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CED-78-88 1 (1978-04-04)

handle is hein.gao/gaobaawxy0001 and id is 1 raw text is: DOCUMIT RESUM 05422 - 13B1005953) i um 3hould Lenders Assue Raro Responsibilities in the Small Business; administration 7(a) Loan Program? CUD-73-88; B-114835. April 4#, 1978. 4 pp. + 5 appendices (39 pp.). Report to Sen. Gaylord Nelson, Chairman@ Senate Select Committee on small Business; by Bluer 3. Staats Comptroller Gineral. Issue Area: Domestic Housing and Community Development (2100). Contact: C-ommunity and Economic Development Div. Budget Function: Community and 2eqional Development: Community Development (451). organization Concerned: Small Business administration. Congressional Relevance: Senate Select Cotmittee on Small Business. Sen. Gaylord Nelson. Authority: Small Business Act (15 U.S.C. 636(a)). Esurgency Livestock Credit Act of 1974 (P.L. 93-357g an amendef). tulral Development Act of 1972 (7 U.S.C. 1932). IndiaA Ifinancing act of 1974 t25 U.S.C. 1451). Public lorks, and Sconosic Development Act of 1965. 42 U.S.C. 3121. 30 U.S.C. 10. Under the 7(a) leaL orogram, the Small Business adainistration (SBA) makes or Vuarantees loans to small businesses to finance plant construction, conversion, or expansion; to purchase equipment, facilities, machinery* supplies, and materials; and to supply working capital. The feasibility of transferring reasonsibilityr for approving, servicing, and liquidating 7(a) guaranteed loans from the SBA to the private lenders participating in the program is being irvestiqated by the Congress. Findings/Conclusions: Zere vas no consensus among the private lenders interviewed concerning the feasibility vf transferring more 7(a) responsibilities to private lenders. concerns expressed by officials of private lending institutions, the SBA, or the kmerican Bankers Association regarding transferring 7(a) loan responsibilities to private lenders included: (1) current legislation does not permit Sal to delegate responsibility for committing federal funds to private lenders; (2) there is a potential for abuse and conflict of interest in permitti,,g private lenders to make decisions on loans guaranteed b the Federal Government; (3) eligibility requirements of the 7(a) loan progrem change frequently; (4) the Federal Government may lose its priority in baakrutt:y proceedings if nongovernmental agencies conduct liquidaiions; (5) private lender personnel are changing constantly and are unable to develop expertise in the 7(a) program; and (6) there m;Ay be increased adainstrative burden and cost to private lenders because of additional responsibilities. (Author/SC,

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