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Committee Examines SBA OIG’s Review of the Microloan Program

WASHINGTON—Today, Members of the House Small Business Subcommittees on Investigations, Oversight, and Regulations and Economic Growth, Tax, and Capital Access heard from agency officials from the United States Small Business Administration (SBA) on the SBA’s September 28, 2017 report entitled, “Audit of SBA’s Microloan Program.” 

“Ultimately, SBA is supposed to make sure that the Microloan Program—a program there to help the littlest of the little guys—is actually fulfilling its purpose. According to a recent audit from the SBA’s Office of Inspector General (OIG), however, the agency needs to improve its oversight over the Microloan Program,” said Subcommittee Chairman Trent Kelly (R-MS). “In fact, OIG found that SBA did not even implement all of the recommendations from the 2009 audit. Even though SBA said it would. That is not acceptable. SBA must do better.”

SBA Must Do Better

The Subcommittees examined the Small Business Administration’s Microloan Program based in the Office of Capital Access. The audit brought to light the inadequate oversight the SBA has been doing on the not-for-profit intermediaries who make last resort microloans to small businesses. Weak oversight undermines the purpose of the program, invites fraud and waste, and puts American taxpayer dollars at risk.

“SBA management did not effectively implement all prior audit recommendations to improve oversight. Furthermore, SBA management did not conduct adequate program oversight to measure program performance and ensure program integrity,” said Mike Ware, Acting Inspector General at the United States Small Business Administration in Washington, DC. “These internal control weaknesses were due to SBA not having an overall site visit plan, an adequate information system, available funding for system improvements, or clear Standard Operating Procedures (SOPs). Additionally, SBA management focused on output-based performance measures instead of outcome measures.”

Subcommittee Chairman Kelly (R-MS) said, “Mr. Manger [Associate Administrator of the Office of Capital Access at the SBA], you have a roadmap. The Office of the Inspector General told you exactly what you need to do to do this thing right. My hope is that the SBA will follow to the tee those recommendations or either dispute with this Committee or the Office of the Inspector General what you don’t agree with.”

Members of both Subcommittees reiterated the importance of adhering to the recommendations of the Office of the Inspector General in ensuring accountability and good stewardship of microloans.