The Office of Inspector General is issuing this audit report to determine the U.S. Small Business Administration’s (SBA) efforts to collect on delinquent Coronavirus Disease 2019 (COVID-19) Economic Injury Disaster Loans (EIDL) with collateral and personal guarantors.
We found that SBA did not perfect its security interest on borrower deposit accounts, conduct post-default site visits, report all delinquent obligors to credit bureaus, or refer debts to the U.S. Department of Justice for litigation.
We recommended SBA conduct a study to determine the minimum loan dollar thresholds for performing site visits, implement policies and procedures based the results of that study, and ensure post-default site visits are conducted and available collateral is liquidated on delinquent COVID-19 EIDLs; verify that all delinquent COVID-19 EIDL obligors are reported to credit bureaus in a timely manner; and confer with the U.S. Department of Justice to establish a reasonable standard for referring delinquent COVID-19 EIDLs for litigation.
SBA management agreed with one recommendation and disagreed with two. Management’s planned action resolved Recommendation 2; however, management’s response did not resolve Recommendations 1 and 3.
