Finding Text
Program: U.S. Department of Housing and Urban Development (HUD) Mortgage Insurance - Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232) Assistance Listing #14.129. Condition: During 2022, the Home received a U.S. Small Business Administration loan without obtaining prior HUD approval. Criteria: The HUD regulatory agreement states there shall not be an encumbrance of any of the mortgaged property without prior written approval of HUD. Context: During testing of debt, it was noted that the Home entered into a loan agreement with the U.S. Small Business Administration. Cause: The Home experienced decreased occupancy, increased labor, benefits and supply expenditures as a lingering impact of the COVID-19 pandemic. It utilized the U.S. Small Business Administration loan as a means to cover operating expenses. Effect: Failure to obtain written approval from HUD constitutes noncompliance with the HUD regulatory agreement. Gross amounts loaned from the U.S. Small Business Administration amounted to $1,999,900 during 2022. Recommendation: Adhere to the HUD regulatory agreement in relation to obtaining prior written approval from HUD before encumbering the Project. Views of Responsible Official of the Auditee: The Home obtained the U.S. Small Business Administration loan as a prudent business decision to meet operating expenses.