Small Business Administration's Compliance with Comptroller General's Decision on Purchase of Guaranteed Loans

CED-77-26: Published: Jan 26, 1977. Publicly Released: Jan 26, 1977.

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The Small Business Administration (SBA) lacks authority to purchase guaranteed loans from banks which have not complied with SBA regulations requiring notification of a borrower's delinquency within 30 days. The files for 80 guaranteed loans purchased and four loans rejected for purchase at SBA's Boston, Kansas City, and San Francisco district offices were examined, as were 106 randomly selected loan authorization purchases to determine the extent of compliance with this regulation.

The Boston and Kansas City District Offices had not made a satisfactory analysis of possible harm to the Government from late delinquency notices. The loan specialists at these offices were unable to explain their serious harm determinations and were uncertain about requirements for these determinations. The failure of SBA procedures to instruct loan officers on how to determine the effects of late delinquency notices may have contributed to the inadequacy of these determinations. Twenty five loan purchases were approved at Washington headquarters without evidence of compliance.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator of the SBA should review purchase documents in the Accounting Operations Division to determine whether an initial review for serious harm was made by district offices, and reexamine the effects of late delinquency notice for all loans.

    Agency Affected:

 

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