504 Program Risk Oversight Act
- Bill Number
- H.R. 5788
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Commerce
- Status
- Passed House
- Latest Action
- 2026-01-26: Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.
- Last Updated
- 2026-06-11T05:06:21Z
AI-Generated Summary
Purpose
The "504 Program Risk Oversight Act" (H.R. 5788) aims to improve oversight and transparency of the 504 Loan Program, which provides government-guaranteed loans to small businesses for fixed assets like real estate and equipment. It requires the U.S. Small Business Administration (SBA) to perform annual risk assessments of the program's loan portfolio to identify and address potential financial risks.
Key Provisions
- Annual Risk Analysis: The SBA Administrator must conduct a yearly review of the entire portfolio of loans guaranteed under Title V of the Small Business Investment Act of 1958 (the legal basis for the 504 Program).
- Report to Congress: Starting December 1, 2025, and annually thereafter, the SBA must submit a detailed report to Congress on the prior fiscal year's analysis. The report includes:
- Overall program risk levels.
- Risk broken down by industry sectors.
- Anonymized risk analysis of loans from development companies (non-profit lenders that originate 504 loans) handling at least 1% of total approvals, categorized by loan dollar value, number of loans, and risk tiers based on loan size (e.g., ≤$500,000; $500,001–$1,000,000; etc., up to $5,500,000).
- Risk by loan age (e.g., <1 year old; 1–2 years old; >2 years old).
- Risk by borrower business age (e.g., new startups; businesses 1–2 years old; established businesses >2 years).
- Risk for loans used on "limited or special purpose properties" (e.g., properties like hotels or self-storage facilities that have restricted uses, as defined in SBA guidance).
- Steps the SBA has taken to reduce identified risks.
- Program statistics, such as total development companies, loans made, gross loan amounts, defaults (including SBA purchases of defaulted loans, recoveries, and charge-offs), enforcement actions against lenders, and any civil monetary penalties imposed.
- Public Availability: The SBA must post the report on its website within 7 days of submitting it to Congress.
Significant Changes to Existing Law
- This amends Title V of the Small Business Investment Act of 1958 by adding a new Section 511, introducing mandatory annual risk analyses and public reporting requirements that do not currently exist.
- Previously, the SBA had general oversight duties for the 504 Program but no specific mandate for comprehensive, annualized portfolio risk assessments with detailed, categorized breakdowns and public disclosure.
Potential Impacts
- Government Agencies: The SBA will face increased administrative workload for conducting analyses, preparing reports, and ensuring public access, potentially leading to better-informed decision-making and resource allocation to mitigate loan defaults.
- Citizens and Small Businesses: Small business owners relying on 504 loans may benefit from a more stable program with reduced risk of systemic issues, though indirect effects could include stricter lending criteria if risks prompt tighter regulations. Greater transparency could build public trust in the program.
- International Relations: No direct impacts, as this focuses on domestic small business lending.
Main Stakeholders Affected
- SBA and Development Companies: Primary implementers and subjects of scrutiny; development companies (certified non-profits that facilitate loans) will be indirectly monitored through anonymized data, potentially facing more enforcement if risks are high.
- Small Businesses: Borrowers under the 504 Program, including startups and established firms in various industries, who depend on these guarantees for growth.
- Congress and the Public: Gain access to detailed risk data for oversight, budgeting, and accountability; taxpayers benefit from efforts to protect federal loan guarantees from losses.
- Lenders and Investors: Banks and other private lenders partnering in 504 loans may see changes in program stability affecting their involvement.
Notable Legal, Constitutional, or Political Implications
- Legal: Enhances accountability under existing federal lending laws by mandating data-driven risk management, without altering core loan guarantee processes. The anonymized reporting protects privacy while promoting transparency, aligning with administrative law requirements for agency reporting.
- Constitutional: No apparent conflicts; it supports Congress's spending power (Article I, Section 9) by improving oversight of federal funds in loan guarantees.
- Political: Promotes fiscal responsibility in small business support programs, potentially appealing to lawmakers focused on reducing government waste. It could influence future appropriations for the SBA if reports reveal high risks, but it avoids partisan mandates by emphasizing neutral, data-based analysis.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Rep. Patronis, Jimmy [R-FL-1], Rep. Cisneros, Gilbert Ray [D-CA-31], Rep. Goodlander, Maggie [D-NH-2]
Recent Actions
- 2026-01-26: Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.
- 2026-01-20: Motion to reconsider laid on the table Agreed to without objection.
- 2026-01-20: On motion to suspend the rules and pass the bill Agreed to by voice vote. (text: CR H933)
- 2026-01-20: Passed/agreed to in House: On motion to suspend the rules and pass the bill Agreed to by voice vote. (text: CR H933)
- 2026-01-20: DEBATE - The House proceeded with forty minutes of debate on H.R. 5788.
- 2026-01-20: Considered under suspension of the rules. (consideration: CR H932-934)
- 2026-01-20: Mr. Williams (TX) moved to suspend the rules and pass the bill.
- 2025-12-12: Placed on the Union Calendar, Calendar No. 352.
- 2025-12-12: Reported by the Committee on Small Business. H. Rept. 119-404.
- 2025-12-12: Reported by the Committee on Small Business. H. Rept. 119-404.
- 2025-11-18: Ordered to be Reported by the Yeas and Nays: 27 - 0.
- 2025-11-18: Committee Consideration and Mark-up Session Held
- 2025-10-17: Referred to the House Committee on Small Business.
- 2025-10-17: Introduced in House
- 2025-10-17: Introduced in House
Bill Versions
- 504 Program Risk Oversight Act — issued 2026-01-20 — PDF (8 pages)
- 504 Program Risk Oversight Act — issued 2025-10-17 — PDF (5 pages)
- 504 Program Risk Oversight Act — issued 2026-01-26 — PDF (5 pages)
- 504 Program Risk Oversight Act — issued 2025-12-12 — PDF (8 pages)