Small Business Administration faces $12M in improper payments after loan review delays

by@zerohedge

Summary

The Small Business Administration (SBA) is facing scrutiny for potentially making $11.5 million in improper payments to banks after overruling employees' recommendations to reduce or deny government guarantees on 16 failed small-business loans. An inspector general report highlighted that for another 13 failed loans, the SBA's slow review process led to the expiration of the six-year statute of limitations, resulting in an additional waste of $5.4 million. The SBA's 7(a) program, which guarantees portions of loans issued by private banks to assist startups, is meant to protect lenders from business failures rather than from adhering to established rules, emphasizing the importance of regulatory compliance in safeguarding taxpayer interests.

Analysis

OpenTheBooks.com: OpenTheBooks.com is a transparency organization focused on forensic audits of government spending and waste. It is presenting the inspector general findings on SBA loan reviews through its ongoing Waste Of The Day series. Small Business Administration: The Small Business Administration is a U.S. federal agency that supports small businesses primarily through guarantee programs rather than direct lending. In the reported events, the agency oversees reviews of failed 7(a) loans where its own staff recommendations were overturned, leading to identified issues with improper payments and expired review deadlines. Program Structure: The SBA's 7(a) program guarantees portions of loans originated by private banks to help small businesses access financing. Oversight Mechanism: Inspector general audits examine agency decisions on loan guarantees to ensure compliance with rules for reducing or denying payouts.

Categories

macropolitics
View Original Tweet