“A bill to waive the guarantee fee for certain business loans made to veterans and spouses of veterans, and for other purposes.”
No CRS summary available for this bill.
This section states congressional findings regarding barriers to veteran entrepreneurship, citing (1) a D’Aniello Institute report that veterans are more likely to own businesses than non-veterans, such businesses are less likely to fail, and the top barrier is lack of access to capital; (2) the Federal Reserve’s 2025 Small Business Credit Survey showing that 48% of majority veteran-owned firms had sufficient financing (compared to 57% of non-veteran-owned firms) and denial rates of 25% for majority veteran-owned firms and 29% for partially veteran-owned firms (compared to 20% for non-veteran-owned firms); and (3) a Government Accountability Office report identifying frequent moves, active duty transitions, credit establishment difficulties, and insufficient personal funds as barriers to capital access for veteran entrepreneurs.
This section prohibits the Small Business Administration (SBA) from collecting specified guarantee fees on loans of up to $1 million made to small business concerns owned by a veteran or spouse of a veteran under the 7(a) loan guarantee program and the Small Business Investment Company (SBIC) debenture guarantee program. Specifically: (1) Under SBA Section 7(a)(18)(C) (15 U.S.C. 636(a)(18)(C)), for loans not made under paragraphs (36) or (37) (i.e., excluding certain export and disaster loans) where the SBA's deferred participation share does not exceed $1 million; (2) Under SBIC Section 503(b)(7)(B) and (d)(3)(B) (15 U.S.C. 697), ongoing guarantee fees for loans made directly by the SBA; and (3) Under SBIC Section 503(i)(2), upfront guarantee fees. "Veteran or spouse of a veteran" is defined to include (A) a veteran, (B) an individual eligible for the Transition Assistance Program under 10 U.S.C. 1144, (C) a member of a reserve component named in 10 U.S.C. 10101 (i.e., Army National Guard of the United States, Army Reserve, Navy Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve), (D) the spouse of such an individual, or (E) the surviving spouse (as defined in 38 U.S.C. 101) of such an individual who died on active duty or from a service-connected disability. (Thus, these waivers expand access to fee-free SBA financing for veteran entrepreneurs, including reservists and transitioning service members.)
This section establishes equity injection requirements (i.e., borrower investment in the small business) under the 7(a) loan program and reduces them under the 504 loan program for businesses owned by veterans or spouses of veterans. (1) 7(a) loans.—For startup or change of ownership loans with a deferred participation (guaranteed) amount of $1 million or less, reduces the minimum equity injection percentage by at least 5 percentage points from levels in Standard Operating Procedure 50 10, version 8 (effective June 1, 2025), or successor guidance; if no exact percentage is listed, requires an equivalent reduction; and directs the SBA Administrator to encourage lenders to lower such requirements generally. (The 7(a) program guarantees loans to small businesses unable to obtain credit elsewhere.) (2) 504 loans.—Requires a minimum equity injection of 5% of total project cost (from current tiers of 10% if operated 2+ years, 15% if operated <2 years, or 20% if operated <1 year or involving change of ownership). (Thus, applies uniformly to startups—operated 2 years or less—and other cases, with the amount for non-startups at the Certified Development Company's discretion.) (The 504 program finances small business fixed assets through Certified Development Companies.)
This section requires the Administrator of the Small Business Administration (SBA) to (1) collect and publish on the SBA website data on the participation of covered persons—defined as individuals described in section 7(a)(18)(C)(ii) of the Small Business Act (15 U.S.C. 636(a)(18)(C)(ii))—in SBA 7(a) loan programs and Small Business Investment Company (SBIC) programs under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); and (2) include in SBA budget justification materials data on covered persons' participation in the Service Corps of Retired Executives (SCORE), small business development centers (SBDCs, as defined in section 3 of the Small Business Act [15 U.S.C. 632]), women’s business centers, and Veteran Business Outreach Centers.