SBA’s Actions to Improve the Management of the 7(a) Loan Guaranty Approval Process

This report presents the results of our verification inspection of a June 2014 Office of Inspector General (OIG) audit of SBA’s 7(a) loan guaranty approval process, performance audit report 14-13. The review determined significant opportunities existed to improve the management of the 7(a) loan guaranty approval process to mitigate its risk of loss and protect the integrity of the program. Specifically, the audit found that processing center management emphasized quantity over quality for 7(a) loan reviews, and processing center loan specialists were not provided adequate guidance and training to conduct their 7(a) loan review activities.

A verification inspection is a short review that focuses on closed recommendations from prior OIG reports. This inspection focuses on recommendation 1, which recommended that SBA revise management reports to measure quality against established targets, ensure production credit is given for all loan review actions, and promote compliance with SBA requirements.

We found SBA effectively implemented recommendation 1 by revising its management reports to include key factors for measuring the quality and complexity of loan reviews to promote compliance with SBA requirements.