SBA’s Desktop Loss Verification Process

This report presents the results of our verification inspection of the U.S. Small Business Administration’s (SBA) corrective actions for the recommendations from the Office of Inspector General (OIG) Audit of SBA’s Desktop Loss Verification Process (Report 19-23). A verification inspection is a review that focuses on the implementation of closed recommendations from prior OIG reports.

SBA made corrective actions in response to our prior audit and implemented a process to ensure all disaster assistance loans were verified before disbursing funds. However, the corrective actions the agency made in response to our prior audit no longer exist because SBA changed its loan processing management system and developed new processes. We found the same issues identified in our prior audit continue to persist because SBA did not address our recommendations when the agency transitioned to its new loan processing platform in 2023. In some cases, SBA weakened or eliminated internal controls even further.

In this verification inspection, we reviewed the files for 28 SBA disaster assistance loans approved in fiscal year 2025 and found 12 were missing photographs of the claimed damages. Only 1 of the 28 files contained contractor estimates for cost of repair or replacement, insurance reports, or repair receipts. The loss verifiers’ comments in the files were often minimal in supporting their conclusions from the documentation submitted. We will not reopen the recommendations from Report 19-23 but will instead incorporate our findings into a future audit of SBA’s disaster assistance loan loss verification process. SBA elected not to provide a formal response to this report.