The Small Business Administration: Loan Origination and Debt Collection Processes

AIMD-00-45R Published: Nov 30, 1999. Publicly Released: Nov 30, 1999.
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Highlights

Pursuant to a congressional request, GAO provided information on the Small Business Administration's (SBA) loan origination and debt collection processes, focusing on the extent to which SBA has established: (1) adequate loan origination procedures and consistently obtains the required documents and data necessary for determining whether loan applicants comply with the program's statutory, regulatory, and eligibility requirements and have any outstanding, delinquent federal debt; and (2) a systematic process for identifying and collecting delinquent debts, including a prompt referral of delinquent debts to the Department of the Treasury for offset and cross-servicing programs.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration In order to address the issues described above, the Administrator, SBA, should direct the Associate Deputy Administrator for the Office of Capital Assets to test SBA's systems to verify they are working effectively to identify and refer eligible loans to Treasury for administrative offset as soon as they become more than 180 days delinquent.
Closed - Implemented
SBA has completed testing to verify that its systems are working effectively to identify and refer eligible loans to Treasury for administrative offset as soon as they become more than 180 days delinquent. The system continues to be tested to ensure that it is effective.
Small Business Administration In order to address the issues described above, the Administrator, SBA, should direct the Associate Deputy Administrator for the Office of Capital Assets to develop procedures that will allow uncollectible loans to be identified and transferred to Treasury for cross-servicing within the required time frames or for those loans on which they are still actively pursuing collection at the 180-day mark, promptly after suspending collection efforts.
Closed - Implemented
SBA has developed the recommended procedures.

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