Small Business Administration

Better Oversight of SBIC Programs Could Reduce Federal Losses Gao ID: T-RCED-95-285 September 28, 1995

Although the Small Business Administration (SBA) has taken steps to reduce losses when firms fail, weaknesses in SBA's management and oversight of the Small Business Investment Company (SBIC) and Specialized Small Business Investment Company (SSBIC) programs continue to place SBA funds at risk. Corrective actions on examination findings are not pursued rigorously, financially troubled firms are not transferred to liquidation quickly, and overstated asset valuations are not detected promptly. GAO believes that these weaknesses result in losses to the government that could have been avoided. Also, given today's tight budget climate, GAO questions whether the stock repurchase program is the best use of federal funds to help small businesses. Finally, although GAO has found no evidence of efforts to restrict examinations, GAO believes that the organizational placement of the Office of Examinations in the same division that is responsible for promoting the program leaves it vulnerable to questions about its independence--especially in light of the programs GAO describes in this testimony.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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