SBA Lender and Loan Oversight

Largely because the SBA relies on lenders to make the loans it guarantees, the agency needs a loan and lender monitoring capability to analyze its overall portfolio of loans, its individual lenders, and their portfolio of loans. In 1998, the White House and Congress suggested the SBA adopt more rigorous risk-management techniques as well as improve their lender and loan reviewing processes. Thus, in FY 1999, the SBA established an Office of Lender Oversight— later renamed the Office of Credit Risk Management— to coordinate and centralize portfolio risk management and lender review within the agency. Although they worked continuously to improve their oversight capabilities, after three years, the SBA was forced to abandon this in-house project. [1] [2]

In 2003, SBA's office of Credit Risk Management hired Dun & Bradstreet, a company that provides commercial data to businesses on credit history, business to business sales, risk exposure, and a variety of other services. Dun & Bradstreet helped SBA start several programs, including credit risk management, insight into individual loans and lenders, early warning predictive scores, and other features that allow agency leaders to better measure and manage the risk in their small business loan programs. A June 2004 GAO Report found that "although the SBA obtained a useful service, it does not have comprehensive policies needed to implement best practices and address its needs as an agency with a public mission, especially regarding its need to use enforcement actions to address noncompliance. Additionally, the SBA did not have a contingency plan in the event that the Dun & Bradstreet service was discontinued." The 2004 report suggested the SBA:

1. Consider the applicability of best practices in developing policies for using the loan monitoring service;
2. Develop enforcement policies to address noncompliance among lenders;
3. Ensure adequate resources are devoted to developing policies;
4. Explore using the service elsewhere in the agency;
5. Develop contingency plans in the event that the Dun & Bradstreet contract is discontinued.

[3] [4]

While their efforts since the 1999 and the 2004 GAO report are to be commended, the SBA still has incomplete and inaccurate loan agent discourse data. A September 2015 OIG report found these inaccuracies are likely to hinder oversight efforts. The SBA claims that their progress in implementing a robust loan agent registration and monitoring system has been limited by their lack a statutory authority to collect personal information from loan agents that would uniquely identify them. The SBA only began recording and tracking loan agent information in a searchable format in 2010. [5].