GAO finds gaps in SBA improper payment estimates and recovery audits

The Government Accountability Office said the Small Business Administration could improve how it estimates improper payments and recovers overpayments in several loan programs. The review covered fiscal years 2020 through 2024 for the Paycheck Protection Program and COVID-19 EIDL, 7(a) loan guaranty and standard EIDL programs.

GAO said SBA’s estimates met the Office of Management and Budget’s basic statistical requirements. However, SBA did not document the basis for key estimation decisions, including its assumption that small and large loans were equally likely to be improper. SBA also did not consider whether the PPP and COVID-19 EIDL estimates reflected known fraud risks.

For 7(a) and standard EIDL, SBA did not conduct recovery audits and had not reevaluated those decisions for 10 years and 15 years, respectively. Interest rates, collateral requirements and other factors affecting cost-effectiveness had changed over the past 10 to 15 years. SBA said it recovered some overpayments with regular loan payments.

GAO said SBA recovered less than 1 percent of the $616.2 million in overpayments it identified across its programs in fiscal year 2025, compared with 62 percent government-wide. SBA estimated about $2 billion in improper payments for programs GAO reviewed in 2025. Its Office of Inspector General said SBA was not compliant with the Payment Integrity Information Act of 2019, in part because of reliability issues affecting its estimates.

GAO said SBA could develop a process that triggers reevaluations of its overpayment recovery approach for 7(a) and standard EIDL. It also identified key factors for designing recovery audits and activities. The factors build on existing federal guidance and could help SBA assess its recovery options more fully and systematically.

GAO reviewed SBA’s methods for estimating improper payments and evaluating recovery audit cost-effectiveness. It interviewed six federal agencies selected for comparably high recovery rates and developed a list of key factors for identifying recovery options. The report was published Monday, 09 November 2026.