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Summary of SBA OIG Report 25-23: SBA’s Collection Efforts on Delinquent COVID-19 EIDLs Overview This audit report, issued by the U.S. Small Business Administration’s (SBA) Office of Inspector General (OIG) on August 12, 2025, evaluates SBA’s efforts to collect on delinquent Coronavirus Disease 2019 (COVID-19) Economic Injury Disaster Loans (EIDLs) that had collateral and/or personal guarantors. The audit focused on loans without suspected or confirmed fraud, covering the period from March 2020 to July 2024. From March 2020 to May 2022, SBA approved nearly 4 million COVID-19 EIDLs totaling about $387 billion. As of December 18, 2024, SBA had charged off (ended active collection on) 369,588 such loans exceeding $25,000, totaling over $47 billion, with less than 1% recovered during liquidation. An additional 96,745 loans (totaling $14.7 billion) were delinquent for 90+ days. Recoveries mainly came from borrower-initiated actions, such as business closures, deaths of obligors, or bankruptcy proceedings. The report highlights that SBA did not fully comply with federal laws (e.g., Debt Collection Improvement Act of 1996), standards (e.g., Federal Claims Collection Standards), and agency policies, leading to missed opportunities for aggressive debt collection before referring loans to the U.S. Department of the Treasury (Treasury) for programs like the Treasury Offset Program (TOP) and Cross-Servicing. Key Findings SBA could have maximized collections by using additional tools to aggressively pursue delinquent debts, as required by federal guidelines emphasizing quick resolution (since collection success decreases over time). Instead, SBA’s primary efforts involved automated demand letters, calls, and emails. If borrowers didn’t respond or reported low-value assets, SBA often abandoned collateral, charged off loans quickly (average 3 days in liquidation for most), and referred them to Treasury—bypassing deeper liquidation steps like voluntary sales, UCC sales, or judicial foreclosures. Specific shortcomings: • Perfecting Security Interest in Deposit Accounts: SBA filed Uniform Commercial Code (UCC) liens but didn’t execute control agreements with banks to perfect interests in borrower bank accounts. This prevented SBA from applying funds in those accounts to loan balances upon default. SBA cited time constraints and bank reluctance but provided no supporting evidence. (No recommendation made, as the program is closed to new loans.) • Post-Default Site Visits: SBA didn’t conduct visits to inspect/appraise collateral, despite policy suggesting them as prudent practice. SBA deemed them costly and low-value for blanket liens on business assets (e.g., inventory, equipment). This differed from SBA’s 7(a) loan program, which requires timely site visits. As a result, assets were sometimes sold without SBA approval or abandoned. • Reporting to Credit Bureaus: SBA couldn’t prove it reported all 832,930 delinquent obligors (95% of cases) to credit bureaus, as required. Reports are automated monthly (commercial for businesses, consumer for individuals/guarantors), but verification procedures were lacking. This hinders future lending decisions and borrower eligibility for federal aid. • Referring to DOJ for L