SBA’s Actions to Address Forgiven PPP Loans Subsequently Flagged as Potentially Ineligible — SBA-OIG Report 25-12

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U.S. SMALL BUSINESS ADMINISTRATION 
OFFICE OF INSPECTOR GENERAL 
SBA's Actions to Address Forgiven 
PPP Loans Subsequently Flagged as 
Potentially Ineligible 
Management Advisory 
 Report 25-12 
April 23, 2025 

 
 
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release of such information. 
NOTICE: 
Pursuant to the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, 
Public Law 117-263, Section 5274, any nongovernmental organizations and business entities 
identified in this report have the opportunity to submit a written response for the purpose of 
clarifying or providing additional context as it relates to any specific reference contained herein. 
Comments must be submitted to AIGA@sba.gov within 30 days of the final report issuance date. 
We request that any comments be no longer than two pages, Section 508 compliant, and free 
from any proprietary or otherwise sensitive information. The comments may be appended to 
this report and posted on our public website. 

OFFICE OF INSPECTOR GENERAL 
U.S. SMALL BUSINESS ADMINISTRATION 
MEMORANDUM 
409 Third St. SW, Washington, DC 20416 • (202) 205-6586 • Fax (202) 205-7382 
Date: 
April 23, 2025 
To: 
Kelly Loeffler 
Administrator 
From: 
Sheldon Shoemaker  
Deputy Inspector General 
 
Subject: 
SBA’s Actions to Address Forgiven PPP Loans Subsequently Flagged as Potentially 
Ineligible (Report 25-12) 
 
The Small Business Administration’s (SBA) Office of Inspector General (OIG) is issuing this 
management advisory to bring to your attention concerns regarding SBA’s actions to address 
forgiven Paycheck Protection Program loans that SBA subsequently flagged as potentially 
ineligible using hold code 70 (potential clawback) but for which it had not completed its review 
to facilitate recovery of improper payments for loans deemed ineligible. It is imperative that SBA 
completes its review to promote program integrity and mitigate financial loss by seeking 
recovery of improper payments for ineligible loans. 
 
We considered management’s comments on the draft of this report when preparing the final 
report. SBA management agreed with both recommendations 1 and 2. 
We appreciate the cooperation and courtesies provided by your staff. If you have any questions 
or need additional information, please contact Andrea Deadwyler, Assistant Inspector General 
for Audits, at (202) 205-6586 or Teresa Gray, Director, Credit Programs Group, at (202) 845- 
4002. 
cc: Wesley Coopersmith, Chief of Staff, Office of Administrator 
 
 Ben Grayson, Deputy Chief of Staff, Office of Administrator  
 
Thomas Kimsey, Associate Administrator, Office of Capital Access  
 
Dianna Seaborn, Deputy Associate Administrator, Office of Capital Access 
 
Anna M. Calcagno, Director Office of Performance, Planning, and the Chief Financial   
Officer 
 
Alex H Wilson, Senior Policy Advisor-Enterprise Risk Management 
 
Nathan Davis, Chief Financial Officer and Chief Risk Officer of Performance, Planning, and 
the Chief Financial Officer 

409 Third St. SW, Washington, DC 20416 • (202) 205-6586 • Fax (202) 205-7382 
Deborah Chen, Deputy Chief Financial Officer, Office of Performance, Planning, and Chief 
Financial Officer 
Robin Wright, Chief Operating Officer, Office of the Administrator 
Wendell Davis, General Counsel, Office of General Counsel 
Michael Simmons, Attorney Advisor, Office of General Counsel  
Peter Meyers, Senior Advisor, Office of Capital Access 
Aaron Wright, Office of Capital Access & Office of Financial Program Operations Audit 
Liaison 
Lance Ausing, Audit Liaison/Program Analyst, Office of Capital Access 

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Contents 
Background .................................................................................................................................. 1 
SBA’s Review Process to Assess Loans Flagged with Hold Code 70.............................................. 2 
SBA May Not Seek Recovery of Ineligible PPP Loans Flagged with Hold Code 70 Valued at 
$25,000 or Less ............................................................................................................................ 4 
Recommendations ................................................................................................................. 6 
Evaluation of Agency Response .................................................................................................... 6 
Summary of Actions Necessary to Close the Recommendations ... Error! Bookmark not defined. 
Scope and Methodology .............................................................................................................. 9 
Use of Computer-Processed Data .......................................................................................... 9 
Appendix 1: Agency Response ................................................................................................... 1-1 

1 
Background 
On March 27, 2020, the President signed the Coronavirus, Aid, Relief, and Economic Security 
(CARES Act) into law to help the nation respond to and recover from the economic impact of the 
COVID-19 pandemic. Section 1102 of the CARES Act provided $349 billion to create the Paycheck 
Protection Program (PPP) under Section 7(a) of the Small Business Act. Subsequent acts provided 
additional funding for the PPP, increasing total funding to $813.7 billion. 
The unprecedented demand for PPP funds and the need to quickly award loans gave way to a 
pay and chase environment that relied heavily on post-payment reviews and resolving 
subsequent hold codes to ensure program integrity. The Small Business Administration (SBA) was 
required to issue regulations for PPP not later than 15 days from the date the CARES Act was 
enacted, and lenders were to disburse loans within 10 days of approving applications. SBA 
launched the program on April 3, 2020 — 1 week after the enactment.1 In response, SBA 
reduced or eliminated key upfront controls as it sought to expedite aid under the presumption 
that post-payment reviews would offset the risks posed by reducing controls and facilitate 
lenders quickly approving and disbursing funds. 
The PPP provided fully guaranteed loans for certain eligible businesses, individuals, and nonprofit 
organizations that could be forgiven if loan proceeds were used as required. As of May 24, 2024, 
SBA had forgiven over 10.5 million PPP loans, totaling over $750 billion. Of the 10.5 million 
forgiven loans, 37,938 loans, totaling approximately $4.6 billion, had an open hold code 70 
(potential clawback). A hold code is an identifier placed on a loan in the agency’s system to 
indicate there is a potential issue that needs to be resolved. SBA uses hold code 70 to flag 
forgiven PPP loans for which it subsequently suspects the borrower is potentially ineligible for 
the loan or for loan forgiveness. There are several ways SBA identifies issues that might indicate 
a need for a hold code 70 including SBA’s automated review process, referrals from SBA’s Office 
of Inspector General (OIG) audits, and investigations and referrals from other agencies. Issues 
that could trigger use of hold code 70 include, but are not limited to, potential fraud, misuse of 
program funds, or evidence that a borrower knowingly violated SBA policy. 
Post-payment reviews examine loans which have already been paid to the borrower and/or 
forgiven to verify that the loans were made and forgiven correctly. SBA may undertake a review 
1 20811 Federal Register Vol. 85, No. 73, April 15, 2020. 

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at any time at SBA’s discretion, however, the record retention window is 10 years from the time 
of forgiveness. SBA started using hold code 70 in July 2021. 
SBA’s guidance stipulates that all loans for which a forgiveness payment has been made and later 
determined to be potentially ineligible will be flagged using hold code 70 regardless of size; 
however, it also stipulates that if a forgiven loan is less than or equal to the $25,000 de minimis 
threshold, it may be considered immaterial, and recovery may not be prioritized. Of the 37,938 
PPP loans subsequently flagged with a hold code 70, there were 26,234 loans, totaling $454 
million, that were less than or equal to $25,000. 
SBA’s Review Process to Assess Loans Flagged with 
Hold Code 70 
SBA uses up to a four-step process to review PPP loans with a hold code 70. The first two steps 
consist of a Reviewing Loan Specialist and an Approving Loan Specialist determining if the 
identified issue is valid and if a clawback would be appropriate. The third step consists of a higher 
authority review (HAR) to assess the appropriateness of decisions in steps one and two and make 
a final loan decision about whether clawback should occur. In step four, HAR reviewers can 
escalate the review to the Office of Capital Access (OCA) to make the final decision about 
whether to clawback ineligible loans. SBA’s detailed four-step review process is outlined below: 
1. Reviewing Loan Specialists identify and verify ineligibility factors regarding borrower
eligibility and the loan and/or forgiveness amount during a manual review, provide a
detailed summary explaining the potential eligibility issue(s)and make a
recommendation to either clear hold code 70 or deny the loan and/or forgiveness
amounts in part or in full.
2. Approving Loan Specialists assess the appropriateness of the reviewer’s
recommendation and sufficiency of the supporting information. If the approver
concurs that hold code 70 should be cleared, the hold code is removed, and the
review process is complete. If the approver  concurs that the loan and/or forgiveness
amount should be denied in part or in full, or disagrees with the reviewer’s
recommendation, the review is escalated to  a HAR.
3. The HAR consists of separate reviews by a reviewing loan specialist and an approving
loan specialist (HAR reviewers). The reviewers assess the recommendation of the
initial reviewer and approver regarding whether initial eligibility and the loan and/or
forgiveness amount should be denied in part or in full.

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The HAR reviewers are authorized to make the final decision on all loan reviews they 
receive unless they further escalate the review to the OCA for the final decision.  
4. At their discretion and on a case-by-case basis, HAR reviewers escalate the review to
OCA to make the final loan or forgiveness review decision.
We found SBA had not completed its review process for the 37,938 PPP loans, totaling 
approximately $4.6 billion, that were flagged with a hold code 70 (potential clawback). 
Specifically, SBA only completed the first two steps of its four-step review process for loan 
and/or forgiveness amounts in which the reviewer and approver recommended the amount be 
denied in part or in full or for loans in which the approver disagreed with the reviewer’s loan 
review recommendation. It had not completed the required step three or step four (as 
necessary) to ensure review decisions were appropriate and finalized to facilitate recovery of 
improper payments for all loans deemed ineligible. 
SBA stated it had not completed the review process for loans flagged with a hold code 70 
because it lacked the necessary infrastructure to perform steps three and four, which consist of 
the HAR and as needed, OCA reviews, in its PPP loan review platform. The agency indicated it is 
working on competing priorities and could not state when the updates would be completed. In 
addition, SBA’s review plan guidance does not establish timelines for completing reviews of loans 
flagged with a hold code 70. Further, SBA has not established comprehensive policies and 
procedures to formalize how it will recover improper payments for loans deemed ineligible. 
The Payment Integrity Information Act of 2019 requires agencies to have a cost-effective means 
of identifying and recovering overpayments if they occur to ensure effective oversight of its 
programs. Reviews are mechanisms agencies use to assist in identifying overpayments across the 
federal government. In this case, they are essential to ensuring that PPP loans are directed to the 
businesses Congress intended and proceeds are used for the purposes Congress required, 
including the CARES Act’s central purposes of keeping workers paid and employed. Payments of 
concern for this review involved PPP loans that were forgiven for amounts of up to 100 percent 
of the loan. 
Incomplete reviews for the 37,938 potentially ineligible PPP loans, totaling approximately $4.6 
billion, may adversely impact program integrity and increase risk of financial loss and improper 
payments. The ability of an agency to collect on delinquent debts generally decreases as debts 

 
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get older.2 Again, SBA first used hold code 70 in July 2021. Swift action by management to 
identify and review potentially ineligible loans and to establish comprehensive policies and 
procedures to formalize how it will recover improper payments could increase the probability of 
recovering improper payments. 
SBA May Not Seek Recovery of Ineligible PPP Loans 
Flagged with Hold Code 70 Valued at $25,000 or 
Less 
 
SBA intended to rely on post-payment reviews to identify issues with initial eligibility and the 
loan and/or forgiveness amounts to offset the risks of weakened or eliminated upfront controls 
while expediting aid to businesses in urgent need of pandemic relief. However, according to 
program officials and the agency’s guidance, it may not seek recovery of disbursed and/or 
forgiven PPP loans, valued at $25,000 or less, flagged with a hold code 70, and later deemed 
ineligible. We identified 26,234 PPP loans (a subset of the 37,938 loans discussed above), each 
valued at $25,000 or less, totaling approximately $454 million, that were made to borrowers, 
forgiven, and subsequently flagged by SBA with a hold code 70. SBA stated it planned to review 
these loans to assess the appropriateness of the hold code 70; however, it may not seek 
recovery of any loans that they deem ineligible. Consequently, SBA may miss opportunities to 
recover identified improper payments for these loans. 
However, we found that the $25,000 de minimis threshold SBA is applying is related to an 
internal memorandum regarding forgiveness reviews and businesses being unable to reconcile 
PPP loan amount calculations with the exact expenditures eligible for forgiveness.3 SBA 
acknowledges the possibility of small discrepancies between PPP loan forgiveness requests and 
supporting documentation and assumes that costs for SBA, lenders, and borrowers to reconcile 
these discrepancies in the loan amount and forgiveness calculations would greatly exceed any 
potential reduction in SBA forgiveness payments.
 
2 U.S. Department of the Treasury, Managing Federal Receivables: A Guide Managing Loans and Administrative Debt, 
(March 2015). 
3 SBA Memorandum De Minimis Threshold for PPP Forgiveness Reviews, May 12, 2021. 

 
5 
To qualify for forgiveness, borrowers needed to: 
1. Maintain staffing and compensation levels during the covered period. 
2. Spend at least 60 percent of the loan on payroll costs. 
3. Use up to 40 percent of loan funds for eligible expenses such as business mortgage 
interest payments, rent, or utilities. 
4. Apply for forgiveness through their lender and submit the necessary documentation. 
However, what is in question regarding the 26,234 PPP loans with a hold code 70, valued at 
$25,000 or less, is the full loan amount and related loans, where applicable, that have been 
made to the borrower and/or the forgiveness amount, not a discrepancy between the 
borrower’s forgiveness request and supporting documentation. According to SBA’s guidance, 
applying the de minimis threshold for forgiveness paid was intended to maximize program 
integrity and optimize use of SBA’s loan review resources, considering the challenges posed by 
the volume of PPP loans and the statutory timeframe for completing reviews.4 The threshold 
would also increase efficiency by focusing on larger transactions with maximum recovery 
potential; however, the agency did not provide a cost analysis to support recovery costs. 
We believe SBA is inappropriately applying the above de minimis guidance intended to mitigate 
reconciliation costs for loans valued at $25,000 or less with losses associated with potential 
improper payments for the 26,234 PPP loans that were paid and forgiven. Further, SBA has 
already completed the first two steps of its four-step review process for these loans and 
identified them as potentially ineligible. 
31 Code of Federal Regulations, Section 901.10, states that agencies should conduct periodic 
comparisons of costs incurred and amounts collected to establish points at which costs of 
further collections efforts are likely to exceed recoveries. The Debt Collection Improvement Act 
allows agencies to suspend or end collections on claims of not more than $100,000 when it 
appears that the cost of collecting the claim is likely to be more than the amount recovered. 
However, the Payment Integrity Information Act of 2019 requires agencies to prevent improper 
payments from being made and to promptly detect and recover any improper payments that 
were made. 
Classifying these loans as de minimis and immaterial and not seeking recovery of loans deemed 
ineligible adversely impacts program integrity and increases risk of financial loss for the 26,234 
 
4 SBA Memorandum De Minimis Threshold for PPP Forgiveness Reviews, May 12, 2021. 

 
6 
loans, totaling approximately $454 million. These are missed opportunities to collect improper 
payments for loans deemed ineligible. In addition, not attempting to recover the improper 
payments could set a precedent for future programs and incentivize ineligible borrowers to 
obtain loans valued at $25,000 or less. Alternatively, pursuing recovery of improper payments 
will help ensure accountability from borrowers and promote program integrity. 
Recommendations 
To ensure borrowers met eligibility requirements and to identify loan funds that should be 
clawed back, we recommend the Administrator direct the Associate Administrator for the Office 
of Capital Access to:  
Recommendation 1: Complete reviews for the 37,938 loans, totaling approximately $4.6 billion, 
which includes the 26,234 loans, totaling approximately $454 million valued at $25,000 or less 
and subsequently flagged with hold code 70 to ensure borrowers met eligibility requirements 
and seek recovery of all ineligible loans. 
Recommendation 2: Develop criteria to formalize the policies and procedures for recovering 
improper payments for all loans subsequently flagged with hold code 70 and later deemed 
ineligible. 
Evaluation of Agency Response 
SBA management provided formal comments to the draft report, which we considered when 
preparing this final report.  Management agreed with recommendations 1 and 2 and their 
planned actions are sufficient to resolve both recommendations.  
In their response, management stated that SBA never classified loans flagged with a hold code 
70 as de minimis or immaterial and does not have a policy that stipulates a de minimis threshold 
of $25,000 or less for post-forgiveness reviews. SBA’s policy is to review loans of all sizes, 
including loans of $25,000 or less.  The agency has closed 4,417 loan reviews valued at $25,000 
or less and the reviews resulted in full approval. Management also stated the post-forgiveness 
reviews are ongoing.  
Management further stated that OIG’s description of SBA’s four-step review process for loans 
flagged with a hold code 70 was inaccurate. Management explained the various loan specialists 

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who conduct loan reviews and provided a description of the review process, stating theirs was 
more accurate. Management also stated that OIG’s reference to SBA only completing the first 
two steps of the four-step review process is not a fair representation as it implies the agency 
does not intend to complete steps three and four. They asserted that SBA has not closed any 
reviews that require steps three and four and, upon finalization of the remaining policy issues 
related to recovery, the agency will complete these steps to finalize denials and partial 
approvals. 
Regarding the classification of flagged loans as de minimis or immaterial, we disagree with 
management’s assertion that SBA provided information to OIG demonstrating that SBA has 
never classified loans flagged with a hold code 70 as de minimis or immaterial. When we 
requested SBA’s review policy for loans flagged with a hold code 70 and valued at $25,000 or 
less, the agency referred us to SBA Memorandum De Minimis Threshold for PPP Forgiveness 
Reviews, dated May 12, 2021, which established 5 percent of the PPP loan or $25,000, 
whichever is less, as the de minimis threshold. Management clarified that it planned to review 
loans valued at $25,000 or less, however it may not seek recovery of disbursed and/or forgiven 
PPP loans valued at $25,000 or less, flagged with a hold code 70, and later deemed ineligible, 
which is what we reflected in the report.  
Regarding management’s statement that our description of the four-step review process is 
inaccurate, our description aligns with management’s statements provided during the review, 
the explanation management provided in the agency’s formal comments, and 86 Federal 
Register 63437, which is the guidance management referred us to during the review. 
Notwithstanding, in the report, we updated our reference to “reviewer” and “supervisor” in 
steps one and two to “reviewing loan specialist” and “approving loan specialist” respectively, to 
align with the 86 Federal Register 63437.  
We further believe our finding that SBA only completed the first two steps of the four-step 
process is factual. At the time of our review, SBA had yet to complete steps three and four (as 
necessary) for the 37,938 loans we identified to ensure eligibility and forgiveness review 
decisions were appropriate and finalized to facilitate recovery of improper payments for all loans 
deemed ineligible. Also, during our review, SBA acknowledged lacking the necessary 
infrastructure to perform steps three and four.  See Appendix 1 for management's comments in 
their entirety.
Summary of Actions Necessary to Close the Recommendations 

8 
The following section summarizes the status of our recommendations and the actions necessary 
to close them. 
Recommendation 1 
Complete reviews for the 37,938 loans, totaling approximately $4.6 billion, which includes the 
26,234 loans, totaling approximately $454 million valued at $25,000 or less and subsequently 
flagged with hold code 70 to ensure borrowers met eligibility requirements and seek recovery of 
all ineligible loans. 
Status: Resolved 
SBA management agreed with the recommendation, stating that they will continue to review 
loans flagged with a hold code 70, including loans valued at $25,000 or less, and follow the 
agency’s recovery plan in effect at the time of completion of each review. Management 
estimates implementing its planned actions by September 30, 2025, assuming adequate 
resources are available.   
Management’s proposed action generally satisfies the intent of this recommendation. 
Management plans to complete its review of loans flagged with a hold code 70, including loans 
valued at $25,000 or less. Management stated they would follow the agency’s recovery plan in 
effect at the time of completion. 
This recommendation can be closed when SBA provides evidence that it completed reviews for 
the 37,938 loans flagged with a hold code 70, to ensure borrowers met eligibility requirements 
and it is seeking recovery of all ineligible loans. 
Recommendation 2 
Develop criteria to formalize policies and procedures for recovering improper payments for all 
loans subsequently flagged with hold code 70 and later deemed ineligible. 
Status: Resolved 
Management agreed with the recommendation, stating they are actively working with the new 
administration to develop a recovery plan. SBA plans to complete final action by June 30, 2025. 
Management’s proposed action satisfies the intent of this recommendation. 
This recommendation can be closed when SBA provides evidence that it developed criteria to 
formalize policies and procedures for recovering improper payments for all loans subsequently 
flagged with hold code 70 that were later deemed ineligible.

 
9 
Scope and Methodology 
This management advisory presents the results of our engagement on SBA’s actions to address 
forgiven PPP loans subsequently flagged as potentially ineligible. Our objectives were to assess 
SBA’s use of hold code 70 and the recovery of funds from ineligible borrowers. To answer our 
objectives, we reviewed laws, regulations, policies, and guidance pertaining to using and clearing 
hold code 70. Our scope of work covered 37,938 PPP loans, totaling approximately $4.6 billion, 
with hold code 70 as of May 24, 2024. 
We interviewed SBA officials from the OCA to gain an understanding of the four-step review 
process for clearing PPP loans with hold code 70, including the roles and responsibilities of the 
reviewers, supervisors, Higher Authority Review and OCA. We analyzed PPP loan data to identify 
the number and amount of forgiven PPP loans with an active hold code 70 (potential clawback). 
We also analyzed the 37,938 PPP loans to determine the number and amount of loans valued at 
or below the $25,000 de minimis threshold. 
This management advisory was prepared in accordance with OIG quality standards and the 
Council of the Inspectors General on Integrity and Efficiency’s Quality Standards for Inspection 
and Evaluation. These standards require that we adequately plan and perform the evaluation to 
obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our objectives. We believe the evidence obtained provides a reasonable 
basis for our conclusions and observations based on our objectives. 
Use of Computer-Processed Data 
We relied on data from SBA’s electronic Loan servicing system (E-Tran) to identify loans with 
hold code 70 to conduct our analysis. SBA provides hold code extracts to SBA OIG on a weekly 
basis. We performed limited testing on data extracts to ensure its reliability by verifying 
information in SBA’s Capital Access Financial System and SBA’s Paycheck Protection Platform. We 
also reviewed data reliability assessments from prior and ongoing SBA OIG engagements that 
used E-Tran data. We believe that the data used in this report are sufficiently reliable to support 
our findings. 
 

 
1-1 
Appendix 1: Agency Response 
 
U.S. Small Business Administration Response to Draft Report 

 
 
 
 
 
 
 
  
 
 
 
  
  
 
  
 
 
 
 
 
  
 
 
 
  
 
  
  
 
 
  
 
  
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
   
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
  
 
 
 
 
 
   
 
To: 
Sheldon Shoemaker 
Deputy Inspector General 
U.S. Small Business Administration 
From: 
Jihoon Kim 
Office of Financial Program Operations, Director 
Office of Capital Access 
Date: 
March 26, 2025 
Subject: 
Response to OIG Draft Report 
Subsequently Flagged as Potentially Ineligible. (Project 24001) 
We appreciate the role the Office of Inspector General (OIG) plays in working with management 
in ensuring that our programs are effectively managed, and for the feedback provided in this 
draft report. We offer the following comments to the draft and recommendations: 
SBA previously provided information to OIG demonstrating that SBA has never classified loans 
flagged with a hold code 70 as de minimis or immaterial and does not have a policy that 
stipulates a de minimis threshold of $25,000 or less for post forgiveness reviews 
to review loans of all sizes, including loans $25,000 or less. To date, SBA has closed the review 
for 4,417 loans valued at $25,000 or less as the review resulted in a full approval. 
Additionally, OIG has identified 37,938 loans in which the review was not completed. As SBA 
has previously explained, the post forgiveness review process is still on going and these loan 
reviews are in-process. These reviews will continue as resources allow, and SBA plans to work 
with the new administration to develop and implement a recovery plan for all ineligible loans. 

 
 
 
 
 
 
 
 
 
 
 
 
Recommendation 1  Complete reviews for the 37,938 loans, totaling approximately $4.6 
billion, which includes the 26,234 loans, totaling approximately $454 million valued at $25,000 
or less and subsequently flagged with a hold code 70 to ensure borrowers met eligibility 
requirements and seek recovery of all ineligible loans. 
SBA Response: SBA agrees. SBA will continue to review loans flagged with a hold code 70, 
including loans valued at $25,000 or less. SBA will follow the Agency's recovery plan in effect 
at the time of completion of each review. SBA estimates closing this recommendation by 
September 30, 2025, assuming adequate resources are available.   
Recommendation 2  Develop criteria to formalize the policies and procedures for recovering 
improper payments for all loans subsequently flagged with a hold code 70 and later deemed 
ineligible. 

 
 
 
 
  
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
   
SBA Response: SBA agrees. SBA is actively working with the new administration to develop a 
recovery plan. SBA estimates closing this recommendation by June 30, 2025.

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