HomeOversight on SBA loan Program Is In Question
Tags: Commercial Loan Workout, SBA Commercial Loans, SBA loan workouts
A government report stated the Small Business Administration, aka SBA, is getting a failing grade for adequately monitoring lenders. The SBA has a estimated $91 billion loan program and each year the SBA guarantees more than 50K loans made by thousands of lenders.
The report mentioned the SBA hasn’t followed common industry standards in assessing and evaluating lenders who are most likely to make risky loans said the Government Accountability Office. 
Highlights of the Report:
- Despite improvements to the SBA’s off-site monitoring of lenders, the
agency does not independently assess the validity of the off-site
monitoring, the report said, nor does it effectively conduct on-site
reviews of lenders.
- The report found that the SBA does not use its off-site monitoring to
target lenders that require on-sight reviews. Rather, they review
lenders with the largest SBA-guaranteed loan portfolio, causing 97
percent of the lenders that the SBA’s off-site monitoring detected as
high risk to escape on-site review.
- The GAO recommended that the SBA use an independent party to validate
its off-site monitoring, revise its on-site review policies and
develop a strategy for on-site reviews that relies more on its lender
risk ratings. In response, the SBA said they agree with these
recommendations and has outlined steps to correct them.
On the other hand, the Obama is talking about shifting funds from Wall Street bailouts and throw a lifeline to small companies and is zooming in on tax cuts for small businesses hiring and investing as a means to spark job creation.
The controversial lip service from Obama about the tax incentives for small business to hire, has left small businesses on the details how to implement the idea.
For those who can qualify for a SBA, the fees have been temporally waived and the guaranteed potion of the loans could be has much as 90%. However the funding pool ran out two weeks ago and pending transactions are still waiting for funding. So where does that leave you? On a waiting list I guess, for now because the House and Senate have each talk about extending the funding, but of course haven’t yet come to agreement.
Most SBA loans have a personal Guarantor. There a required actions when a SBA loan is in default. So if you are affected by the economy or your customer needs have changed you need create a action plan how to get back on track. If you are prepared, and there is no other way to avoid the inevitable default, then call your lender, present your plan and see if they will work with you. They might surprise you one way or the other. Make sure you also have a good Chapter 11 attorney in your pocket, your last resort.
If you have any questions about SBA loans please don’t hesitate to call our SBA veteran of 15 years, Mr. Sanchez at 480-214-2310. SBA Loan Modifications is a option.
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