As part of the usual oversight of any loan program, the SBA's Office of Inspector General said it is reviewing a sample of 300 Recovery Act loans.
Glenn Harris, counsel to the SBA OIG, confirmed with Credit Union Times that since April, the office has looked at about 300 loans including Recovery Act 7(a) loans using the 90% guaranty and those with fees waived as well as American Recovery Capital loans. Harris said the findings of the review will not be discussed until the OIG issues its reports. He did not provide a date of publication.
SBA Spokesman Michael Stamler said "from the outset, SBA and the Office of Management and Budget anticipated that there may be a higher rate of default in the ARC program than we traditionally see in our other SBA loan programs because the assistance is for businesses identified as experiencing financial hardship."
"Recovery Act provided funding to the inspector general for increased auditing of loan programs under the Act, so an audit could well be part of the planned auditing schedule," Stamler said.
Under the legislation that authorized the program, ARC loans were built for small businesses having difficulty meeting their debt costs but could demonstrate a likelihood of survival if they could help under ARC, Stamler said. The ARC loans, available up to $35,000 with deferred payments, have a 100% guarantee from SBA, rather than the 90% authorized for other SBA-guaranteed loans.