SBA's Certified Lenders Program Falls Short of Expectations
RCED-83-99
Published: Jun 07, 1983. Publicly Released: Jun 07, 1983.
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Highlights
GAO evaluated the effectiveness of the Small Business Administration's (SBA) efforts to streamline its loan delivery system by involving private lenders in the credit check process through the Certified Lenders Program (CLP). GAO also commented on whether SBA experience under the CLP warranted further delegation of authority to lenders under the Preferred Lenders Program (PLP).
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Small Business Administration | The Administrator, SBA, should terminate the CLP as it presently exists because participating lenders have not merited the priority processing afforded them due to incomplete submissions and inadequate credit analysis. |
Closed – Not Implemented
SBA disagreed with this recommendation and does not intend to terminate the CLP.
|
| Small Business Administration | SBA should direct its loan specialists to retain responsibility for performing thorough credit analysis, verifying all elements of a lender's analysis to ensure that loan applications meet SBA loan quality standards. |
Closed – Not Implemented
SBA disagreed with this recommendation, stating that this action is inconsistent with SBA efforts to delegate more loan processing activity to lenders and is continuing with the CLP.
|
| Small Business Administration | The Administrator, SBA, should develop a modified program to provide expedited loan processing to all SBA lenders who merit it through adherence to application packaging requirements. As part of this modified program, SBA should: (1) develop lender guidance in the form of a comprehensive checklist that will facilitate the assembly of complete and well analyzed loan packages by all lenders; and (2) apply preliminary screening procedures to all applications that would identify loan packages that are complete enough to qualify for expedited processing by SBA. |
Closed – Not Implemented
SBA has changed its lender certification criteria to emphasize quality rather than volume. However, SBA has not extended its expedited processing to any lender that submits complete packages and is not likely to do so.
|
| Small Business Administration | The Administrator, SBA, should terminate further consideration of the PLP. Recognizing, however, that SBA is conducting a limited pilot test of the program, SBA should monitor and evaluate the following aspects of the program before considering further expansion: (1) the quality of lender credit analyses when compared with SBA standards and requirements; and (2) the completeness of loan application packages. |
Closed – Not Implemented
The PLP is being implemented on a national basis as of September 30, 1984. SBA expects that the number of banks participating in the PLP to increase significantly in fiscal year 1985.
|
| Small Business Administration | SBA in its assessment of benefits, should compare any personnel time savings it expects from an expanded PLP against any additional efforts required in training lenders and monitoring their performance. |
Closed – Not Implemented
SBA believes that the PLP saves salaries and other expense, but it has not systematically measured or calculated the savings.
|
| Small Business Administration | SBA should not give any further consideration to the Preferred Lenders Pilot Program unless compelling evidence surfaces that the program would be viable on an expanded basis and the problems identified in this report can be resolved. |
Closed – Not Implemented
The PLP is being implemented on a national basis as of September 30, 1984. SBA expects that the number of banks participating in the PLP to increase significantly in fiscal year 1985.
|
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