SBA Hot Topic Tuesday: OIG Challenges $11.5 Million in Paid 7(a) Guaranties — One Review Took 20.8 Years
September 1, 2026
Bob Coleman
Founder & Publisher
SBA Hot Topic Tuesday: OIG Challenges $11.5 Million in Paid 7(a) Guaranties — One Review Took 20.8 Years
SBA has pushed back on a new Inspector General review of the 7(a) guaranty purchase process involving 16 loans and $11.54 million in challenged payments.
The SBA Office of Inspector General concluded that SBA lacked sufficient support to overturn earlier recommendations to repair or deny those guaranties. SBA disagreed with that conclusion and conducted its own individualized review of the loans.
The dispute gives lenders a detailed look at what happens after an initial repair or denial recommendation.
After a borrower defaults, the lender submits a guaranty purchase request. An SBA servicing center reviews whether the lender originated, closed, serviced and liquidated the loan in accordance with SBA requirements. If the servicing center recommends repair or denial and the lender disagrees, the file moves to SBA’s Portfolio Management and Quality Control team, or PMQC, for final review.
PMQC can uphold the repair or denial or overturn it and authorize payment of the guaranty.
From October 2021 through March 2025, PMQC reviewed 545 loans previously recommended for repair or denial. It overturned 197 decisions, resulting in approximately $168 million in guaranty purchases.
OIG reviewed 32 of those overturned decisions and challenged 16.
The issues included repayment ability, equity injection, IRS tax verification, eligibility and debt refinancing.
One early-default loan involved a $45,000 tax lien and no evidence supporting the lender’s explanation that the business failed after losing a major customer.
Another involved a seller who remained with the business as a key employee after an acquisition.
A third involved an equity injection where OIG said the lender did not adequately document that the funds came from a legitimate source.
The most dramatic finding involved how long some reviews remained unresolved.
One guaranty review took 7,594 days from borrower default to completion: 20.8 years.
Another took 20.6 years, a third 19.8 years and another 18.7 years.
In the 20.8-year case, nearly 16 years were spent in PMQC review.
SBA agreed to strengthen its internal repair-and-denial procedures, documentation standards, review timeframes and tracking controls.
What SBA ultimately decided on the 16 challenged loans — and whether SBA can recover a guaranty after it has already been paid — is detailed in this week’s Coleman Report.
_____________________________________________
Want access to the complete report?
Or Email me at bob@colemanreport.com, or text me at (818) 974-8934.
One Institutional Membership
✔ Weekly SBA Intelligence Briefing
✔ Monthly Executive Intelligence Report
✔ Monthly Coleman Report Live
✔ Twice Monthly SBA Office Hours