504 Credit Risk Management Improvement Act of 2025
Summary
The 504 Credit Risk Management Improvement Act of 2025 aims to amend the Small Business Investment Act of 1958. It seeks to enhance the Office of Credit Risk Management within the Small Business Administration (SBA). The act also requires the SBA Administrator to issue rules regarding the environmental obligations of certified development companies (CDCs).
Expected Effects
The act will likely lead to increased oversight and regulation of CDCs participating in the SBA 504 loan program. This includes enhanced file reviews, supervision, and enforcement actions. The SBA will also need to develop rules to clarify environmental compliance for CDCs.
Potential Benefits
- Improved oversight of CDCs, potentially reducing risks to the SBA and taxpayers.
- Increased transparency through annual portfolio risk analysis reports to Congress.
- Clarified environmental compliance procedures for CDCs, promoting responsible development.
- Potential for more efficient loan processing due to standardized file reviews.
- Enhanced enforcement authority to address violations by CDCs.
Potential Disadvantages
- Increased costs for CDCs due to potential fees for oversight activities.
- Potential for delays in loan processing due to more stringent review processes.
- Possible increased administrative burden on CDCs related to environmental compliance.
- Risk of overly strict enforcement actions that could hinder CDC operations.
- The act's effectiveness depends on the SBA's ability to implement the new rules and procedures effectively.
Constitutional Alignment
The act appears to align with the Constitution's Commerce Clause (Article I, Section 8), which grants Congress the power to regulate commerce. By amending the Small Business Investment Act, Congress is regulating financial activities related to small businesses, which falls under interstate commerce. The Act does not appear to infringe on any individual liberties outlined in 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).