WASHINGTON — Due to the recent relatively high credit risks spotted in SBA's Community Express loan program, which is designed for small businesses in disadvantaged communities, the agency has referred the matter to its Office of Inspector General for an audit.
"As we review the program's pilot status and make decisions about its future, we want to ensure that the program minimizes fraud, waste and abuse," SBA said today in a statement.
The Community Express pilot program assists small businesses owned by women, veterans and minorities that are located in underserved areas. Of the 337 Community Express lenders, 12 are credit unions, according to SBA.
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SBA said it met with major lenders in late February to discuss the program's cap concerns. Congress mandated that not more than 10% of the total number of loans guaranteed in any fiscal year may be awarded. The agency told major lenders that they had a per month loan cap starting in April and offered to help find alternative funding. Still, loan production continued to increase and in one instance exceed the cap. SBA said it reset targets based on the actual production and current 7(a) loan volume.
Community Express loans account for about 2% of total SBA loan volume. In fiscal year 2007, 7,000 loans, all under $35,000, were approved.
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