United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Resources, Community, and Economic Development Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1999-08-25 monographic deposited born digital 29 p. GA 1.13:RCED-99-249 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-99-249 P0b002ee180379a7c f:rc99249 DGPO 2010-08-12 2011-03-24 GAOREPORTS-RCED-99-249 machine generated eng fdlp REPORT GAOREPORTS-RCED-99-249 RCED-99-249 Business assistance Business development loans Loan defaults Government guaranteed loans Rural economic development Internal controls Loan repayments USDA Business and Industry Loan Program Letter Report RCED Pursuant to a congressional request, GAO provided information on the reasons for the losses being incurred by the Guaranteed Business and Industry Loan Program, focusing on the Rural Business-Cooperative Service's experience with business and industry guaranteed loans made during fiscal year (FY) 1994 through FY 1998 on which the Service paid losses.<p/>GAO noted that: (1) the level of losses associated with the Rural Business-Cooperative Service's Guaranteed Business and Industry Loan Program has been relatively low in recent years, compared with the size of the entire loan portfolio; (2) nevertheless, the Service did not follow its own requirements in making guarantees on loans to 18 of the 24 borrowers, thereby contributing to the losses; (3) specifically, the loans to these 18 borrowers did not meet the Service's guarantee requirements because 11 loans were missing feasibility studies--thoughtful evaluations of prospective borrowers' business proposals--that Service officials should have obtained, 3 others had feasibility studies with significant flaws, and 4 were questionable, given the business risk and the potential for loss of collateral; (4) for the remaining six borrowers, the information GAO obtained from the Service's loan files was insufficient to pinpoint problems; (5) Service field officials said that they had not obtained feasibility studies and other documentation when information provided by lenders and borrowers about the businesses and business plans appeared to provide an adequate basis for their guarantee decisions; (6) they also said that they have been operating in an environment that occasionally fosters lending to riskier businesses in order to achieve the program's goals of maintaining or increasing jobs in rural areas and that they occasionally feel pressure to use all of the loan guarantee authority allocated to their offices; (7) GAO's findings are similar to the results of internal quality control reviews performed by the Service of its guarantee decisions in 13 states during FY 1997 and FY 1998; and (8) through these reviews, the Service found that its offices had made guarantee decisions without feasibility studies and other required documents, such as business plans. https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-99-249/html/GAOREPORTS-RCED-99-249.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-99-249/pdf/GAOREPORTS-RCED-99-249.pdf GAO/RCED-99-249 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-99-249 Letter Report GAO/RCED-99-249; Rural Development: Rural Business-Cooperative Service; Business assistance Business development loans Loan defaults Government guaranteed loans Rural economic development Internal controls Loan repayments USDA Business and Industry Loan Program