SBA requests funding to improve loan-processing system

The Small Business Administration’s fiscal 2009 budget requests a $12.2 million increase from 2008 to help build a new loan management and accounting system.

The project  —  which would spend a total of $16.8 million in 2009 — would replace outdated mainframe systems that are expensive to maintain and don’t interact with the agency’s other systems, SBA Administrator Steve Preston said at a Feb. 4 press briefing on the budget.

The new system would improve oversight of SBA’s $85 billion in loans and loan guarantees, the budget states. Preston said it would be the backbone on which SBA’s programs run.

The Office of Management and Budget has been watching the major project. It’s on OMB’s High Risk IT Project List.

The system is based on old code language and needs to be replaced, Preston said. “This proposal enables us to build on initiatives to improve operational efficiency,” Preston said.

The change is expected to take several years. Currently, SBA is developing specific functional requirements and completing the planning stage for contracting out the work.

Officials have said the economic recovery efforts stemming from Hurricane Katrina exposed problems with the SBA’s systems. The agency responds to disaster areas to assist local small businesses, but the agency could not process loan applications as quickly as officials would have liked.

They realized the agency relies heavily on mainframe-based loan processing systems that are inflexible and obsolete, officials have said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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