Overview

Title

To amend the Small Business Act to require a limit on the number of small business lending companies, and for other purposes.

ELI5 AI

The CEASE Act wants to change the rules so that only a certain number of companies can give money to small businesses to help them grow. It says no more than 16 companies that are not charities can give out loans at the same time, to keep things fair and not too crowded.

Summary AI

H.R. 2987, also known as the “Capping Excessive Awarding of SBLC Entrants Act” or the “CEASE Act,” proposes an amendment to the Small Business Act. This bill seeks to limit the number of small business lending companies that can provide loans to small businesses under section 7 of the Act. Specifically, it mandates that no more than 16 small business lending companies, which are not nonprofit entities, be permitted to make these loans at any given time. This limitation aims to regulate and oversee the number of such companies operating in the market.

Published

2025-04-24
Congress: 119
Session: 1
Chamber: HOUSE
Status: Introduced in House
Date: 2025-04-24
Package ID: BILLS-119hr2987ih

Keywords AI

small business act cease act small business lending companies section 7 loans lending company limit nonprofit entity exclusion h.r. 2987 congress bill 119 fair competition small business loans

Sources

Bill Statistics

Size

Sections:
2
Words:
225
Pages:
2
Sentences:
7

Language

Nouns: 79
Verbs: 15
Adjectives: 11
Adverbs: 0
Numbers: 9
Entities: 21

Complexity

Average Token Length:
4.18
Average Sentence Length:
32.14
Token Entropy:
4.44
Readability (ARI):
17.79

AnalysisAI

General Summary of the Bill

H.R. 2987, known as the “Capping Excessive Awarding of SBLC Entrants Act” or the “CEASE Act,” aims to amend the Small Business Act. The amendment proposed by this bill places a cap on the number of small business lending companies—specifically, no more than 16 companies that are not nonprofit organizations can be granted the authority to issue small business loans at any given time. The bill does not apply this limit to nonprofit entities.

Summary of Significant Issues

There are several notable issues accompanying the CEASE Act:

  1. Lack of Explanation for the Cap: The bill does not clarify why the specific number of 16 lending companies was chosen. Without a rationale, questions may arise concerning whether this limitation is based on data or policy considerations.

  2. Impact on Small Business Financing: The potential effects on access to loans by small businesses are not addressed. Limiting the number of lending companies might restrict the availability of financing options, potentially affecting small businesses heavily reliant on these loans.

  3. Selection Criteria Unclear: There is no information on how the 16 companies would be chosen, which raises concerns about the transparency and fairness of the selection process. Without clear criteria, there could be perceptions of favoritism.

  4. Exclusion of Nonprofits: While nonprofit entities are not counted toward the 16-company limit, the bill does not explain why this exemption exists. Understanding the rationale behind excluding nonprofits might be necessary to evaluate whether this part of the bill ensures fair competition or not.

  5. Lack of Fair Competition Guidelines: The bill does not establish any guidelines to ensure fair competition among the authorized lending companies. The absence of such provisions might allow some companies to gain an undeserved advantage, potentially skewing the market dynamics.

Impact on the Public

The CEASE Act has several potential impacts on the public, particularly small business owners seeking financial assistance. By placing a numerical cap on small business lending companies, it could limit the available options for obtaining loans, possibly driving up competition and reducing the flexibility currently enjoyed by small businesses. This limitation might hinder their growth opportunities at a time when access to capital is crucial for expansion, innovation, and coping with economic fluctuations.

Impact on Specific Stakeholders

  • Small Businesses: Small businesses might find it harder to access the necessary funds as the number of lending companies is restricted. With potentially fewer lenders, interest rates could rise, or lending terms might become less favorable.

  • Financial Institutions: Those wishing to become authorized lending companies might face steeper competition to secure one of the limited spots. This could disadvantage newer or smaller financial institutions that do not have the same resources as established companies.

  • Nonprofit Lending Entities: Nonprofit organizations are excluded from the limitation, potentially allowing them to play a more prominent role in small business lending. This could be beneficial if nonprofits offer more favorable terms to small businesses, but it also highlights the disparity in regulatory treatment between nonprofit and for-profit lenders.

Overall, while the CEASE Act intends to regulate the number of small business lenders, ensuring that small businesses continue to have adequate access to financial resources without compromising the competitiveness of the lending market will be crucial to its effective implementation.

Issues

  • The potential impact on small business lending due to the limitation of 16 small business lending companies is not addressed in Section 2, which could be concerning if it restricts access to necessary financing for small businesses.

  • The reason for setting the limit of 16 small business lending companies is not provided in Section 2, which might require further explanation or justification to ensure transparency and fairness.

  • The criteria for selecting the small business lending companies under Section 2 are not mentioned, potentially leading to perceived favoritism or a lack of transparency in the selection process.

  • Section 2 excludes nonprofit entities from the limitation without clarification, which may require explanation to understand the implications and fairness of this exclusion.

  • Section 2 does not specify any guidelines or criteria to ensure fair competition among lending companies, which could result in favoring certain businesses and affect the competitive balance in the market.

Sections

Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.

1. Short title Read Opens in new tab

Summary AI

The section provides the short title for the bill, which can be referred to as the "Capping Excessive Awarding of SBLC Entrants Act" or simply the "CEASE Act."

2. Limitation on number of small business lending companies Read Opens in new tab

Summary AI

The amendment to the Small Business Act places a cap on the number of small business lending companies, specifying that no more than 16 such companies, other than nonprofit entities, can be authorized to issue loans at any given time.