Audit of SBA's Microloan Program

This report presents the results of our audit of the Small Business Administration’s (SBA’s) Microloan Program.  We last conducted an audit of the SBA’s Microloan Program in 2009 and made several recommendations to SBA to improve its program oversight.  However, we determined that SBA management did not effectively implement all prior audit recommendations to improve oversight. 

Furthermore, SBA management did not conduct adequate program oversight to measure program performance and ensure program integrity.  In our review of a statistical sample of 52 microloan files, we found that data contained in SBA’s information system for 27 of the loans did not match the information included in the intermediaries’ loan files.  In addition, we found that intermediaries did not have sufficient documentation to support that it originated and closed 44 of the 52 microloans, or 85 percent, totaling approximately $910,000, in accordance with SBA’s requirements.  These deficiencies affect the reliability of the data reported to SBA by the intermediaries.

As a result, SBA’s ability to validate microloan data, conduct analyses across multiple programs and systems, and capture outcome-based measures was impaired, and there was no way to ensure program integrity or measure program success.  These internal controls over the Microloan Program are critical as Congress considers expanding the program.  The Office of Inspector General made four recommendations to the Associate Administrator for the Office of Capital Access to improve SBA's oversight of the Microloan Program.  SBA management agreed with the four recommendations.  SBA management’s proposed actions resolve all four of our recommendations.