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Highlights

Pursuant to a congressional request, GAO provided information on the reasons for the losses being incurred by the Guaranteed Business and Industry Loan Program, focusing on the Rural Business-Cooperative Service's experience with business and industry guaranteed loans made during fiscal year (FY) 1994 through FY 1998 on which the Service paid losses.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture The Secretary of Agriculture should direct the Rural Business-Cooperative Service to clarify when it expects feasibility studies to be obtained.
Closed - Implemented
On January 13, 2000, USDA's Rural Business Cooperative Service issued an Administrative Notice to its state office directors clarifying when feasibility studies are required, and calling attention to the importance of carefully evaluating these studies prior to making lending decisions. The agency also stated that it plans to incorporate this instruction in the federal regulations for the program.
Department of Agriculture The Secretary of Agriculture should direct the Rural Business-Cooperative Service to emphasize to its field offices the importance of carefully evaluating these studies before making lending decisions.
Closed - Implemented
USDA provided training for its Rural Business Service field staff in a nationwide meeting on August 3-4, 1999. The training session was attended by those responsible for administration of USDA's Business and Industry Guaranteed Loan Program, including USDA Rural Development State Office Directors, Program Directors, and Loan Specialists. The agency stated that during the training session, agency officials discussed the importance of feasibility studies for evaluating businesses that had applied for loans. This training session also included training in the evaluation of feasibility studies, and how to distinguish between a properly completed feasibility study and a business plan.

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