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SBA Hot Topic Tuesday — SBA and Poultry Lending

March 13, 2018

By Bob Coleman
Editor, SBA Hot Topic Tuesday

SBA Hot Topic Tuesday — SBA and Poultry Lending

Last week, SBA’s Inspector General issued a comprehensive audit questioning whether $1.8 billion in 7(a) loans were eligible for SBA financing.

On Friday, SBA quashed an impending controversy by saying yes, SBA would honor the guarantee of loans previously approved.

SBA says in a press release:

This week, the U.S. Small Business Administration received a report from its Inspector General on loans made to poultry farmers.

The report focuses on 11 loans that were made from FY 2012 – FY 2016 and, by extension, questioned whether the remaining 1,500 poultry loans made during that five year period met SBA’s eligibility requirements. The SBA has reviewed those 11 loans, and confirmed that they were correctly made in accordance with Agency policy at the time. The loan guarantees will continue to be honored for those and other similar poultry loans. As always, SBA loan guarantees are backed by the full faith and credit of the U.S. Government.

Unclear is SBA’s attitude toward future poultry 7(a) loans.

Small business loans are at the core of the SBA mission, and the Agency is examining the policies and procedures around poultry loans to ensure SBA loans continue to be directed towards those small businesses most in need of assistance.

Until SBA addresses the issues raised by the OIG about agreements between borrowers and “integrators” it is probably best to follow the advice of one lender we contacted.

“The only way I would do a poultry loan today is to submit it GP through Citrus Heights.” He then snarkily added, “Where it would probably sit for a long, long time.”

SBA OIG Report 18-13, “Evaluation of SBA 7(a) Loans Made to Poultry Farmers.”

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