Peggy E. (Peg) Gustafson was sworn in as the Inspector General of the U.S. Small Business Administration on October 2, 2009. Ms. Gustafson previously served as General Counsel to Senator Claire...
Audit Report 14-09: Purchase Reviews Allowed $3.1 Million in Improper Payments on 7(a) Recovery Act Loans
On January 29, 2014, the OIG issued Audit Report 14-09, Purchase Reviews Allowed $3.1 Million in Improper Payments on 7(a) Recovery Act Loans. This report is the second in a series resulting from the OIG’s audit of purchased 7(a) Recovery Act loans and presents the results of an audit of the SBA purchase reviews on nine additional 7(a) Recovery Act Loans. The OIG found that three 7(a) Recovery Act loans purchased by the SBA were not originated and closed in accordance with SBA rules and regulations. The deficiencies included loans approved and disbursed by lenders with questionable eligibility, inadequate assurance of repayment ability, and equity injection issues. The three loans had inappropriate or unsupported disbursements of approximately $3.1 million.
The OIG recommended that the SBA seek recovery of $3.1 million from the three lenders associated with these loans on the guaranties paid by the SBA for the loans (less any amounts received from liquidation). The SBA agreed with the OIG’s recommendations and each case is undergoing the Office of Capital Access’ (OCA) Denial Review Process, with appropriate action to be taken upon final resolution.