Finding Text
Condition: One Revolving Loan Fund (RLF) loan issued during the year ended September 30, 2022 of eight tested did not have a supporting loan agreement. Criteria: The standard loan documentation for RLF loans must include, at a minimum, the: (1) loan application, (2) loan agreement, (3) board of director?s meeting minutes approving the RLF loan or appropriate substitute documentation if board approval is not required, (4) promissory note, (5) security agreement(s) if applicable, (6) deed of trust or mortgage if applicable, (7) agreement of prior lien holder if applicable, and (8) evidence demonstrating that credit is not otherwise available on terms and conditions that permit the completion or successful operation of the activity to be financed (13 CFR section 307.11(a)(1)(ii)). Cause: While all other standard loan documentation for the RLF loans tested was maintained and the Authority has review and approval procedures surrounding completing and maintaining standard loan documentation, one loan agreement was missing from the supporting documentation of eight loans tested. Effect: Standard loan documentation is not complete and this may hinder collection efforts in the event of default. Questioned Costs: $0 Recommendation: Ensure all standard loan documentation is maintained. Consider utilizing a checklist for each loan file that lists all required documentation as part of the Authority?s established loan file review process. The checklist should be completed and signed by the Chief Executive Officer and Senior Loan Specialist to document completion and review of the loan file prior to closing.