Section 1112 Payments for SBA’s business loan programs

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Program level Payment Integrity results

Sponsoring agency: Small Business Administration

PROGRAM METRICS

$10,585 M

in FY 2025 outlays, with a

99.7%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    04/2020 - 03/2025


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-3.0

Causes

The root cause of all identified improper payments for this program was the lender’s inability to substantiate the payment request with sufficient supporting documentation at the time of review. In these cases, required documentation was incomplete, insufficient, or did not adequately support the amount requested, preventing the agency from fully validating the payment. No improper payments were attributed to eligibility errors, system limitations, fraud, or calculation errors.

No unknown payments were identified for this program. All sampled payments were traceable, reviewable, and attributable to specific payment requests submitted by lenders. The improper payments identified through statistically valid sampling were fully understood, documented, and resolved through recovery actions. Because the root cause was isolated to documentation sufficiency and did not reflect broader systemic or control failures, the scope of the issue was limited and appropriately addressed through targeted corrective actions.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $36.48 M
Amount of overpayments outside the agency's control $0.0 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $36.48 M

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $0.0 M

Prevention

The agency implemented targeted corrective actions to address the causes of improper payments identified through statistically valid post-payment sampling conducted for this temporary pandemic relief program. While the program was in effect, the agency also conducted payment file reviews of lender-submitted requests as part of ongoing operational oversight. When a payment request appeared excessive or potentially incorrect, the lender was contacted immediately to resolve the discrepancy and ensure the appropriate payment amount was ultimately disbursed.

In addition, the agency completed 100 percent of the loan payment reviews selected under the approved statistical sampling methodology. These reviews identified a limited number of overpayments representing less than one percent of total program outlays, indicating a low overall risk profile. Upon identification, the agency initiated recovery actions, and 100 percent of identified improper payments were fully recaptured, with recoveries completed between June and August 2025, mitigating the full financial impact of the improper payments.

Beyond recovery actions, the agency conducted lender-specific corrective outreach. Lenders associated with the identified improper payments were counseled and provided one-on-one training focused on the specific procedural and documentation deficiencies that led to the overpayments. These corrective actions were implemented while the program remained operational and were prioritized based on risk to prevent recurrence during the remaining life of the program.

Because the program has concluded and all funding has been exhausted, no further corrective actions are planned. The actions taken fully resolved the identified improper payments, reduced residual improper and unknown payment risk to a negligible level, and eliminated the need for additional corrective measures for this program.
The agency implemented a layered set of actions that were proportional to the low level and dollar value of improper payments identified for this temporary pandemic relief program. While the program was in effect, the agency reviewed lender-submitted payment requests prior to disbursement as part of ongoing operational oversight. When a payment request appeared excessive or could not be substantiated due to insufficient supporting documentation, the lender was contacted immediately to resolve the deficiency and ensure that only the appropriate payment amount was disbursed.

In addition to these pre-disbursement controls, the agency conducted statistically valid post-payment sampling and completed 100 percent of the loan payment reviews selected under the approved sampling methodology. The reviews identified a limited number of overpayments representing less than one percent of total program outlays, all of which were attributable to insufficient documentation to support the payment request. Upon identification, the agency initiated recovery actions and recaptured 100 percent of identified improper payments, with recoveries completed between June and August 2025.

To address the root cause, lenders associated with the improper payments were counseled and provided one-on-one training focused on documentation standards and substantiation requirements. These actions directly addressed the cause of the improper payments and were implemented while the program remained operational. Given the low improper payment rate, the limited dollar value of the deficiencies, and full recovery of identified overpayments, the corrective actions taken were appropriate and proportional, and residual improper and unknown payment risk has been reduced to a negligible level.

The agency implemented corrective actions that were directly aligned with the severity, rate, and dollar value of the improper payments identified through statistically valid sampling. One hundred percent of the loan payment reviews selected as part of the approved statistical sampling methodology were completed, resulting in the identification of a limited number of overpayments totaling less than one percent of total program outlays.

All identified improper payments were fully recaptured, with recoveries completed between June and August 2025, demonstrating that the corrective actions effectively mitigated the financial impact of the root causes. In addition, lenders associated with the improper payments were counseled and provided one-on-one training focused on the specific procedural and documentation deficiencies that contributed to the overpayments. These actions were effectively implemented and prioritized based on risk and ensured compliance for the remainder of the program’s lifecycle.

Because the program has ended, all funding has been exhausted, all sampled reviews have been completed, and 100 percent of identified improper payments have been recovered, no further corrective actions are warranted. Additional expenditures to further reduce improper or unknown payment risk would exceed any potential benefit.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Training Training

Eligibility element/information needed Description of the eligbility element/information
Financial The financial position or status of a beneficiary, recipient, or their family

Additional information

0 is entered as the reduction target because all funding for this program has been expended - this program was ended.

Reduction target

0 %

The agency has sufficient internal controls, human capital, information systems, and supporting infrastructure in place to reduce improper and unknown payments to a level at which further investment would not be cost-effective. This program was a temporary pandemic relief initiative, all authorized payments under the act have been disbursed, and all program funding has been exhausted. The improper payment estimate was less than 1 percent, and all identified improper payments were recaptured, demonstrating that existing controls were effective and proportionate to program risk. Given the program's closure and the low residual risk, additional expenditures to further reduce improper or unknown payments would exceed any potential savings and are not warranted.

No additional resources were requested in the most recent budget submission as all funding for this program has been fully exhausted. This program was a temporary pandemic relief initiative, and the scope of the review encompassed all payments made under the governing Act. The improper payment estimation was less than 1 percent, and all identified improper payments were fully recaptured. As a result, no additional resources or efforts are required to establish or maintain payment integrity for this program.

Although the Section 1112 Payment Program completed its final disbursement as of September 2024, accountability for payment integrity continues during the closeout phase through established oversight and quality assurance processes. The program monitors the quality and accuracy of all awards to ensure compliance with applicable statutory, regulatory, and program requirements. Supervisory review and quality assurance activities are used to assess documentation sufficiency, adherence to policy, and the proper administration of award funds. These processes support the identification and resolution of issues discovered during post-award review activities. When discrepancies are identified, the program takes appropriate actions in accordance with established procedures. This approach maintains accountability and program integrity.

$0 M