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U.S. SMALL BUSINESS ADMINISTRATION
OFFICE OF INSPECTOR GENERAL
COVID-19 Economic Injury Disaster
Loan Servicing Capability
Management Advisory
Report 25-16
May 29, 2025
Make a Difference
To report fraud, waste, or mismanagement, contact the U.S. Small Business Administration’s
Office of Inspector General Hotline at https://www.sba.gov/oig/hotline. You can also write to the
U.S. Small Business Administration, Office of Inspector General, 409 Third Street, SW (5th Floor),
Washington, DC 20416. In accordance with the Inspector General Act of 1978, codified as
amended at 5 U.S.C. §§ 407(b) and 420(b)(2)(B), confidentiality of a complainant’s personally
identifying information is mandatory, absent express consent by the complainant authorizing the
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:
May 29, 2025
To:
Kelly Loeffler
Administrator
From:
Sheldon Shoemaker
Deputy Inspector General
Subject:
COVID-19 Economic Injury Disaster Loan Servicing Capability (Report 25-16)
This management advisory presents the results of our review of the U.S. Small Business
Administration’s Coronavirus Disease 2019 Economic Injury Disaster Loan Servicing Center. We
considered management’s comments on the draft of this report when preparing the final report.
SBA management agreed with Recommendations 1 and 2, and both recommendations will be
closed upon issuance of this report.
We appreciate the cooperation and courtesies provided by your staff. If you have any
questions, please contact me or Andrea Deadwyler, Assistant Inspector General for Audits,
at (202) 205-6586.
cc: Wesley Coopersmith, Chief of Staff, Office of the Administrator
Ben Grayson, Deputy Chief of Staff, Office of the Administrator
Robin Wright, Chief Operating Officer, Office of the Administrator
Nathan Davis, Chief Financial Officer and Chief Risk Officer, Office of Performance, Planning,
and the Chief Financial Officer
Deborah Chen, Deputy Chief Financial Officer, Office of Performance, Planning, and the
Chief Financial Officer
Sharon Kirkley, Accountant, Office of Performance, Planning, and the Chief Financial Officer
Alex H. Wilson, Senior Policy Advisor, Enterprise Risk Management
Wendell Davis, General Counsel, Office of General Counsel
Michael Simmons, Attorney Advisor, Office of General Counsel
Anna M. Calcagno, Director, Office of Strategic Management and Enterprise Integrity
Thomas Kimsey, Associate Administrator, Office of Capital Access
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409 Third St. SW, Washington, DC 20416 • (202) 205-6586 • Fax (202) 205-7382
Peter Meyers, Senior Advisor, Office of Capital Access
Aaron Wright, Program Analyst, Office of Capital Access
Michelle Blank, Supervisory Criminal Investigator, Investigations Division
Malcolm Johnson, Jr., Supervisory Criminal Investigator, Investigations Division
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Contents
Background ..................................................................................................................................... 1
COVID-19 EIDL Servicing Center Structure ................................................................................ 2
Customer Service Team ....................................................................................................... 3
Intake Team ......................................................................................................................... 3
Risk Management and Congressional Team........................................................................ 4
Processing Team .................................................................................................................. 4
Liquidation/TOP Team ......................................................................................................... 5
Objective ......................................................................................................................................... 5
Results ............................................................................................................................................. 5
CESC Staffing and Servicing Action Cycle Times ........................................................................ 6
CESC Written Guidance and Performance Goals ........................................................................ 7
Hardship Accommodation Plan ................................................................................................. 9
Recommendations .......................................................................................................................... 9
Evaluation of Agency Response ..................................................................................................... 10
Summary of Actions Necessary to Close the Recommendation(s) .......................................... 10
Scope and Methodology................................................................................................................ 11
Tables
1 CESC Weekly Cycle Times from July 6 Peak to October 5 .................................................. 6
2 Average Processing Cycle Times — Week Ended October 5, 2024 .................................... 7
3 CESC Team Servicing Action Performance Goals ............................................................... 8
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Figures
1 CESC Organization Chart .................................................................................................... 3
2 CESC Processing Flow for Servicing Action Requests ......................................................... 4
Appendices
1 Agency Response ............................................................................................................ 1-1
1
Background
In response to the adverse economic effects caused by the Coronavirus Disease 2019 (COVID-19)
pandemic, Congress provided lending authority for the U.S. Small Business Administration (SBA)
to provide COVID-19 Economic Injury Disaster Loans (EIDL) to help businesses pay for expenses
that could have been met had the pandemic not occurred, including working capital needs such
as fixed debt payments and operating expenses such as payroll.
In addition to small businesses, private nonprofit organizations, and small agricultural
concerns, entities eligible for COVID-19 EIDLs included cooperatives, Employee-owned Stock
Ownership Plans (ESOP), and tribal business concerns with not more than 500 employees; sole
proprietorships with or without employees; and independent contractors affected by COVID-19.1
These entities could apply for 30-year loans up to $2 million.2
Because of the unique nature of COVID-19 EIDLs, SBA’s Office of Capital Access determined that
a servicing center solely focused on these loans would be best suited to service and address
them. As a result, in the first quarter of fiscal year 2023, the agency established a new COVID-19
EIDL Servicing Center (CESC) in Fort Worth, Texas.
From March 2020 through May 2022, SBA approved nearly 4 million COVID-19 EIDLs totaling
over $377 billion, a significant increase in the size of the pre-pandemic loan portfolio that was
less than 263,000 disaster loans. As of October 7, 2024, about 27 percent of the COVID-19 EIDLs
were charged off as uncollectible, 10 percent were paid in full, and 7 percent were cancelled
before full disbursement. The remaining 2.3 million COVID EIDLs are now in servicing at the
CESC. The volume of loans assigned to the CESC increased from about 2 million loans when we
began our review in April 2024 to about 2.3 million loans in October 2024.
1 Pub. L. No. 116-136 § 1110 (a)(2) the term “eligible entity” means – (A) a business with not more than
500 employees; (B) any individual who operates under a sole proprietorship, with or without employees, or as an
independent contractor; (C) a cooperative with not more than 500 employees; (D) an ESOP (as defined in Section 3
of the Small Business Act (15 U.S.C. 632) with not more than 500 employees; or (E) a tribal small business concern,
as described in Section 31 (b)(2)(c) of the Small Business Act (15 U.S.C. 657 a (b)(2)(c)) with not more than
500 employees.
2 Pub. L. No. 116-136 § 1110 (b) ELIGIBLE ENTITIES – During the covered period, in addition to small business
concerns, private nonprofit organizations, and small agricultural cooperatives, an eligible entity shall be eligible for
a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636 (b)(2)).
2
Routine loan servicing includes issuing monthly loan statements, collecting monthly payments,
and answering borrowers’ questions about their loans. COVID-19 EIDL servicing, however, is
significantly different than traditional loan servicing in that it includes a variety of complex
servicing action requests that are not common to private sector business loans.
Specifically, the CESC reviews and approves COVID-19 EIDL servicing requests that include, but
are not limited to:
• Hardship Accommodation – providing an eligible borrower with a reduced monthly
payment for up to 30 consecutive months.
• Subordination – subordinating SBA’s senior lien position in Uniform Commercial Code or
real estate collateral to a junior lender.
• Change of Ownership – consenting to a change in business ownership requested by the
borrower.
• Assumption – consenting to a change of legal structure or for another business to
assume a loan following sale of the business.
• Release of Collateral – releasing part or all of SBA’s security interest or lien on collateral
for a loan before the loan is paid in full.
Automated processes have allowed CESC staff to focus on these complex COVID-19 EIDL
servicing action requests. For example, SBA’s Unified Lending Platform generated monthly
statements for borrowers. Borrowers received an email informing them that a statement was
available for review in the MySBA Loan portal, and they could log in to view it. The portal, which
was launched in February 2023, allowed borrowers to perform some actions themselves (such as
view loan details, access loan statements, and make payments) and to message SBA to make
some servicing action requests (such as payoff statement and verification of mortgage requests)
through the portal’s message function.
COVID-19 EIDL Servicing Center Structure
The CESC has a Director, Deputy Director, and a Senior Supervisory Loan Specialist who oversee
operations. The CESC functional teams (Customer Service, Intake, Risk Management and
Congressional, Processing, and Liquidation/TOP) perform loan servicing and other actions. The
CESC also has five legal groups that review and approve high-risk servicing actions and prepare
legal documents (see Figure 1 below).
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Figure 1: CESC Organization Chart
Source: Office of Inspector General generated based on information provided by CESC management
Customer Service Team
The Customer Service Team handled phone calls transferred from a Customer Service Center in
Buffalo, New York. The Customer Service Center in Buffalo handled simple requests, such as
changes of address or phone number, and transferred phone calls with more complex servicing
action requests to the CESC Customer Service Team. A customer service staff member then
assisted with creating a servicing action request for the borrower and emailed the request to the
CESC Intake Team at COVIDEIDLServicing@sba.gov. The Customer Service Team’s goal was to
maintain an average call wait time of 4 minutes for 80 percent of the calls answered; however,
this goal had not been issued in written guidance. The CESC had employee performance
evaluation standards intended to ensure that the Customer Service Team answered borrower
calls promptly.
Intake Team
The Intake Team received all servicing action requests generated by the borrower via an email to
COVIDEIDLservicing@sba.gov or by the CESC Customer Service Team via an email. The Intake
Team had a goal of processing a minimum of 30 servicing actions (cases) per day. If the Intake
Loan Specialist could not fulfill the borrower servicing action request with the information
obtained, they contacted the borrower for more information or documentation. Once the Intake
Loan Specialist ensured that the borrower had provided all necessary information and there
4
were no hold codes3 attached to the loan, the Intake Loan Specialist created the loan servicing
action in the system and assigned the loan to the next available Loan Specialist from the
Processing Team. If there was a hold code on the loan, the request was forwarded to the Risk
Management and Congressional Team (see Figure 2).
Figure 2: CESC Processing Flow for Servicing Action Requests
Source: Office of Inspector General prepared graphic based on interviews of CESC management.
Risk Management and Congressional Team
The Risk Management and Congressional Team reviewed COVID-19 EIDLs containing agency and
non-agency hold codes. An agency hold code is added to a loan file when SBA is notified of possible
fraud, detects possible fraud or identity theft associated with a COVID-19 EIDL, or there is an asset
seizure made by law enforcement for that borrower. Non-agency hold codes pertain to loan
eligibility concerns (such as bankruptcy, etc.), which may or may not be indicative of fraud.
The Risk Management and Congressional Team evaluated the validity of hold codes placed on
loans. If the team determined that a hold code was valid, the requested servicing action was
denied. If the reason for the hold code was unsubstantiated or resolved, the team removed the
hold code so the servicing action could be performed by the Processing Team. A separate group
within the Risk Management and Congressional Team was responsible for responding to
congressional inquiries.
Processing Team
The Processing Team was responsible for approving all servicing actions. Although there were no
written processing time goals for each type of servicing action request, the team had a goal of
processing requests within 7 days of receipt.
3 A hold code is an identifier placed on a loan in the agency’s system for potential fraud or eligibility issues.
5
Liquidation/TOP Team
The Liquidation/TOP team liquidated collateral and performed required tasks when notified that
a borrower was deceased, had filed for bankruptcy, or had closed their business. The team also
managed servicing inquiries concerning the U.S. Department of the Treasury (Treasury) Cross-
Servicing Program (collection actions) and the Treasury Offset Program (TOP) for all COVID-19
EIDL and Paycheck Protection Program loans.4 This included recalling loans from Treasury back
to the CESC, processing refunds from offset if required, reviewing Credit Alert System (CAIVRS)
referrals for closure, and completing actions to return loans to regular servicing or liquidation
when needed. The Liquidation/TOP team’s goal was to respond to requests pertaining to
deceased borrowers, bankruptcies, or business closures within 48 hours.
We are currently conducting a separate review regarding collection efforts on COVID-19 EIDL
collateral and personal guarantors; therefore, we did not assess this team’s activities in this
review.
Objective
Our objective was to gain an understanding of SBA’s COVID-19 servicing processes and
determine its capability to service more than 2 million COVID-19 EIDLs.
Results
We found the CESC demonstrated that it was capable of servicing over 2 million COVID EIDLs
during the period of our review. The CESC appeared to be adequately staffed as evidenced by its
ability to complete over 23,500 servicing actions per month with an average processing time of
5.44 days per action. However, we identified opportunities for improvement related to formal
documentation and issuance of performance goals and written COVID-19 EIDL servicing
guidance. Formalizing goals and providing clear and current guidance will ensure accountability.
We also found that a large number of borrowers enrolled in the Hardship Accommodation Plan
(HAP), which increased the servicing workload for the CESC. However, SBA has since ended the
HAP program. As a result, we did not make any recommendations regarding this issue.
4 Federal and state agencies submit delinquent debt information to Treasury, Bureau of Fiscal Service. TOP
intercepts and withholds federal and state payments for individuals who owe delinquent debts to federal and
state agencies.
6
CESC Staffing and Servicing Action Cycle Times
As of October 8, 2024, the CESC had 1,492 staff members. CESC management projects that by
fiscal year 2028, its portfolio will reach a steady state and will require about 600 staff members
to service the anticipated portfolio of about 2 million COVID-19 EIDLs. The CESC monitored the
time it took to complete servicing actions and reallocated staff members among teams as
needed. From April through September 2024, the CESC processed an average of 23,561 servicing
action requests monthly. The average overall cycle time for the 6-month period was 5.44 days,
while the peak cycle time was 8.30 days. As of October 5, 2024, the CESC overall cycle time for
processing servicing action requests had dropped to 4.72 days (see Table 1).
Table 1: CESC Weekly Cycle Times from July 6 Peak to October 5
Week Ended
Completed
Actions
Intake
Cycle Time
(days)
Processing
Cycle Time
(days)
Overall Cycle
Time
(days)
7/6/2024
3,399
4.83
3.47
8.30
7/13/2024
5,909
4.88
2.97
7.85
7/20/2024
6,678
3.08
2.24
5.32
7/27/2024
5,961
4.38
2.42
6.80
8/3/2024
4,997
3.48
2.36
5.84
8/10/2024
5,608
2.02
2.35
4.37
8/17/2024
5,046
2.27
2.90
5.17
8/24/2024
6,119
2.07
2.79
4.86
8/31/2024
6,090
1.86
2.90
4.76
9/7/2024
3,626
2.72
3.03
5.75
9/14/2024
5,371
1.97
2.54
4.51
9/21/2024
5,100
1.74
3.30
5.04
9/28/2024
5,888
2.50
2.99
5.49
10/5/2024
6,332
1.85
2.87
4.72
Source: COVID-19 EIDL weekly cycle times for July 6 through October 5, 2024
Less complex servicing actions, such as payoff requests, verification of mortgage requests,
and refund requests, took less time to process than more complex requests such as loan
assumptions, change in ownership requests, and release of collateral. To illustrate, Table 2
below provides the average processing cycle times for various servicing actions.
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Table 2: Average Processing Cycle Times — Week Ended
October 5, 2024
Servicing Action Type
Average Processing Cycle Time
(days)*
Payoff requests
1.23
Verification of mortgage requests
1.34
Refund requests
1.45
HAP enrollment requests
5.76
Return of loan to regular servicing
6.39
Subordinations
6.96
Release of collateral
19.25
Change in ownership requests
21.16
Loan assumptions
24.67
* Some actions required the borrower to provide documentation. The total
processing cycle time included both the time it took for SBA to process the action
and for the borrower to provide documentation.
Source: COVID-19 EIDL cycle times — week ended October 5, 2024
CESC Written Guidance and Performance Goals
The Office of Capital Access reorganization plan, which was approved on December 23, 2022,
established the CESC. Accordingly, in coordination with the Office of Financial Program
Operations, the CESC was required to develop and implement plans, operating procedures,
and standards to effectively service the COVID-19 EIDL portfolio and communicate those efforts
to internal and external stakeholders. The CESC was also required to implement approved
operating procedures and standards to effectively monitor performance and strengthen and
improve program delivery and communication.
SBA’s Standard Operating Procedure (SOP) governing disaster loan servicing and collateral
liquidation became effective on September 1, 2015, about 5 years before the onset of the
COVID-19 pandemic occurred and SBA’s COVID-19 EIDL program was created; therefore, it did
not address COVID-19 EIDLs, and much of the SOP was not applicable to these loans.5 However,
SBA issued a Policy Notice on December 12, 2022, to provide additional guidance specific to
5 SOP 50 52 2, Disaster Loan Servicing and Liquidation, effective September 1, 2015.
8
servicing and liquidating COVID EIDLs. This Policy Notice was later updated August 5, 2024,
and is valid until August 1, 2025.6 The agency is in the process of updating the SOP to include
COVID-19 EIDLs.
SBA also created a Draft COVID EIDL Servicing Manual that was subsequently revised on various
dates. This manual provides the primary internal controls over COVID-19 EIDL servicing. During
the time of our review, the manual remained in draft form and had not yet been finalized or
approved by CESC management.
In addition, as depicted in Table 3, the CESC developed performance goals for each CESC team to
help facilitate timely processing. However, these goals were not in written guidance during the
time of our review.
Table 3: CESC Team Servicing Action Performance Goals
CESC Team
Performance Goal
Customer Service
Average call wait time of 4 minutes for 80 percent of calls answered
Intake
Process 30 servicing action cases per day (minimum)
Processing
Process servicing actions within 7 days of receipt
Liquidation/TOP
Respond to requests pertaining to deceased borrowers, bankruptcies, or
business closures within 48 hours
Source: CESC management officials
Similarly, as previously mentioned in this report, the CESC has informal goals for overall
processing cycle times. However, at the time of our review, management had not yet developed
formal, written processing performance goals for the specific servicing actions it routinely
performs. For example, there were no formal processing time goals for approving requests
related to HAP, subordination, change of ownership, assumption, or release of collateral.
The Government Performance and Results Act (GPRA) requires federal agencies to develop a
5-year strategic plan and to submit an annual performance plan and annual performance report
to Congress. It also requires agencies to engage in performance management tasks such as
setting goals, measuring results, and reporting progress. The GPRA Modernization Act, enacted
6 SBA Policy Notice 5000-857729, COVID EIDL Servicing and Liquidation, effective August 5, 2024.
9
in 2010, provides the foundation for holding federal agencies accountable for setting
performance goals and objectives that deliver results for the American taxpayer. By
formalizing written goals, SBA will enhance its ability to effectively monitor CESC operations.
Hardship Accommodation Plan
In November 2022, SBA implemented the HAP program to aid borrowers whose 30-month
payment deferment for COVID-19 EIDLs was ending. HAP was intended to help those who
had not yet fully recovered from the pandemic and may have been struggling to make their
monthly payments. HAP allowed borrowers to make reduced monthly loan payments for up to
30 months; however, the unpaid principal and interest that accumulated during HAP enrollment
would result in a balloon payment that would come due at the end of the 30-year note.
Since this program was implemented, approvals for HAP enrollment have represented the
largest volume of servicing actions performed at the CESC. We determined that as of October 7,
2024, there were 301,234 COVID-19 EIDLs enrolled in the plan, totaling $37 billion. This
represented about 13 percent of all loans in servicing and about 15 percent of the total dollars
in servicing. Although the CESC managed the significant increase in HAP servicing actions, a
continued increase in these actions could have challenged the CESC’s capacity. However, on
March 19, 2025, SBA discontinued offering HAP, and as a result, we did not make any
recommendations related to the HAP program.
Recommendations
To ensure appropriate processes are followed and to effectively monitor CESC operations, we
recommend the Administrator direct the Associate Administrator for the Office of Capital Access
to:
Recommendation 1: Finalize and approve procedures and standards included in the Draft
COVID EIDL Servicing Manual.
Recommendation 2: Publish and communicate written overall CESC performance goals for
effective monitoring of its operations in coordination with SBA’s Office of Financial Program
Operations.
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Evaluation of Agency Response
SBA management provided formal written comments that are included in their entirety in
Appendix 1. Management agreed with Recommendations 1 and 2 and has taken actions to
implement both. Because management’s actions satisfy the intent of Recommendations 1 and 2,
both recommendations will be closed upon issuance of this report.
Summary of Actions Necessary to Close the Recommendation(s)
The following section summarizes the status of our recommendations and the actions necessary
to close them.
Recommendation 1
To ensure appropriate processes are followed, we recommend the Administrator direct the
Associate Administrator for the Office of Capital Access to finalize and approve procedures and
standards included in the Draft COVID EIDL Servicing Manual.
Status: Closed
SBA management agreed with the recommendation. On April 10, 2025, the agency finalized the
COVID EIDL Servicing Manual after proper reviews and approvals by the appropriate SBA
officials. SBA’s actions to finalize the manual sufficiently meet the intent of our recommendation;
therefore, we are closing this recommendation upon issuance of this report.
Recommendation 2
To effectively monitor CESC operations, we recommend the Administrator direct the Associate
Administrator for the Office of Capital Access to publish and communicate written overall CESC
performance goals for effective monitoring of its operations in coordination with SBA’s Office of
Financial Program Operations.
Status: Closed
SBA management agreed with the recommendation. The agency included CESC servicing action
performance goals for fiscal year 2025 within its finalized COVID EIDL Servicing Manual, dated
April 10, 2025. In a follow-up statement to our inquiry regarding goals within the COVID EIDL
Servicing Manual, SBA officials clarified that they would update the manual in ensuing years to
reflect CESC performance goals for that year.
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Management’s inclusion of fiscal year 2025 performance goals in the finalized COVID EIDL
Servicing Manual, coupled with their plan to update the manual in ensuing years as appropriate,
sufficiently meets the intent of our recommendation. As a result, we are closing this
recommendation upon issuance of this report.
Scope and Methodology
This management advisory reports the results of our review of SBA’s CESC. The scope of our
inspection covered April through October 2024.
We reviewed federal laws, regulations, policies, procedures, internal memorandums, and other
written guidance pertaining to SBA COVID-19 EIDL servicing. We also interviewed SBA officials
assigned to the CESC to obtain an understanding of its operations. Additionally, we interviewed
supervisors responsible for managing the day-to-day operations of select functional groups
assigned to the CESC and obtained and reviewed reports containing performance metrics for
those groups. We did not interview supervisors assigned to the Liquidation/TOP Team because
the SBA Office of Inspector General was conducting a separate review of this team at the time of
our inspection.
SBA’s Office of Inspector General Technology Solutions Division integrated information from the
following tables provided monthly by the agency to produce a singular dataset:
• Disaster Loan Extract
• Disaster Additional Information
• Disaster Loan
• COVID EIDL Master Application ETRAN Loan Characteristics
• ETRAN Use of Proceeds
• CARES Hold Code
We then analyzed the dataset to determine the total number and percentage of loans in
servicing, delinquent in servicing, charged off the accounting records, paid in full, and canceled
for April 29 through October 7, 2024.
We also obtained data for all loans previously and currently enrolled in HAP as of October 2,
2024. We reviewed and analyzed the data to obtain a better understanding of HAP.
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We did not perform detailed transaction testing of the CESC’s servicing actions because we did
not identify significant concerns indicating that material errors would be found.
We performed this review in accordance with the Council of Inspectors General on Integrity and
Efficiency’s Quality Standards for Inspection and Evaluation. These standards require we plan
and perform a review to obtain sufficient and appropriate evidence to provide a reasonable basis
for our conclusions and observations based on our objective. We believe the evidence obtained
provides a reasonable basis for our conclusions and observations based on our objectives.
1-1
Appendix 1: Agency Response
U.S. Small Business Administration
Response to Draft Report
U.S. SMALL BUSINESS ADMINISTRATION
WASHINGTON, DC 20416
To:
Sheldon Shoemaker
Deputy Inspector General
U.S. Small Business Administration
From:
Jihoon Kim, Director, Office of Financial Program Operations, OCA
Date:
May 5th, 2025
Subject:
Response to OIG Draft Report – COVID-19 Economic Injury Disaster Loan
Servicing Capability (Project 24803)
In response to the adverse economic effects caused by the Coronavirus Disease 2019 (COVID-
19) pandemic, Congress provided lending authority for the U.S. Small Business Administration
(SBA) to provide COVID-19 Economic Injury Disaster Loans (EIDL) to help businesses pay for
expenses that could have been met had the pandemic not occurred, including working capital
needs such as fixed debt payments and operating expenses such as payroll.
Because of the unique nature of COVID-19 EIDLs, SBA’s Office of Capital Access determined
that a servicing center solely focused on these loans would be best suited to service and address
them. As a result, in the first quarter of fiscal year 2023, the agency established a new COVID-
19 EIDL Servicing Center (CESC) in Fort Worth, Texas.
From March 2020 through May 2022, SBA approved nearly 4 million COVID-19 EIDLs totaling
over $377 billion, a significant increase in the size of the pre-pandemic loan portfolio that was
less than 263,000 disaster loans. As of October 7, 2024, about 27 percent of the COVID-19
EIDLs were charged off as uncollectible, 10 percent were paid in full, and 7 percent were
cancelled before full disbursement. The remaining 2.3 million COVID EIDLs are now in
servicing at the CESC. The volume of loans assigned to the CESC increased from about 2
million loans when we began our review in April 2024 to about 2.3 million loans in October
2024.
Recommendation 1: Finalize and approve procedures and standards included in the Draft
COVID EIDL Servicing Manual.
SBA Response: SBA agrees to finalize procedures and standards in the Draft COVID EIDL
Servicing Manual.
Recommendation 2: Publish and communicate written overall CESC performance goals for
effective monitoring of its operations in coordination with SBA’s Office of Financial Program
Operations.
SBA Response: SBA agrees to publish and communicate written overall CESC performance
goals in the finalized COVID EIDL Servicing Manual.