WASHINGTON – Today, Congresswoman Nydia M. Velázquez (D-NY), Ranking Member of the House Committee on Small Business, introduced the 7(a) Program Risk Oversight Act, legislation to give Congress and the public a clearer picture of risk and fraud in the Small Business Administration’s (SBA) flagship lending program.
“While the SBA is currently required to send Congress an annual report on the risk in the 7(a) program, our Committee's investigation into the loan default rate makes clear that Congress and the public need more detailed information on the program's performance to protect both the program and the small businesses that depend on it. Small businesses and taxpayers alike deserve that transparency,” said Ranking Member Velázquez.
The 7(a) Program is the SBA's primary lending program, assisting small businesses unable to attain credit elsewhere. In fiscal year 2025, more than 78,000 7(a) loans were originated with a total value of approximately $37.3 billion. The Program is intended to operate at zero-subsidy, costing American taxpayers no money, a status that has historically been a bipartisan priority for members of the Committee. Unfortunately, a months-long investigation into the Program by Committee Democrats revealed a concerning rise of loan defaults.
The Small Business Act currently requires the SBA to conduct an annual risk analysis of the 7(a) Program and report the results to Congress. But that report is limited in scope, and current law keeps it from the public, causing confusion and competing narratives among advocates, researchers, and lenders as to the cause of the rising defaults.
The 7(a) Program Risk Oversight Act requires the SBA to break down program risk by loan size, by how long a loan has been on the books, by the age of the borrower's business, and by the type of lender that originated the loan. The legislation adds new reporting on enforcement actions and civil penalties tied to fraud, on loans the agency has determined were made fraudulently, and on loans that are falling behind on payments. For the first time, it also requires the SBA to post the report publicly within seven days of submitting it to Congress.
By requiring the agency to disaggregate risk data, the legislation would help lawmakers, regulators, and the public spot trouble, earlier and target solutions where they are needed most, preserving the program's zero-subsidy status over the long term.
The 7(a) Program Risk Oversight Act is endorsed by America’s Credit Unions, the Americans Bankers Association, and the Independent Community Bankers of America.
“We applaud Ranking Member Velázquez for her work to provide more transparency on the SBA’s 7(a) lending program. This bill will help ensure that Congress has the information needed to address specific issues with the program and that the program remains an effective tool for small businesses and lenders such as credit unions,” said America's Credit Unions Chief Advocacy OfficerKathleen Coulombe.
“America’s banks are proud to support the 7(a) Loan Program, which provides vital loans to small businesses that would not otherwise have access to financing.We commend Congresswoman Velázquez for introducing the 7(a) Program Risk Oversight Act, which will strengthen the program by providing greater transparency in the outcome of 7(a) loans,” said ABA President and CEO Rob Nichols.
“ICBA and the nation’s community banks support Rep. Velázquez’s 7(a) Risk Program Oversight Act to promote transparency at the SBA’s 7(a) loan guarantee program. Establishing more detailed annual reporting by the SBA’s Office of Credit Risk Management will enhance transparency and the availability of granular risk data to further strengthen the critical 7(a) program, which supports community bank lending to small businesses nationwide,” said Independent Community Bankers of America President and CEO Rebeca Romero Rainey.
