Small Business Lending Fraud Prevention Act

Bill Number

H.R. 7401

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Commerce

Status

Passed House

Latest Action

2026-06-24: Motion to reconsider laid on the table Agreed to without objection.

Last Updated

2026-07-07T20:23:00Z

AI-Generated Summary

Purpose

The legislation aims to strengthen integrity in Small Business Administration (SBA) loan processes by requiring employees involved in loans to formally confirm they have no prohibited conflicts of interest.

Key Provisions

• Certification Requirement: Starting 270 days after enactment, any SBA employee who will personally and substantially participate in originating, reviewing, or approving an SBA-administered loan must provide a written certification to the SBA Administrator before involvement. This certification must state:
• To the employee's knowledge, no conflict of interest exists that is prohibited under federal law (18 U.S.C. § 208) or regulation (5 C.F.R. § 2635.502).
• The employee will immediately disclose any conflict discovered later, notify their supervisor, and withdraw from the loan process.
• The employee understands all applicable federal and SBA conflict-of-interest rules.
• Regulatory Implementation: The SBA Administrator must issue rules to carry out the Act within 180 days of enactment.
• Definitions: The bill defines the "Administration" as the Small Business Administration and the "Administrator" as its head.

Significant Changes to Existing Law

This Act introduces a new mandatory written certification process for SBA employees handling loans, building on but not altering the underlying conflict-of-interest rules in 18 U.S.C. § 208 and 5 C.F.R. § 2635.502. It adds a proactive disclosure and recusal obligation tied specifically to loan participation.

Potential Impacts

• On Government Agencies: The SBA must develop and enforce new certification procedures and issue implementing regulations, which may increase administrative workload for loan oversight.
• On Citizens: Loan applicants and small businesses may experience added safeguards against biased decision-making, though the process could introduce minor delays in loan handling.
• On International Relations: No direct effects are outlined in the legislation.

Main Stakeholders Affected

• SBA employees who handle loan origination, review, or approval.
• The SBA Administrator and agency leadership responsible for regulations and oversight.
• Small business borrowers and applicants whose loans are processed by the SBA.

Notable Legal, Constitutional, or Political Implications

The bill reinforces existing federal ethics standards by requiring formal, documented assurances rather than relying solely on general prohibitions. It carries no apparent constitutional issues and focuses narrowly on administrative procedures within the executive branch, with potential to deter fraud through increased accountability.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Meuser, Daniel [R-PA-9]

Cosponsors (1)

Rep. Goodlander, Maggie [D-NH-2]

Recent Actions

• 2026-06-24: Motion to reconsider laid on the table Agreed to without objection.
• 2026-06-24: On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 415 - 0, 1 Present (Roll no. 225). (Roll call 225)
• 2026-06-24: Passed/agreed to in House: On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 415 - 0, 1 Present (Roll no. 225). (Roll call 225)
• 2026-06-24: Considered as unfinished business. (consideration: CR H4226-4227)
• 2026-06-23: At the conclusion of debate, the chair put the question on the motion to suspend the rules. Mr. Williams (TX) objected to the vote on the grounds that a quorum was not present. Further proceedings on the motion were postponed. The point of no quorum was considered as withdrawn.
• 2026-06-23: DEBATE - The House proceeded with forty minutes of debate on H.R. 7401.
• 2026-06-23: Considered under suspension of the rules. (consideration: CR H4140-4141; text: CR H4140)
• 2026-06-23: Mr. Williams (TX) moved to suspend the rules and pass the bill.
• 2026-02-20: Placed on the Union Calendar, Calendar No. 426.
• 2026-02-20: Reported by the Committee on Small Business. H. Rept. 119-500.
• 2026-02-20: Reported by the Committee on Small Business. H. Rept. 119-500.
• 2026-02-11: Ordered to be Reported by the Yeas and Nays: 24 - 0.
• 2026-02-11: Committee Consideration and Mark-up Session Held
• 2026-02-05: Referred to the House Committee on Small Business.
• 2026-02-05: Introduced in House

Bill Versions

• Small Business Lending Fraud Prevention Act — issued 2026-06-24 — PDF (4 pages)
• Small Business Lending Fraud Prevention Act — issued 2026-02-05 — PDF (3 pages)
• Small Business Lending Fraud Prevention Act — issued 2026-02-20 — PDF (6 pages)