United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2003-04-30 monographic deposited born digital 21 p. GA 1.13:GAO-03-720T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-03-720T P0b002ee1803a3775 f:d03720t DGPO 2010-08-12 2011-03-24 GAOREPORTS-GAO-03-720T machine generated eng fdlp REPORT GAOREPORTS-GAO-03-720T GAO-03-720T Government guaranteed loans Lending institutions Loan accounting systems Risk management Small business loans SBA 7(a) Loan Program SBA Preferred Lenders Program Testimony A06759

The Small Business Administration (SBA) is responsible for oversight of its 7(a) loan program lenders, including those who participate in the Preferred Lenders Program or PLP. SBA delegates full authority to preferred lenders to make loans without prior SBA approval. In fiscal year 2002, preferred lenders approved 55 percent of the dollar value of all 7(a) loans--about $7 billion. Small businesses are certainly a vital part of the nation's economy. According to SBA, they generate more than half of the nation's gross domestic product and are the principal source of new jobs in the U.S. economy. In turn, SBA's mission is to maintain and strengthen the nation's economy by aiding, counseling, assisting, and protecting the interests of small businesses. Providing small businesses with access to credit is a major avenue through which SBA strives to fulfill its mission. Strong oversight of lenders by SBA is needed to protect SBA from financial risk and to ensure that qualified borrowers get 7(a) loans. SBA has a total portfolio of about $46 billion, including $42 billion in direct and guaranteed small business loans and other guarantees. Because SBA guarantees up to 85 percent of the 7(a) loans made by its lending partners, there is risk to SBA if the loans are not repaid. SBA must ensure that lenders provide loans to borrowers who are eligible and creditworthy to protect the integrity of the 7(a) program. Our statement today is based on the report we issued December 9, 2002, Small Business Administration: Progress Made but Improvements Needed in Lender Oversight (GAO-03-90). The report and our remarks will focus on our evaluation of (1) SBA's 7(a) lender oversight program and (2) SBA's organizational alignment for conducting oversight of preferred lenders and Small Business Lending Companies (SBLC). In addition, we will comment on SBA's latest response to our findings and recommendations. Our overall objective is to provide the Senate Committee on Small Business and Entrepreneurship with information and perspectives to consider as it moves forward on SBA reauthorization. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-03-720T/html/GAOREPORTS-GAO-03-720T.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-03-720T/pdf/GAOREPORTS-GAO-03-720T.pdf GAO-03-720T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-03-720T Testimony GAO-03-720T; Small Business Administration: Progress Made but Improvements Needed in Lender Oversight; Government guaranteed loans Lending institutions Loan accounting systems Risk management Small business loans SBA 7(a) Loan Program SBA Preferred Lenders Program Title 15 Section 636 15 U.S.C. 636