H. Rpt. 119-406 accompanies the "Main Street Parity Act" — legislation that falls within the Select Committee on the Modernization of Congress's jurisdiction. Committee reports serve as the official legislative history of a bill, documenting what the legislation would do and why the committee recommends passage. Reports of this kind include the committee's section-by-section analysis, any amendments adopted during markup, the Congressional Budget Office cost estimate, dissenting views from minority members, and the legal basis for the legislation. Courts and agencies consult committee reports when interpreting enacted laws, making these documents important beyond the immediate legislative moment.
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House Report 119-406 - MAIN STREET PARITY ACT
[House Report 119-406]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-406
======================================================================
MAIN STREET PARITY ACT
_______
December 12, 2025.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Williams of Texas, from the Committee on Small Business, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5763]
The Committee on Small Business, to whom was referred the
bill (H.R. 5763) to amend the Small Business Investment Act of
1958 to modify the criteria for loans for plant acquisition,
construction, conversion or expansion, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary........................................ 2
II. Need for Legislation............................................ 2
III. Hearings........................................................ 2
IV. Committee Consideration......................................... 2
V. Committee Votes................................................. 2
VI. Section-by-Section of H.R. 5763................................. 4
VII. Congressional Budget Office Cost Estimate....................... 4
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure 4
IX. Oversight Findings & Recommendations............................ 4
X. Performance Goals and Objectives................................ 4
XI. Statement of Duplication of Federal Programs.................... 4
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits........................................................ 5
XIII. Federal Mandates Statement...................................... 5
XIV. Federal Advisory Committee Statement............................ 5
XV. Applicability to Legislative Branch............................. 5
XVI. Statement of Constitutional Authority........................... 5
XVII. Changes in Existing Law Made by the Bill, as Reported........... 5
XVIII.Minority Views................................................. 11
I. Purpose and Bill Summary
On October 14, 2025, Chairman Williams, along with
Representative Simon, introduced H.R. 5763, the Main Street
Parity Act. H.R. 5763 removes an additional five percent equity
requirement for limited or single purpose properties under the
Small Business Administration's (SBA) 504 loan program.
II. Need for Legislation
The SBA 504 loan program provides long-term, fixed-rate
financing of up to $5.5 million for acquiring fixed assets such
as land, buildings, and heavy machinery. Under the 504 loan
program, small business owners are typically required to
contribute at least ten percent of the total project cost.
However, for properties classified as ``limited or single
purpose,'' such as dairy farms, bowling alleys, or nursing
homes, an additional five percent of the total project cost is
required for the project. This imposes an added financial
burden on entrepreneurs because of the labeling of their
property.
This additional percentage requirement was introduced
nearly 30 years ago based on the assumption that limited or
single-purpose properties pose a greater financial risk to the
loan program--data from the past 15 years disputes that
assumption. Charge-off rates for these special-purpose
properties perform comparatively to, or better than, the
overall 504 loan program.
Some industries, such as bowling alleys and hospitals, even
have a zero percent charge-off rate, outperforming the 504 loan
program average charge-off rate of 0.5 percent. The additional
five percent equity requirement punishes small business owners
with these limited or single purpose properties.
This bill brings parity to all industries in the 504 loan
program by eliminating the additional five percent equity
requirement for limited or single-purpose properties. H.R. 5763
will ensure that small business owners are treated equally and
not penalized based on outdated assumptions.
III. Hearings
On September 16, 2025, the Committee on Small Business held
a hearing examining matters related to H.R. 5763 entitled
``Pathway to Capital: The Role of SBA Lending in Supporting
Main Street America.''
IV. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on November 18, 2025, and ordered H.R.
5763 to be reported favorably to the House of Representatives
by a roll call vote of 27 ayes to 0 nos.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report legislation and amendments
thereto. The Committee voted to favorably report H.R. 5763 to
the House of Representatives at 11:41 AM.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
VI. Section-by-Section of H.R. 5763
Section 1--Short title
This Act may be cited as the ``Main Street Parity Act.''
Section 2--Modification to criteria for loans for plant acquisition,
construction, conversion or expansion
This section removes the statutory requirement that
limited-purpose property builders must provide an additional
five percent equity to obtain an SBA loan under the 504 loan
program.
VII. Congressional Budget Office Cost Estimate
Pursuant to 3(c)(3) of rule XIII of the Rules of the House
of Representatives, the Committee adopts as its own the cost
estimate prepared by the Director of the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act
of 1974. At the time this report was filed, the Committee has
requested but not received a cost estimate from the Director of
the Congressional Budget Office.
VIII. New Budget Authority, Entitlement Authority,
and Tax Expenditures
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a)(I) of the
Congressional Budget Act of 1974, the Committee provides the
following opinion and estimate with respect to new budget
authority, entitlement authority, and tax expenditures. While
the Committee has not received an estimate of new budget
authority contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974, the Committee does
not believe that there will be any new or increased costs
attributable to this legislation.
IX. Oversight Findings & Recommendations
In accordance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the oversight findings and recommendations of the Committee on
Small Business with respect to the subject matter contained in
H.R. 5763 are incorporated into the descriptive portions of
this report.
X. Performance Goals and Objectives
With respect to the requirements of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, the goal of
H.R. 5763 is to bring parity to all industries under the SBA's
504 loan program.
XI. Statement of Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, no provision of H.R. 5763 is known to
be duplicative of another Federal program, including any
program that was included in a report to Congress pursuant to
section 21 of Public Law 111-139 or the most recent Catalog of
Federal Domestic Assistance.
XII. Congressional Earmarks, Limited Tax Benefits,
and Limited Tariff Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee finds that the bill
does not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits as defined in clause 9(e),
9(f), or 9(g) of rule XXI of the Rules of the House of
Representatives.
XIII. Federal Mandates Statement
The Committee will adopt as its own the estimate of the
Federal mandates prepared by the Director of the Congressional
Budget Office pursuant to section 423 of the Unfunded Mandates
Reform Act.
XIV. Federal Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
XV. Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
XVI. Statement of Constitutional Authority
Pursuant to clause 7 of rule XII of the Rules of the House,
the Committee finds that the authority for this legislation in
Art. I, Sec. 8, cl.1 of the Constitution of the United States.
XVII. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
SMALL BUSINESS INVESTMENT ACT OF 1958
* * * * * * *
TITLE V--LOANS TO STATE AND LOCAL DEVELOPMENT COMPANIES
* * * * * * *
LOANS FOR PLANT ACQUISITION, CONSTRUCTION, CONVERSION, AND EXPANSION
Sec. 502. The Administration may, in addition to its
authority under section 501, make loans for plant acquisition,
construction, conversion or expansion, including the
acquisition of land, to State and local development companies,
and such loans may be made or effected either directly or in
cooperation with banks or other lending institutions through
agreements to participate on an immediate or deferred basis:
Provided, however, That the foregoing powers shall be subject
to the following restrictions and limitations:
(1) Use of proceeds.--The proceeds of any such loan
shall be used solely by the borrower to assist 1 or
more identifiable small business concerns and for a
sound business purpose approved by the Administration.
(2) Maximum amount.--
(A) In general.--Loans made by the
Administration under this section shall be
limited to--
(i) $5,000,000 for each small
business concern if the loan proceeds
will not be directed toward a goal or
project described in clause (ii),
(iii), (iv), or (v);
(ii) $5,000,000 for each small
business concern if the loan proceeds
will be directed toward 1 or more of
the public policy goals described under
section 501(d)(3);
(iii) $5,500,000 for each project of
a small manufacturer;
(iv) $5,500,000 for each project that
reduces the borrower's energy
consumption by at least 10 percent; and
(v) $5,500,000 for each project that
generates renewable energy or renewable
fuels, such as biodiesel or ethanol
production.
(B) Definition.--As used in this paragraph,
the term ``small manufacturer'' means a small
business concern--
(i) the primary business of which is
classified in sector 31, 32, or 33 of
the North American Industrial
Classification System; and
(ii) all of the production facilities
of which are located in the United
States.
(3) Criteria for assistance.--
(A) In general.--Any development company
assisted under this section or section 503 of
this title must meet the criteria established
by the Administration, including the extent of
participation to be required or amount of paid-
in capital to be used in each instance as is
determined to be reasonable by the
Administration.
(B) Community injection funds.--
(i) Sources of funds.--Community
injection funds may be derived, in
whole or in part, from--
(I) State or local
governments;
(II) banks or other financial
institutions;
(III) foundations or other
not-for-profit institutions; or
(IV) the small business
concern (or its owners,
stockholders, or affiliates)
receiving assistance through a
body authorized by this title.
(ii) Funding from institutions.--Not
less than 50 percent of the total cost
of any project financed pursuant to
[clauses (i), (ii), or (iii) of
subparagraph (C)] clause (i) of
subparagraph (C) shall come from the
institutions described in subclauses
(I), (II), and (III) of clause (i).
(C) Funding from a small business concern.--
The small business concern (or its owners,
stockholders, or affiliates) receiving
assistance through a body authorized by this
title shall provide--
(i) at least 15 percent of the total
cost of the project financed, if the
small business concern has been in
operation for a period of 2 years or
less; or
[(ii) at least 15 percent of the
total cost of the project financed if
the project involves the construction
of a limited or single purpose building
or structure;
[(iii) at least 20 percent of the
total cost of the project financed if
the project involves both of the
conditions set forth in clauses (i) and
(ii); or]
[(iv)] (ii) at least 10 percent of
the total cost of the project financed,
in all other circumstances, at the
discretion of the development company.
(D) Seller financing.--Seller-provided
financing may be used to meet the requirements
of subparagraph (B), if the seller subordinates
the interest of the seller in the property to
the debenture guaranteed by the Administration.
(E) Collateralization.--
(i) In general.--The collateral
provided by the small business concern
shall generally include a subordinate
lien position on the property being
financed under this title, and is only
1 of the factors to be evaluated in the
credit determination. Additional
collateral shall be required only if
the Administration determines, on a
case-by-case basis, that additional
security is necessary to protect the
interest of the Government.
(ii) Appraisals.--
(I) In general.--With respect
to commercial real property
provided by the small business
concern as collateral, an
appraisal of the property by a
State licensed or certified
appraiser--
(aa) shall be
required by the
Administration before
disbursement of the
loan if the estimated
value of that property
is more than the
Federal banking
regulator appraisal
threshold; or
(bb) may be required
by the Administration
or the lender before
disbursement of the
loan if the estimated
value of that property
is equal to or less
than the Federal
banking regulator
appraisal threshold,
and such appraisal is
necessary for
appropriate evaluation
of creditworthiness.
(II) Federal banking
regulator appraisal threshold
defined.--For purposes of this
clause, the term ``Federal
banking regulator appraisal
threshold'' means the lesser of
the threshold amounts set by
the Board of Governors of the
Federal Reserve System, the
Comptroller of the Currency,
and the Federal Deposit
Insurance Corporation for when
a federally related transaction
that is a commercial real
estate transaction requires an
appraisal prepared by a State
licensed or certified
appraiser.
(4) If the project is to construct a new facility, up
to 33 per centum of the total project may be leased, if
reasonable projections of growth demonstrate that the
assisted small business concern will need additional
space within three years and will fully utilize such
additional space within ten years.
(5) Limitation on leasing.--In addition to any
portion of the project permitted to be leased under
paragraph (4), not to exceed 20 percent of the project
may be leased by the assisted small business to 1 or
more other tenants, if the assisted small business
occupies permanently and uses not less than a total of
60 percent of the space in the project after the
execution of any leases authorized under this section.
(6) Ownership requirements.--Ownership requirements
to determine the eligibility of a small business
concern that applies for assistance under any credit
program under this title shall be determined without
regard to any ownership interest of a spouse arising
solely from the application of the community property
laws of a State for purposes of determining marital
interests.
(7) Permissible debt refinancing.--
(A) In general.--Any financing approved under
this title may include a limited amount of debt
refinancing.
(B) Expansions.--If the project involves
expansion of a small business concern, any
amount of existing indebtedness that does not
exceed 100 percent of the project cost of the
expansion may be refinanced and added to the
expansion cost, if--
(i) the proceeds of the indebtedness
were used to acquire land, including a
building situated thereon, to construct
a building thereon, or to purchase
equipment;
(ii) the existing indebtedness is
collateralized by fixed assets;
(iii) the existing indebtedness was
incurred for the benefit of the small
business concern;
(iv) the financing under this title
will be used only for refinancing
existing indebtedness or costs relating
to the project financed under this
title;
(v) the financing under this title
will provide a substantial benefit to
the borrower when prepayment penalties,
financing fees, and other financing
costs are accounted for;
(vi) the borrower has been current on
all payments due on the existing debt
for not less than 1 year preceding the
date of refinancing; and
(vii) the financing under section 504
will provide better terms or rate of
interest than the existing indebtedness
at the time of refinancing.
(C) Refinancing not involving expansions.--
(i) Definitions.--In this
subparagraph--
(I) the term ``borrower''
means a small business concern
that submits an application to
a development company for
financing under this
subparagraph;
(II) the term ``eligible
fixed asset'' means tangible
property relating to which the
Administrator may provide
financing under this section;
and
(III) the term ``qualified
debt'' means indebtedness--
(aa) that was
incurred not less than
6 months before the
date of the application
for assistance under
this subparagraph;
(bb) that is a
commercial loan;
(cc) the proceeds of
which were used to
acquire an eligible
fixed asset;
(dd) that was
incurred for the
benefit of the small
business concern; and
(ee) that is
collateralized by
eligible fixed assets.
(ii) Authority.--A project that does
not involve the expansion of a small
business concern may include the
refinancing of qualified debt if--
(I) the amount of the
financing is not more than 90
percent of the value of the
collateral for the financing,
except that, if the appraised
value of the eligible fixed
assets serving as collateral
for the financing is less than
the amount equal to 125 percent
of the amount of the financing,
the borrower may provide
additional cash or other
collateral to eliminate any
deficiency;
(II) the borrower has been in
operation for all of the 2-year
period ending on the date the
loan application is submitted;
and
(III) for a financing for
which the Administrator
determines there will be an
additional cost attributable to
the refinancing of the
qualified debt, the borrower
agrees to pay a fee in an
amount equal to the anticipated
additional cost.
(iii) Financing for business
expenses.--
(I) Financing for business
expenses.--The Administrator
may provide financing to a
borrower that receives
financing that includes a
refinancing of qualified debt
under clause (ii), in addition
to the refinancing under clause
(ii), to be used solely for the
payment of business expenses.
(II) Application for
financing.--An application for
financing under subclause (I)
shall include--
(aa) a specific
description of the
expenses for which the
additional financing is
requested; and
(bb) an itemization
of the amount of each
expense.
(III) Condition on additional
financing.--A borrower may not
use any part of the financing
under this clause for non-
business purposes.
(iv) Loans based on jobs.--
(I) Job creation and
retention goals.--
(aa) In general.--The
Administrator may
provide financing under
this subparagraph for a
borrower that meets the
job creation goals
under subsection (d) or
(e) of section 501.
(bb) Alternate job
retention goal.--The
Administrator may
provide financing under
this subparagraph to a
borrower that does not
meet the goals
described in item (aa)
in an amount that is
not more than the
product obtained by
multiplying the number
of employees of the
borrower by $75,000.
(II) Number of employees.--
For purposes of subclause (I),
the number of employees of a
borrower is equal to the sum
of--
(aa) the number of
full-time employees of
the borrower on the
date on which the
borrower applies for a
loan under this
subparagraph; and
(bb) the product
obtained by
multiplying--
(AA) the
number of part-
time employees
of the borrower
on the date on
which the
borrower
applies for a
loan under this
subparagraph,
by
(BB) the
quotient
obtained by
dividing the
average number
of hours each
part time
employee of the
borrower works
each week by
40.
(v) Total amount of loans.--The
Administrator may provide not more than
a total of $7,500,000,000 of financing
under this subparagraph for each fiscal
year.
* * * * * * *
XVIII. MINORITY VIEWS
One of the primary responsibilities of the Small Business
Administration (SBA) is to ensure that small businesses have
access to capital to grow and scale their respective
operations. The SBA administers multiple loan guaranty
programs, including the 504/Certified Development Company (CDC)
program, to provide affordable access to capital to lead these
small firms. The 504/CDC program supports businesses in
accessing long-term financing for major fixed assets like land,
buildings, equipment, and machinery. For standard 504/CDC
loans, a third-party lender provides at least 50 percent of the
financing, the Certified Development Company--guaranteed by the
SBA--provides a maximum of 40 percent, and the small business
borrower provides at least 10 percent. In Fiscal Year 2024, the
504/CDC program approved 5,994 loans totaling $6.6 billion,\1\
and the program contributed to the creation and retention of
64,206 jobs.\2\
---------------------------------------------------------------------------
\1\U.S. Small Business Administration. 7(a) & 504 Summary Report.
(Last Accessed: September 24, 2025).
\2\National Association of Development Companies. 504 Loan Impact
Across America. (Pg. 7).
---------------------------------------------------------------------------
As part of the program, the 504/CDC program provides access
to financing for the construction of limited or single purpose
buildings or structures, better known as ``special purpose
properties.'' The SBA defines ``special purpose properties'' as
limited-market properties with a unique physical design,
comprised of special construction materials, or have a layout
that restricts its utility to the specific use for which it was
built.\3\ Examples of special purpose properties include, but
are not limited to, amusement parks, bowling allies, car
washes, marinas, and cemeteries. Currently, borrowers looking
to develop a ``special purpose property'' with financing
through the 504/CDC program are required to provide at least 15
percent\4\ or in some cases at least 20 percent of the total
cost,\5\ instead of the at least 10 percent as required in
standard 504/CDC projects.
---------------------------------------------------------------------------
\3\Small Bus. Admin. SOP 50.10.8: Lender and Development Company
Loan Programs. (June 1, 2025), (Pg. 140).
\4\15 U.S.C. Sec. 696(3)(C)(ii).
\5\15 U.S.C. Sec. 696(3)(C)(iii).
---------------------------------------------------------------------------
In 1996, when the special purpose property designation was
developed, the limited function of these buildings or
properties also limited their adaptability to other uses if
they were ever to be sold by the borrower. Congress viewed the
limited use nature of these properties as potentially reducing
the universe of possible buyers and thereby associating a
heightened level of risk with these properties.
Yet almost thirty years have passed since Congress
increased the equity requirement for these properties and the
technological improvements and enhancements in building
construction and rehabilitation have increased the adaptability
and utility of these properties. Moreover the 10-year charge
off rate for 504/CDC loans for designated ``special purpose
properties'' (0.5 percent)\6\ is comparable to the 10-year
charge of rates for standard 504/CDC loans (0.41 percent),\7\
demonstrating that ``special purpose properties'' pose no
greater risk to the 504/CDC loan portfolio and the zero-subsidy
requirement than standard 504/CDC loans.
---------------------------------------------------------------------------
\6\NADCO. Special Use Property Charge Off Rates by NAICS Code.
(2025). On File with House Small Business Committee, Minority Staff.
Available for Review Upon Request.
\7\Small Bus. Admin. Small Business Administration Loan Program
Performance, Table 9--Charge Off Rate as a Percent of Unpaid Principal
Balance. (Last accessed: Sept. 24, 2025).
---------------------------------------------------------------------------
The additional equity required of small business borrowers
owning and operating ``special purpose properties'' can, in
many instances, be excessively burdensome and act as a
significant barrier to accessing 504/CDC financing. Therefore,
in order to ease this burden, it has become appropriate to
lower the equity requirement for financing the purchase and
development of these properties. Eliminating the special
purpose penalty would reduce the burden that these businesses
face when accessing capital, treat them substantially similar
to standard 504/CDC financed properties, and allow these
businesses to operate more efficiently.
Nydia M. Velazquez,
Ranking Member.
[all]