Audit Report 15-06: Improvement is Needed in SBA’s Oversight of Lender Service Providers

On March 12, 2015, OIG issued Audit Report 15-06, Improvement is Needed in SBA’s Oversight of Lender Service Providers.  This report presents the results of our audit of the Small Business Administration’s oversight of lender service providers (LSPs) as loan agents.

LSPs are deeply involved in all phases of the loan life cycle, including originating, closing, servicing, and liquidating SBA business loans.  Since the number of LSPs and their agreements with lenders have significantly increased in recent years, SBA will need to improve its internal controls to ensure LSPs’ performance and conduct complies with SBA’s requirements.  We determined that SBA had not established a method to track LSP portfolio activities, and therefore could not adequately assess potential risks associated with LSP involvement in SBA loan programs.  In addition, SBA did not adequately investigate a number of potential violations of SBA policy by lenders and LSPs, such as a lack of approved agreements.

OIG recommended two actions that will help strengthen SBA’s oversight of LSPs and their relationships with SBA lenders.  The Agency agreed with OIG’s findings and recommendations, and has already taken some steps to improve its oversight of LSPs.