SBA OIG Report Claims 40% of Stimulus Loans Inappropriate or Unsupported Approvals

Documentation deficiencies identified in twenty-four, or 40 percent, of the sixty 7(a) loans reviewed, resulted in inappropriate or unsupported loan approvals of approximately $14.2 million. The documentation in the loan files was inadequate to ensure the loans:

• were made to creditworthy borrowers,
• met SBA' s eligibility criteria, and/or
• had adequate evidence of equity inj ection, use of proceeds, or Internal Revenue Service (IRS) verification.

Of the 24 deficient loans, 14 were lender-approved with inappropriate or unsupported loan approvals totaling $6.9 million and 10 were SBA-approved with inappropriate or unsupported loan approvals totaling $7.3 million. As of March 31, 2011, one of these 24 loans exhibited signs of early repayment problems. Suspicious activity was identified in one loan, which was referred to our Investigations Division for further review. Furthermore, problems with a lender's verification of equity injection and a missing gasoline supply agreement were identified on a loan that was not part of the random sample but was reviewed inadvertently by the OIG' s contractor

Download the full report here:
http://www.sba.gov/sites/default/files/ROM%2011-07%20Origination%20and%20Clos...

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• Bob Coleman
• Charles Green
• SBA
• Small Business
• SBA Loan
• OIG Report