C-Suite Wednesday – SBA Inspector General Tells Congress SBA’s Top 8 Challenges

June 1, 2022

Delaney Sexton
Contributing Editor

C-Suite Wednesday – SBA Inspector General Tells Congress SBA’s Top 8 Challenges

The SBA Office of Inspector General’s Semiannual Report to Congress was recently submitted for the first half of fiscal year 2022. The report consists of the OIG’s published reports and important investigations executed through their oversight work of the SBA. Of the topics in the Semiannual report, the OIG reviews the top eight management and performance challenges facing the agency.

  1. SBA’s Economic Relief Programs are susceptible to significant fraud risks and vulnerabilities.
  2. Inaccurate procurement data and eligibility concerns in the Small Business Contracting Programs undermine the reliability of contracting goal achievements.
  3. SBA faces significant challenges in IT investment, system development, and security controls.
  4. SBA Risk Management and Oversight practices need improvement to ensure the integrity of loan programs.
  5. SBA’s management and monitoring of the 8(a) Business Development Program needs improvement.
  6. Identification of improper payments in SBA’s loan programs remains a challenge.
  7. SBA’s Disaster Assistance Program must balance competing priorities to deliver prompt assistance but prevent fraud.
  8. SBA needs robust grants management oversight.

The two issues affecting lenders the most are the SBA’s risk management and oversight practices needing improvement to ensure the integrity of SBA’s loan programs and the identification of improper payments in the loan programs.

For the fourth challenge, the OIG found that the SBA Office of Credit Risk Management did not always effectively oversee high-risk lenders and monitor their compliance with policies and procedures and take corrective action when needed. The SBA responded that they plan on developing a database to manage oversight of these lenders.

In the sixth challenge listed, the OIG reports that lenders were out of compliance for 5 of the 8 loans they reviewed worth $8.7 million in questioned costs. SBA did not identify or fully address the material deficiencies noted. The OIG’s reviews consistently identified issues regarding eligibility, repayment ability, size standards, business valuations, appraisals, equity injection, and debt refinance. SBA is working to revise the 7(a) loan servicing and liquidation requirements.

Read Our Previous Reporting:
Hot Topic Tuesday – OIG Investigated $335 Million in Loan Agent Fraud in the Last Decade – October 26, 2021

OIG Semiannual Report to Congress