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...
ROM 11-03 - America’s Recovery Capital Loans Were Not Originated And Closed In Accordance With SBA’s Policies and Procedures
This report presents the results ofthe audit of America's Recovery Capital (ARC) loans disbursed pursuant to the American Recovery and Reinvestment Act of 2009 (Recovery Act). The Recovery Act provided the Small Business Administration (SBA) with $730 million to expand the Agency's lending and investment programs and create new programs to stimulate lending to small businesses. Ofthe $730 million received, $255 million was authorized for SBA to establish the ARC loan program to provide small businesses access to the capital needed to drive economic recovery and retain jobs.
The audit objectives were to (1) determine if ARC loans were originated and closed in accordance with SBA's policies and procedures, and (2) identify any evidence of suspicious activity.
To answer these objectives, based on a stratified random sample design, we randomly selected a sample of 120 ARC loans from a population of 4,559 ARC loans approved between June 1,2009 and January 31,2010 with gross loan approvals totaling approximately $148 million and at least one disbursement as of January 31,2010. Ofthe 120 loans reviewed, 79 were lender-approved and 41 were SBA-approved loans. As of November 12, 2010, one hundred thirteen, or 94 percent of the 120 sampled loans reviewed, had been fully disbursed. See Appendix I for further details on our sampling methodology and Appendix II for a list ofthe sampled loans.
The audit fieldwork was performed by RER Solutions, Inc. (RER) under a contract with the Office ofInspector General (OIG). Fieldwork was conducted from April to October 2010, in accordance with Government Auditing Standards prescribed by the Comptroller General ofthe United States. The contractor, RER, reviewed SBA and lender loan files using an OIG-approved checklist. For all loans examined, RER also reviewed information contained in SBA's Loan Accounting System.