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B-300248 1 (2004-01-15)

handle is hein.gao/gaocrptappy0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 B-300248 January 15, 2004 The Honorable Christopher S. Bond Committee on Small Business and Entrepreneurship United States Senate Subject: SBA's Imposition of Oversight Review Fees on PLP Lenders Dear Senator Bond: This legal opinion is a supplement to SmallBusiness Administration: Progress Made But Improvements Needed in Lender Oversight, GAO-03-90, our report to you on the Small Business Administration's (SBA) oversight of lenders who make SBA- guaranteed loans under section 7(a) of the Small Business Act, 15 U.S.C. § 636. As we reported, in implementing the section 7(a) program, SBA has increased its reliance on private lenders to provide small businesses with access to credit, in part through its Preferred Lender Program (PLP). Under the PLP, eligible lenders may make section 7(a) loans without prior SBA approval, but SBA is required by the Small Business Act to evaluate PLP lenders' participation in this program at least annually. We reported that it is essential that this SBA oversight be conducted effectively because of the great autonomy that PLP lenders exercise in making section 7(a) loans. In the course of evaluating SBA's oversight of PLP lenders, we learned that SBA has contracted with a private firm to assist in conducting these PLP lender oversight reviews. We also learned that the contractor is paid not from SBA's appropriated funds but rather from fees imposed by SBA on the lenders that the lenders pay directly to the contractor. We believed this arrangement raised questions about whether SBA was in compliance with certain appropriations restrictions, but because these legal issues were beyond the scope of our report and required additional factual investigation, we agreed with your staff to issue a separate legal opinion addressing them. We have now obtained the necessary information to analyze these issues and we are issuing this opinion as a supplement to our previous report.' As discussed in more detail below, we conclude that SBA is not authorized to fund its PLP oversight reviews by charging a fee to the PLP lenders and that doing so contravenes the Miscellaneous Receipts Statute. Furthermore, we conclude that SBA 'We have also discussed these issues with staff of the Senate Small Business and Entrepreneurship Committee in the 107t and 108 Congresses and the House and Senate Appropriations Committees, and we are providing copies of this opinion to those committees.

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