SBA Oversight Bill Hits Small Business Lenders with New Fees and Enforcement Power

The “504 Credit Risk Management Improvement Act of 2025” is essentially a major power-up for the Small Business Administration’s (SBA) Office of Credit Risk Management (OCRM). This bill targets the Certified Development Companies (CDCs) that administer the popular 504 loan program, which helps small businesses finance major assets like real estate and equipment. Simply put, the SBA is giving its risk managers more tools—and more teeth—to police the lenders who facilitate these loans, aiming to protect the program’s integrity.

The New Sheriff in Town: What OCRM Can Do Now

Under Section 2, the OCRM Director gains significant new oversight and enforcement authority. For starters, they must now review a random selection of loan closing files to ensure everything is done by the book. If a review finds a problem that could cost the government money, the CDC or the loan closing attorney has to fix it immediately. This means that if you’re a small business owner relying on a 504 loan, your closing process is now subject to more scrutiny, which should, in theory, reduce mistakes that could jeopardize your financing down the line.

For CDCs themselves, the enforcement landscape is changing fast. The OCRM can now take 'informal enforcement actions' against a CDC for violating rules in the Standard Operating Procedures Manual. For more serious issues, the Director can impose civil monetary penalties up to $250,000. And if a CDC is 60 days late submitting its required annual report, the Director can either suspend the company from the 504 program for up to 30 days or hit them with a fine up to $10,000. For a small business lender, getting suspended for a month is a huge deal—it means they can’t process new loans, which is a major disruption to their operations and to the small businesses they serve.

The Cost of Accountability: New Fees for Lenders

Perhaps the biggest practical change for CDCs is the introduction of a mandatory fee structure, starting one year after the bill becomes law. The OCRM can charge each CDC a fee designed to cover the entire cost of the Administration's oversight activities, such as examinations and reviews. This fee will be calculated on a graduated scale based on the size of the CDC’s portfolio, but it can’t exceed 1 basis point (0.01%) of that portfolio’s value. While 0.01% sounds small, for a CDC managing a large portfolio of guaranteed debentures, this fee represents a new, mandatory operational cost they must pay out of their servicing fees. This is a direct financial burden that aims to make the oversight process self-funding, shifting the cost of regulation directly onto the regulated entities.

Clearing the Environmental Compliance Fog

Section 3 addresses a long-standing procedural headache: environmental compliance. The bill requires the SBA Administrator to issue clear rules within 180 days detailing exactly what steps eligible CDCs must take to meet the environmental review requirements under the National Environmental Policy Act (NEPA). NEPA compliance is often a complex, time-consuming process for real estate projects. By forcing the SBA to create a clear roadmap, this section aims to streamline the process. For a small manufacturer or developer using a 504 loan to build a new facility, this clarity could cut down on delays and confusion during the planning and approval stages, making the loan process more predictable.