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Small Business: Improving SBA Loan Collateral Liquidations Would Increase Recoveries

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Report Type Reports and Testimonies
Report Date Dec. 19, 1991
Report No. RCED-92-5
Subject
Summary:

The Small Business Administration (SBA) has the authority to provide assistance to new or existing small businesses through direct (government-funded) loans or guaranteed loans made by private lenders. With almost $11.5 billion in outstanding loans, the general business loan program is SBA's largest financial assistance effort. However, more than $1.2 billion of these loans are in liquidation. SBA is experiencing substantial losses in liquidating loans because (1) collateral is insufficient to cover the losses when loans are liquidated and (2) SBA does not maximize recoveries on existing loan collateral. This report provides an overview of SBA's liquidation of loan collateral for defaulted loans, including losses on liquidated loans; the adequacy and valuation of collateral; and collateral recovery efforts by SBA and private lenders.

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