NFIB

SBA Urged to Make Changes to 7(a) Loan Oversight
01/13/2003

A new General Accounting Office report is urging the Small Business Administration to make changes to its 7(a) loans to help ensure that loans are made in accordance with taxpayersÆ best interests.

The GAO recommends that the SBA tighten its oversight of private-sector lenders of 7(a) loans. According to the GAO, the SBA currently does not provide "adequate assurance that lenders are sufficiently assessing eligibility and creditworthiness of borrowers." The government guarantees up to 85 percent of these loans.

The GAO also recommends that the SBA implement specific criteria for determining whether borrowers are eligible for 7(a) loans. The report said that current criteria are so broad that it hinders the assessment of eligibility decisions.

Sen. Kit Bond (R-Mo.) says that he will encourage the SBA to follow the new recommendations.

"With a slow economy and reduced funding for SBA programs, sound lending decisions to protect the taxpayers' stake in guaranteed loans are more critical than ever," Bond said in the American City Business Journals.