Well now, let’s chat about something rather intriguing I stumbled upon recently – it’s an OIG review of loan recovery from the Small Business Administration (SBA) 7(a) Program. Just a heads up, if you’re remotely interested in finance or small businesses, you might find this a fascinating read! Let’s delve in, shall we?

The Lawscape and SBA 7(a) Loans

In the year 2014, the Office of Inspector General (OIG)had an interesting job to do. This involved setting up the High Risk 7(a) Loan Review Program. The main purpose behind this decision? To mitigate losses from SBA-backed loans and shore up the integrity and effectiveness of the 7(a) Program. Sounds like a grand task, eh?

The OIG perused eight loans that had defaulted too soon, raising more than a few eyebrows. And guess what they found? Some serious deficiencies present in three loans, valued at a whopping $3.2 million, which justified the denial of the SBA guarantee. Quite the discovery, wouldn’t you agree?

Identifying Issues and Seeking Solutions

The team at OIG meant business. They issued individual reports on each of these loans. All done to help SBA review and recover the money quickly. The reports mapped out all deficiencies in great detail. But they weren’t just playing detective, they were also the neighbourhood watch- they sniffed out suspicious activity in two purchased loans amounting to $1.4 million. Talk about being on the ball!

Shifting Ownership and Associated Risks

The SBA has often found itself grappling with risks associated with change-of-ownership transactions. The OIG had put together a report previously, wherein three out of five loans that were reported for potential fraudulent activity, were part of the SBA’s 2015 review for improper payments. Intriguingly, these improper payments weren’t identified by the SBA themselves. As per the OIG’s observation, it was largely due to SBA’s limited review of the original lender’s lending guidelines that the improper payments slipped through.

Highlighting Key Findings of the OIG Report

The report mentioned an interesting snippet of information – eight out of the total 15 loans reviewed had financed change of ownership transactions. Moreover, four out of these eight loans, amounting to a total of $2.8 million, either carried lender deficiencies or showed signs of suspicious activity. It seems that the SBA has its work cut out for itself in mitigating risks from change of ownership transactions.

Identifying and Countering Improper Payments

The OIG has established that the SBA has made strides in improving its 7(a) purchase review process, but still has much ground to cover when it comes to thwarting improper payments. The OIG discovered four loans that appeared in SBA’s 2014 or 2015 reviews for improper payments. This raised the proverbial red flag as it totaled up to $4.5 million of unidentified improper payments.

Reaping the benefits of Hiring Legal Assistance

This is where the Lawscape and I, Lawscape, come into the picture. We offer assistance and legal guidance to navigate these murky waters of SBA loan defaults. The group has an impressive track record of resolving SBA debts, defending against Treasury debts, and avoiding bankruptcy or foreclosures for clients, achieving millions of dollars in compromise and negotiated repayment agreements.

But guess what? It isn’t just about the money. It’s about supporting federal debtors in their legal dealings with various government bodies like the SBA Office of Hearings and Appeals, the Treasury Department, or the Bureau of Fiscal Service. So, if you’re seeking legal advice on these SBA matters, feel free to ring us at 212-460-5004!

You can access a complete copy of the OIG’s Report to Congress on the High Risk SBA 7(a) Loan Review Program. Dive in for a riveting read!