mr. Burchett and Mr. Kim have put forward to make intermediaries with at least 25 percent of their loans in a rural area eligible for a bonus technical assistance grant is a necessary one that I support and would encourage all of my colleagues to support.
Mr. Speaker, I applaud our bipartisanship and, more importantly, our commitment to America's small businesses.
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Ms. VELAZQUEZ. Mr. Speaker, I have no further speakers. I reserve the balance of my time.
Oftentimes, the biggest barrier to entrepreneurship is accessing affordable capital. But for many entrepreneurs, access to expert advice can give them an added boost and the skills needed to grow a sustainable business.
To that end, the microloan program leverages the network of nonprofit intermediary lenders, many of them CDFIs, who have deep roots in the local community, are committed to economic development, and offer technical business and marketing assistance for these small businesses.
This bill will go a long way in helping these microlenders reach more small businesses in rural areas, which, in turn, will stimulate the local economies. It also mandates reporting on the program's effectiveness so our committee can continue to oversee the program and make necessary modifications to further improve the program.
Again, thank you to Representative Burchett and Representative Kim for collaborating on the bill before us today. I also thank the ranking member, Mr. Chabot, and his staff for working with us in a bipartisan manner, not just on this piece of legislation, but on all the bills we have brought to the floor today.
Mr. Speaker, I urge my colleagues to vote ``yes,'' and I yield back the balance of my time.
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