Management Advisory Memo 16-08

As part of its High-Risk 7(a) Loan Review Program, on January 8, 2016, the Office of Inspector General (OIG) issued a memorandum, Report 16-08, which provides the Small Business Administration (SBA) with early notification of issues identified as part of our review.  We identified that the lender did not provide sufficient information to support that it approved the loan in accordance with SBA’s origination and closing requirements.  Specifically, the lender did not inspect or adequately value the significant fixed assets for this limousine and transportation service business, resulting in increased losses to SBA.  As a result, a repair to the guarantee payment for $299,318 is appropriate to cure the lender’s material deficiencies on this loan. The Agency agreed with the recommendation to recover funds from the lender.