EDA Needs to Improve Oversight of CARES Act Revolving Loan Funds to Ensure Loans Are Made to Eligible Borrowers and Used as Intended

Title Full

EDEDA Needs to Improve Oversight of CARES Act Revolving Loan Funds to Ensure Loans Are Made to Eligible Borrowers and Used as Intended

Date Issued

Wednesday, April 30, 2025

Submitting OIG

Department of Commerce OIG

Agencies Reviewed/Investigated

Department of Commerce

Components

Economic Development Administration

Report Number

OIG-25-019-A

Report Description

Our audit found that loan costs claimed by the RLF operators were not allowable, allocable, and reasonable. Specifically, we found that the four operators awarded 11 of the 19 loans (58 percent), totaling $4,020,050, to ineligible borrowers that did not meet the eligibility criteria in the operators’ respective RLF operational plan, and borrowers did not use the RLF funds for the purpose intended by the CARES Act. As a result, we are questioning $4,020,050 in loan funds. In addition, we found RLF operators with 20 percent or more loans that were delinquent, in default, or written off, and EDA did not identify this as an area of concern.

Report Type

Audit

Special Projects

Pandemic

Agency Wide

Yes

Number of Recommendations

Questioned Costs

$4,020,050

Funds for Better Use

Report updated under NDAA 5274

External Link

https://www.oig.doc.gov/reports/?entry=31232

Open Recommendations

This report has 4 open recommendations.

Recommendation Number	Significant Recommendation	Recommended Questioned Costs	Recommended Funds for Better Use
1.	Yes	$4,020,050	$0
1. We recommend that the Acting Assistant Secretary of Commerce for Economic Development Administration instruct the Director, Performance, Research and National Technical Assistance Division (or designee, including the Interim RLF Coordinator) to review and make a determination regarding the allowability of the $4,020,050 in questioned costs with the respective RLF operators’ loans that were made to ineligible borrowers and not used for their intended purposes.
2.	Yes	$0	$0
2. We recommend that the Acting Assistant Secretary of Commerce for Economic Development Administration instruct the Director, Performance, Research and National Technical Assistance Division (or designee, including the Interim RLF Coordinator), to take appropriate actions for all noncompliances identified, such as suspending or terminating the RLF operator’s grant if not in compliance with federal regulations and their RLF plans.
3.	Yes	$0	$0
3. We recommend that the Acting Assistant Secretary of Commerce for Economic Development Administration instruct the Director, Performance, Research and National Technical Assistance Division (or designee, including the Interim RLF Coordinator), to ensure EDA provides oversight of the RLF operators to ensure loans are made to eligible borrowers and used for their intended purposes.
4.	Yes	$0	$0
4. We recommend that the Acting Assistant Secretary of Commerce for Economic Development Administration instruct the Director, Performance, Research and National Technical Assistance Division (or designee, including the Interim RLF Coordinator), to develop procedures to ensure that the Risk Analysis System identifies areas of concern (such as high delinquent, default, or write off rates) and require that appropriate corrective actions are taken to address these areas of concern.