Passed
414 Yea4 Nay13 Not voting2/3 required
HR-915-119
Motion to reconsider laid on the table Agreed to without objection.
Sponsored by Mark Alford (R-MO)
What it does
This bill would amend the Small Business Act to explicitly allow SBA 7(a) business loans to be used to finance business software, cloud computing services, and related technology, including tools that use artificial intelligence, for functions like payroll, HR, sales, billing, accounting, and inventory tracking. It clarifies that this does not retroactively invalidate similar past loans, does not authorize loans for research and development, and does not narrow the existing definition of working capital.
Who benefits
Small businesses seeking SBA-backed loans to adopt or upgrade software and cloud services, software and cloud computing vendors selling to small businesses, and SBA-approved lenders who can now originate loans for a clearer set of technology purposes.
Who is hurt
No group is meaningfully harmed by this provision, though taxpayers bear indirect exposure through the federal loan guarantee program if default rates on technology-financed loans rise, and lenders take on new underwriting considerations for software-related collateral, which has less resale value than physical assets.
Supporters argue
Supporters argue that modern software and cloud tools are now essential operating infrastructure for small businesses, yet many owners lack the capital to adopt them, and this bill removes ambiguity about whether SBA loans can cover these costs. They contend that explicitly authorizing this use will help small businesses compete with larger firms that already have access to advanced technology, including AI-based tools.
Opponents argue
Opponents argue that expanding loan eligibility to intangible software and subscription-based cloud services increases default risk for the SBA loan guarantee program, since software has little resale or collateral value if a business fails. They contend that the bill could encourage lenders to approve loans for recurring operating expenses rather than durable investments, potentially straining the loan guarantee fund and taxpayer exposure over time.
Constitutional context
Congress has authority to structure federal lending and guarantee programs like the SBA 7(a) program under the Spending Clause (Art. I, §8, cl. 1) and its power to regulate commerce among the states; this bill raises no significant separation-of-powers or individual-rights question.
Checks and balances
Congress defines the permissible uses of SBA loans by statute, while the SBA (an executive branch agency) administers the loan guarantee program within those statutory bounds, with no significant shift in authority between branches.
Historical precedent
Congress has periodically expanded permissible uses for SBA 7(a) loans over the decades, such as adding energy efficiency and disaster recovery purposes, though no prior amendment specifically addressed cloud computing or AI tools.
Passed