Small Business Lending Fraud Prevention Act

Floor Speech

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Mr. WILLIAMS of Texas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 7401) to require employees of the Small Business Administration to certify that the employee does not have any prohibited conflicts of interest with respect to loans in which the employee is involved, and for other purposes.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 7401

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 ``Small Business Lending Fraud Prevention Act''. SEC. 2. SMALL BUSINESS ADMINISTRATION EMPLOYEE CONFLICT OF INTEREST CERTIFICATION.

(a) In General.--Beginning on the date that is 270 days after the date of the enactment of this Act, an employee of the Administration that will personally and substantially participate in the origination, review, or approval of a loan administered by the Administration shall, prior to such participation in such loan, certify to the Administrator in writing that such employee--

(1) to their knowledge, does not have any conflict of interest prohibited under section 208 of title 18, United States Code, or section 2635.502 of title 5, Code of Federal Regulations, with respect to such participation in such loan;

(2) upon learning of any such conflict of interest after submitting such certification, will immediately disclose such conflict of interest to the supervisor of such employee and recuse themselves from participating in such loan; and

(3) understands the requirements applicable to such employee under Federal law and regulations of the Administration regarding conflicts of interest with respect to such participation in such loan.

(b) Regulations.--Not later than 180 days after the date of enactment, the Administrator shall issue regulations implementing this Act.

(c) Definitions.--In this Act:

(1) Administration.--The term ``Administration'' means the Small Business Administration.

(2) Administrator.--The term ``Administrator'' means the Administrator of the Administration.

Mr. Speaker, I rise in strong support of H.R. 7401, the Small Business Lending Fraud Prevention Act, introduced by the gentleman from Pennsylvania (Mr. Meuser) and the gentlewoman from New Hampshire (Ms. Goodlander).

Last year, a former SBA loan officer pled guilty to submitting false statements in order to fraudulently secure over $500,000 in pandemic relief loans for herself and family members. When the SBA initially denied the loans, the SBA employee approved them herself.

The SBA Office of Inspector General identified multiple instances in which SBA employees approved loans to relatives or others who were barred from conflict of interest rules and noted that such cases were rarely prosecuted. We must take serious steps to avoid such cases in the future. It should not be possible for fraud like this to occur.

This bipartisan legislation offers a commonsense solution to add a layer of security to crack down on loan fraud. H.R. 7401 requires SBA employees to certify that they have no conflicts of interest before processing a loan, to disclose any conflicts immediately, and to recuse themselves if a conflict of interest is discovered.

It is our responsibility to ensure taxpayer funds are handled appropriately. This bill will provide a safeguard against improper loan approvals and establish a clear basis for prosecution if an employee knowingly approves loans prohibited by conflict of interest rules.

Mr. Speaker, I urge my colleagues to support H.R. 7401, and I reserve the balance of my time.

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Mr. WILLIAMS of Texas. Mr. Speaker, we must pass H.R. 7401 to strengthen integrity in SBA lending programs by requiring employees involved in loan decisions to certify they have no prohibited conflicts of interest.

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Mr. WILLIAMS of Texas. Mr. Speaker, I urge my colleagues to vote in favor of H.R. 7401 to support transparency, accountability, and public confidence in the administration of SBA loans, and I yield back the balance of my time.
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