Key Takeaways
- •All three bipartisan bills, H.R. 7401, H.R. 7396, and H.R. 7412, were ordered reported favorably to the House with unanimous 24-0 votes.
- •Rep. Meuser (Republican-PA-9) cited cases of former SBA loan officers, like Reina Barrett, who pled guilty to submitting and approving fraudulent COVID-19 EIDL applications.
- •Rep. Velázquez (Democratic-NY-7) pressed Chairman Williams (Republican-TX-25) on the SBA Administrator's "egregious" unresponsiveness to congressional oversight letters and meeting requests.
- •While supporting the anti-fraud bills, Rep. Velázquez (Democratic-NY-7) noted most COVID-19 fraud occurred in the Trump administration's first nine months due to lowered guardrails.
- •The three bills, addressing SBA loan fraud prevention, codifying the Office of Native American Affairs, and establishing a whistleblower awards office, will now advance to the House.
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Hearing Analysis
Overview
The House Small Business Committee met on February 11, 2026, for a legislative markup of three bipartisan measures designed to enhance the integrity of the Small Business Administration (SBA) and expand its outreach to underserved communities. Chaired by Rep. Roger Williams (R-TX-25), the committee focused on addressing systemic failures in pandemic-era lending, codifying existing agency offices, and establishing new mechanisms for recovering taxpayer funds lost to fraud. The proceedings underscored a rare moment of unanimous bipartisan cooperation, with all three bills passing the committee by a vote of 24-0.
Policy Proposals
The first measure considered was H.R. 7401, the Small Business Lending Fraud Prevention Act, introduced by Rep. Daniel Meuser (R-PA-9) and Rep. Maggie Goodlander (D-NH-2). This legislation targets internal ethics and conflicts of interest within the SBA's loan processing operations. Rep. Meuser highlighted recent criminal cases involving SBA employees, specifically citing Reina Barrett, a former loan officer who pled guilty to seeking over $550,000 in fraudulent pandemic relief for herself and her family, and Atala Williams, who was charged with approving fraudulent applications in exchange for kickbacks. The bill requires SBA employees involved in loan origination or approval to certify they have no conflicts of interest and mandates immediate disclosure and recusal if a conflict arises. Rep. Goodlander emphasized that such conflicts undermine public trust and create unnecessary red tape for honest entrepreneurs who "play by the rules."
Overview
The committee then turned to H.R. 7396, the Native American Entrepreneurial Opportunity Act. Introduced by a bipartisan group including Rep. Kelly Morrison (D-MN-3), the bill seeks to codify the SBA’s Office of Native American Affairs, which currently exists but lacks a statutory foundation. Rep. Morrison noted that Native-owned businesses contribute over $33 billion to the U.S. economy annually and employ more than 300,000 people. Ranking Member Nydia Velázquez (D-NY-7) supported the measure, noting it would ensure the office remains a permanent fixture regardless of changes in presidential administrations. The bill also establishes an Assistant Administrator role for the office who will report directly to the SBA Administrator, ensuring that the needs of tribal communities and Native Hawaiian organizations are prioritized in agency decision-making.
Policy Proposals
The final and perhaps most debated measure was H.R. 7412, the Put America on Commission Act of 2026, introduced by Chairman Williams and Rep. Johnny Olszewski (D-MD-2). This bill establishes an Office of Whistleblower Awards within the SBA to incentivize the public to report credible information regarding fraudulent pandemic loans. Chairman Williams cited SBA Office of Inspector General (OIG) estimates that over $200 billion—nearly 20 percent of all pandemic funding—was disbursed to bad actors through programs like the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. Under the bill, whistleblowers whose tips lead to a final conviction would receive a monetary award funded entirely by the recovered fraudulent assets and civil penalties. Rep. Olszewski, drawing on his experience as a county executive, argued that the bill restores public trust by holding exploiters accountable. Rep. Pete Stauber (R-MN-8) added that the bill provides "real teeth" to enforcement, particularly in states like Minnesota where significant fraud rings have been uncovered.
Key Testimony
While the markup was characterized by broad agreement on the bills themselves, Ranking Member Velázquez utilized her opening remarks to criticize the current SBA administration’s lack of transparency. She stated that the SBA Administrator has "egregiously ignored" congressional oversight letters and requests for meetings, which she argued obstructs the committee’s ability to conduct meaningful oversight. Regarding H.R. 7412, Velázquez noted that while she supported the whistleblower initiative, the primary bottleneck in fraud recovery is not a lack of leads—the OIG currently has over 130,000 actionable leads—but rather a lack of resources for the law enforcement community to investigate and prosecute those cases.
Policy Proposals
The impact of these legislative proposals spans several sectors. The financial and lending sectors would see increased compliance and certification requirements for SBA-backed loans. Tribal governments and Native-owned businesses would gain more stable and direct access to federal entrepreneurial resources. Furthermore, the legal and investigative sectors would see a surge in activity related to pandemic fraud recovery.
Overview
Specific organizations and programs mentioned during the hearing include the SBA Office of Inspector General (OIG), the Congressional Budget Office (CBO), the Paycheck Protection Program (PPP), and the Economic Injury Disaster Loan (EIDL) program. Chairman Williams noted that the CBO previously estimated that similar whistleblower legislation would reduce the federal deficit by $108 million over ten years.
Following the unanimous 24-0 votes for H.R. 7401, H.R. 7396, and H.R. 7412, the bills were ordered to be reported favorably to the House of Representatives. Chairman Williams concluded the session by authorizing committee staff to make technical changes and providing members two business days to file supplemental or dissenting views. No specific dates for floor votes were mentioned, but the bipartisan consensus suggests the measures may move quickly through the legislative process.
Transcript
All right, the committee will now come to order. A quorum is present, and without objection the chair is authorized to declare a recess of the committee at any time. As required by the House rules, a copy of the legislative measures have been made available to members and the public at least 24 hours in advance. Without objection, the committee will vote electronically in accordance with committee rules and regulations developed by the House Committees on Rules and Administration. I now recognize myself for opening remarks. Today we will mark up three important bipartisan bills that support efforts to combat waste, fraud, and abuse. These bills reflect our continued commitment to ensure transparency and accountability within the SBA and support efforts to root out fraud in the SBA's COVID-era lending programs. The bills will establish an office to help recover taxpayer dollars, prevent conflicts of interest in loan processing, and codify the Office of Native American Affairs. These bills will support the SBA's ability to serve America through small businesses and taxpayers alike. As chairman, I'm proud of the work underway in this committee, particularly our efforts to address systematic failures and support existing SBA programs. The committee has demonstrated our commitment to proactive, responsible oversight and accountability, and for that I say thank you. First, we will consider a bill that targets and prevents potential ethics violations in loan processing. The bill will enhance accountability and oversight of the SBA loan process by requiring conflict of interest certification. Next, we will consider a bill to codify the SBA's Office of Native American Affairs, an office which has been appropriated funds but not yet to be codified. Finally, we will consider my bill to establish the Office of Whistleblower Awards. The office will support the SBA OIG in its efforts to combat fraud. The bill will increase efficiency to fraud recovery by incentivizing public participation. With this additional resource, SBA is strategically positioned to stop bad actors and recover funds. Correcting and mitigating systematic failures is inherently complex and requires a strong bipartisan effort, and I'm proud of the collaborative effort that has resulted in today's markup. These three bills lay the foundation for a better tomorrow. I look forward to continuing to work with my colleagues to make strides in addressing waste, fraud, and abuse by improving internal mechanisms and processes. The SBA is better positioned to serve American small business. With that, I yield to my friend and the distinguished ranking member from New York, Ms. Velázquez, for her opening remarks.
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