Velázquez Conducts Oversight of SBA Office Overseeing Credit Risk
Washington, February 5, 2020
Washington, D.C.— Today, Rep. Nydia M. Velázquez (D-NY), Chairwoman of the House Small Business Committee, conducted oversight of the Small Business Administration (SBA) Office of Credit Risk Management (OCRM). OCRM is responsible for assessing the risk levels of SBA lending partners and oversees the $120 billion 7(a) and 504 loan portfolios.
“The SBA 7(a) loan program plays an essential role in filling the gap left by the private markets. In fiscal year 2019, almost 52,000 small businesses were approved for 7(a) loans, injecting over $23 billion in long-term capital into local communities across the country and supporting approximately 500,000 jobs,” said Chairwoman Velázquez. “Given the importance of this program to our small business community, we must ensure that SBA is conducting proper oversight and holding non-compliant lenders accountable.”
The SBA established OCRM to oversee SBA lenders and to ensure that they comply with agency program requirements. The office manages credit risk, monitors lender performance, and enforces lending program requirements for banks that participate in the 7(a) and 504 programs. In 2018, following years of rapid growth in SBA lending programs, Congress passed the Small Business 7(a) Lending Oversight Act to codify OCRM, give them additional tools to address risky lenders, and provide Congress with regular updates regarding oversight and performance of SBA portfolios. The hearing allowed members to review OCRM, discuss the challenges the office currently faces in monitoring lender risk, and what Congress can do to ensure the OCRM is operating effectively.
During her testimony, the Director of the OCRM, Susan Streich, touted the improvements that the office had made in their lender risk assessment process in the Oversight Reform Act was enacted.
“OCRM continues to refine and streamline its approach to monitoring lender risk through its multi-level review process,” said Susan Streich, Director of the Office of Credit Risk Management at SBA. “The Federally Regulated 7(a) Lender Oversight Team is now positioned to perform reviews every 24 months on all lenders with greater than $10 million in SBA loans, and every 36 months for those lenders with portfolios less than $10 million.”
“If we intend to continue enhancing access to affordable capital for small businesses, it is clear SBA’s Office of Credit Risk Management will be a key stakeholder,” said Chairwoman Velázquez. “I look forward to working with my colleagues from across the aisle as we continue to work to enhance the efficiency of SBA’s operations, and more broadly, to continue enhancing access to capital for America’s small businesses.”