Finding Text
2022-001 ? INTEREST RATE GREATER THAN MAXIMUM ALLOWED Condition: The Organization provided a loan to a microborrow in an amount greater than $10,000. The Organization charged an interest rate of 8.5% on this loan, even though it was for an amount greater than $10,000. Criteria: The SBA sets maximum interest rates allowed to be charged on the loans to the microborrowers. For loans greater than $10,000 the maximum interest rate allowed is 7.75%. Cause: The Organization had a breakdown in internal controls when preparing this loan. Effect: A microborrower is being charged interest at a higher rate than allowed by the SBA. The Organization will likely have to do a loan modification for the borrower that lowers the interest rate and applies the overage paid by the borrower as a reduction to the principal balance. Recommendation: We recommend the Organization ensures that processes are in place to review loan terms and agreements prior to issuing the loans to ensure all compliance requirements are met. Response: The Loan Officer, along with the preparer of the loan documents, if different, will verify the interest rate authorized by underwriting is compliant before issuing closing documents. Both should be knowledgeable about the rules and regulations associated with the process and double check one another.