On March 31, 1995, the OIG issued Audit Report 5-3-H-004-006, SBA Loan Servicing and Debt Collection Activities. The objective of this review was to evaluate the effectiveness of SBA's loan servicing and debt collection procedures for delinquent loans serviced by the SBA. Further, the OIG evaluated whether the current loan collection and deposit procedures resulted in effective cash management.
The OIG found that enhancements to SBA's loan servicing and debt collection procedures could substantially increase collections. The SBA did not have an aggressive program to recover delinquent debt or effective procedures to identify cash management improvements. Specifically, the OIG found that: (1) the SBA could maximize collections on delinquent debt and provide for management and technical assistance to delinquent borrowers by having loan officers intensify their servicing of delinquent borrowers, (2) annual collections could be increased by approximately $18.5 million over the next five years if loans are referred to collection agencies on a more timely basis, (3) restructuring SBA's procedures for processing field office receipts and collecting bank loan guaranty fees could save the SBA approximately $764,485 over the next five years, and (4) the government could maximize collections and detect delinquent borrowers applying for additional Federal assistance if the SBA improved its procedures for referring delinquent borrowers to other agencies.