OIG Claims SBA 7(a) Repairs and Denials should increase by $472 Million

OIG Claims SBA 7(a) Repairs and Denials should increase by $472 Million

In a Thanksgiving day posting, SBA’s Inspector General issued a report that says SBA’s improper payments to lenders for SBA 7(a) guaranty purchases is not the 1.73 percent calculated by the agency in 2011.

Rather, SBA is lying to Congress and the public as the improper payments to lenders “could have been high as 20 percent, or about $473 million.” writes the OIG.

If the OIG demands this level of repairs and denials, lenders will obviously flee and shut down their SBA lending programs.

However, SBA management continues to rebuff these OIG recommendations. It writes OIG’s statistics are invalid and OIG’s review of a sample of 30 loans inconclusive.

Oh yeah, and SBA told the agency to back off, as its people are doing a good job of stewardship of taxpayer dollars.

OIG fired back that of course they were right and SBA was wrong. And it hired a statistician to prove that there was only a one-in 1.72 million chance that is was wrong!

We’ll go more into the 44 page report later, but the bottom line is these eye-bulging statistical claims by OIG are not helpful to the program.

Fortunately SBA management continues to resist Inspector General headline grabbing claims, but you need to be aware of the severe pressures placed on SBA by the OIG in processing your SBA 7(a) guaranty purchase packages.

The writing is on the wall that documentation requirements are only going to get more burdensome to you as the OIG ratchets up its pressure upon SBA management in the 7(a) guaranty purchase process.

Read the full SBA OIG Report