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Report File
Date Issued
Submitting OIG
Small Business Administration OIG
Other Participating OIGs
Small Business Administration OIG
Agencies Reviewed/Investigated
Small Business Administration
Report Number
22-25
Report Description

The Office of Inspector General (OIG) is issuing this management advisory to express concerns regarding the U.S. Small Business Administration’s (SBA) decision to end collections on purchased Paycheck Protection Program (PPP) loans with an outstanding balance of $100,000 or less.In anticipation of a significant number of delinquent PPP loans that lenders will submit for guaranty purchase, we began reviewing SBA’s process for approving PPP guaranty purchases. During our review, we identified concerns with SBA’s decision to end collections on these loans and found that expedited management action is needed to determine whether it is cost effective to pursue collections on these loans. Management attention is needed to ensure effective stewardship of billions of dollars in potential funds owed to taxpayers. Ending collections could incentivize ineligible borrowers to obtain loans valued at $100,000 or less in similar future loan programs. However, continuing to pursue collections will help ensure accountability from delinquent borrowers.We recommend the SBA Administrator stay the April 27, 2022 decision to end collections on purchased PPP loans with an outstanding balance of $100,000 or less until a comprehensive cost benefit analysis is conducted. We recommend the agency explore alternative means of collections for PPP loans with an outstanding balance of $100,000 or less. We also recommend conducting an initial and periodic cost benefit analysis on PPP purchase guarantees with comprehensive estimates to sufficiently assess whether the cost of collecting loans of $100,000 or less is more than the recovery amount and pursue collections based on results of the analysis. Management disagreed with recommendations 1 and 2 and agreed with recommendation 3.

Report Type
Review
Special Projects
Pandemic
Agency Wide
Yes
Number of Recommendations
3
Questioned Costs
$0
Funds for Better Use
$0

Open Recommendations

This report has 2 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
2 Yes $0 $0

Explore alternative means of collections for PPP loans with an outstanding balance of $100,000 or less.

3 Yes $0 $0

Conduct an initial and periodic cost benefit analysis on PPP purchase guarantees with comprehensive estimates to sufficiently assess whether the cost of collecting loans of $100,000 or less is more than the recovery amount and pursue collections based on results of the analysis.

Small Business Administration OIG

United States