H.R.2987 - Capping Excessive Awarding of SBLC Entrants Act of 2025; CEASE Act of 2025 (119th Congress)
Summary
H.R. 2987, also known as the CEASE Act of 2025, amends the Small Business Act to limit the number of small business lending companies (SBLCs). Specifically, it restricts the Administrator from authorizing more than 16 non-profit SBLCs to make loans under section 7 of the Act at any given time. The bill was passed by the House of Representatives on June 5, 2025.
The intention is to cap the number of these lending companies. This could impact the availability of loans for small businesses.
The Act aims to control the expansion of SBLCs, potentially streamlining oversight and management of these entities.
Expected Effects
The CEASE Act will likely result in a more controlled environment for small business lending companies. It could lead to increased competition among existing SBLCs.
Small businesses might experience changes in loan accessibility. The limitation could affect the overall volume of loans dispersed.
The Act may also influence the types of businesses that receive funding, depending on the lending priorities of the authorized SBLCs.
Potential Benefits
- Potential for more effective oversight: Limiting the number of SBLCs could allow for better regulation and monitoring by the Administrator.
- Reduced risk of mismanagement: A smaller number of entities may be easier to manage and control, reducing the risk of financial mismanagement or fraud.
- Increased focus on quality over quantity: The existing SBLCs might be incentivized to improve their services and lending practices due to reduced competition from new entrants.
- Streamlined processes: Fewer SBLCs could simplify administrative processes related to loan approvals and disbursements.
- Potential for more targeted lending: With a limited number of SBLCs, the Administrator could potentially guide lending towards specific sectors or underserved communities.
Potential Disadvantages
- Reduced access to capital for small businesses: Limiting the number of SBLCs could decrease the overall availability of loans, particularly for startups and businesses that may not qualify for traditional financing.
- Increased competition among borrowers: Small businesses may face greater competition for loans from the limited number of authorized SBLCs.
- Potential for regional disparities: The concentration of SBLCs in certain geographic areas could disadvantage businesses in other regions.
- Reduced innovation in lending practices: Limiting the number of SBLCs may stifle innovation and the development of new lending models.
- Risk of favoritism or bias: The Administrator's decision on which SBLCs are authorized could be subject to political influence or bias.
Constitutional Alignment
The CEASE Act appears to align with the constitutional power of Congress to regulate commerce (Article I, Section 8). It involves the regulation of lending companies that operate across state lines and impact the national economy. There are no apparent infringements on individual rights or liberties as defined in the Bill of Rights.
The Act does not appear to violate any specific constitutional provisions. It falls under the broad authority of Congress to enact laws necessary and proper for carrying out its enumerated powers (Article I, Section 8, Clause 18).
However, the specific implementation and oversight by the Administrator could raise questions of due process if not handled fairly and transparently.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).