SBA to Review Loans Approved from August 2023 through December 2024 for Eligibility at Guaranty Purchase
March 18, 2026
Bob Coleman
Founder & Publisher
SBA to Review Loans Approved from August 2023 through December 2024 for Eligibility at Guaranty Purchase
The OIG says SBA failed to document 38% of Etran error codes clearances for eligibility for 7(a) borrowers between August 1, 2023, and December 31, 2024.
SBA will now “flag 73,302 loans in the Centralized Loan Chron System (CLSC) for review at the time of guaranty purchase and will seek recovery where appropriate and legally justified.”
From the OIG Report:
Specifically, the framework did not screen to determine whether a small business (1) was organized for profit, (2) met SBA’s size requirements, or (3) was an ineligible business type.
We also reviewed 188 of the 9,650 loans that had at least one error code and found SBA did not maintain sufficient documentation to support the reviewer’s decision to clear error codes for 71 (or 38 percent) of the loans we reviewed, totaling about $60.7 million.
Specifically:
- Twenty-two loan files with matters related to ownership percentage did not have sufficient supporting documentation that validated the percentage. This is important because, for example, if the applicant owns more than 50 percent of another business, that other entity is considered an affiliate and must be included in the lender’s analysis.
- Sixteen loan files did not have supporting documentation that could validate size standard calculations for the applicant. For example, if annual receipts were identified in a lender’s analysis, there was no documentation such as tax returns to validate the analysis.
- Thirteen loan files did not have sufficient supporting documentation pertaining to sold or inactive businesses. For example, if an applicant sold a potential affiliate, the loan file did not have documentation such as a sales contract to support the lender’s analysis.
- Eleven loan files related to other matters, such as verifying business industry and name, also did not have sufficient supporting documentation necessary for SBA to validate the lender’s analysis.