Bill Summary
The "Small Business Lending Fraud Prevention Act" is a piece of legislation aimed at enhancing ethical standards and transparency within the Small Business Administration (SBA). The Act requires SBA employees who are involved in the origination, review, or approval of loans to certify, in writing, that they do not have any conflicts of interest as defined by federal law. This certification must occur before the employee participates in any loan-related activities.
Key provisions of the Act include:
1. **Conflict of Interest Certification**: Employees must confirm, both before participating in a loan and upon discovering any conflicts afterward, that they are not in violation of conflict of interest regulations, and they must disclose any conflicts to their supervisor immediately.
2. **Regulatory Framework**: The SBA Administrator is tasked with developing regulations to implement these requirements within 180 days of the Act's enactment.
3. **Definitions**: The legislation clarifies key terms, including what constitutes the "Administration" (the SBA) and the role of the "Administrator."
Overall, this Act is designed to prevent potential fraud and ensure that SBA employees act in the best interest of the public when handling loans, thereby enhancing the integrity of small business lending processes.
Possible Impacts
The "Small Business Lending Fraud Prevention Act" outlined in the provided legislation can affect individuals and entities in several ways. Here are three examples:
1. **Enhanced Transparency and Trust in the Loan Process**:
- Employees of the Small Business Administration (SBA) must now certify that they have no conflicts of interest before participating in loan decisions. This requirement can lead to increased transparency in the loan approval process. Small business owners may feel more confident in the integrity of the SBA's loan programs, knowing that there are checks in place to prevent conflicts of interest. This could encourage more businesses to seek loans, believing that the decision-making process is fair and unbiased.
2. **Increased Accountability for SBA Employees**:
- The requirement for SBA employees to disclose any conflicts of interest and recuse themselves from loan participation could lead to greater accountability within the agency. Employees who are aware that they must certify their impartiality may be more cautious in their professional conduct. This could help prevent unethical behavior and ensure that loans are awarded based on merit, ultimately benefiting legitimate businesses and fostering a healthier economic environment.
3. **Potential Delays in Loan Processing**:
- The implementation of this certification process may also introduce additional steps in the loan approval timeline. Small business owners waiting for loans may experience delays if SBA employees must take time to complete certifications and disclose conflicts before making loan decisions. While these measures aim to prevent fraud and ensure fair practices, they could inadvertently slow down access to necessary funding for small businesses, particularly in urgent situations where quick financing is needed.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7401 Reported in House (RH)]
<DOC>
Union Calendar No. 426
119th CONGRESS
2d Session
H. R. 7401
[Report No. 119-500]
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 5, 2026
Mr. Meuser (for himself and Ms. Goodlander) introduced the following
bill; which was referred to the Committee on Small Business
February 20, 2026
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
_______________________________________________________________________
A BILL
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.
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.
Union Calendar No. 426
119th CONGRESS
2d Session
H. R. 7401
[Report No. 119-500]
_______________________________________________________________________
A BILL
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.
_______________________________________________________________________
February 20, 2026
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed