A bipartisan, bicameral bill was introduced this week that would create a government-wide shared services lending platform known as Lending.gov.
The bill, the Federal Loan Systems Modernization Act (S. 3980), would create this platform for borrowers and establish a standardized set of back-end loan management capabilities for participating agencies.
In recent decades, Congress has turned to lending programs to provide financial assistance, due to its relatively low cost to the government. There are now more than 125 credit programs extending hundreds of billions annually. These include Small Business Administration loans that help small businesses expand and hire workers; U.S. Department of Agriculture rural business and infrastructure loans; U.S. Department of Energy loan guarantees for energy projects; U.S. Department of Housing and Urban Development multifamily housing loans; and U.S. Department of Transportation loans for major infrastructure projects.
However, the infrastructure needed to manage these complex programs has not kept pace, and many credit programs are run using outdated technology and fragmented systems, leading to wasteful spending, poor customer experience, and fraud.
This bill calls for modernizing federal technology, reducing duplication across agencies, and improving digital service delivery. Specifically, the Federal Loan Systems Modernization Act would:
Build on successful centralized platforms such as Grants.gov;
Test a scalable model for shared services in lending that could set a precedent for future shared services initiatives in other mission areas;
Improve efficiency and customer experience and reduce fraud;
Incorporate enhanced identity verification, cross-program data matching, real-time risk analytics and alerts, and standardized underwriting and servicing controls.
Further, a centralized platform would make these capabilities more accessible across agencies, enabling earlier detection of fraudulent or ineligible applications and reducing improper payments.
The bill was introduced by U.S. Sens. Marsha Blackburn (R-TN) and Maggie Hassan (D-NH) along with U.S. Reps. Brad Finstad (R-MN) and Raja Krishnamoorthi (D-IL).
“Tennesseans, small businesses, and families across the country deserve a simple process that makes accessing federal loans easier,” Blackburn said. “The Federal Loan Systems Modernization Act would streamline the process for borrowers and federal agencies, replacing the confusing patchwork of loan programs that frustrates Americans every day. It would also stop waste, fraud, and abuse of taxpayer dollars.”
This legislation is supported by the Center for USA Lending, Council for Citizens Against Government Waste, Association of Government Accountants, Shared Services Leadership Council, and the Committee for a Responsible Federal Budget.
“The federal government is one of the largest lenders in the world, with programs that support housing, small businesses, infrastructure, disaster recovery, and national security. But the outdated systems used by many of these lending programs cost billions and have allowed tens of billions in fraud,” Hassan said. “This bipartisan bill will modernize federal lending through a shared services platform known as Lending.gov, helping make our government more user friendly, combat fraud, and save taxpayer dollars. It is one of many ways in which we can make our government better deliver for people while saving money at the same time.”