In July 2004, Inc.com reported that … monitoring system that can help it oversee a portfolio of $45 billion in loans. Now it needs to lay out exactly how it is going to use it, says Senator Olympia Snowe, chair of the Senate Committee on Small Business and Entrepreneurship. In 2003, the Small Business Administration (SBA) awarded a contract to Dun & Bradstreet to provide the agency with a loan monitoring service to help it assess and manage risk associated with its borrowers and lenders. The GAO reviewed the service, at Senator Snowe’s request, and reported that the service was on par with those used by private sector lenders, but that the SBA did not have policies in place to use it to fulfill the agency’s needs. Snowe pushed the SBA to develop those policies.
SBA’s new Disaster Credit Management System (DCMS) was launched in November 2004 and faced its first critical test in the fall of 2005, when the nation was hit with some major hurricanes in 2005, including Katrina, the costliest hurricane with an estimated cost of $35 billion. SBA was (and still is) swamped with loan applications as is the Small Business Administration Disaster Credit Management System Support.
In July 2006, GAO issued a report evaluating the following:
Factors affecting SBA’s ability to provide timely disaster assistance
Actions SBA took after the disasters to improve its response to disaster victims (see Report GAO-06-860 at http://www.gao.gov/new.items/d06860.pdf)
Use the above links, the material in the textbook, Argosy University online databases, and the Web to address the following questions:
What was wrong with the existing loan management system and why did SBA decide to replace it in 2004?
In what other ways could the agency use information systems to improve the process of loan application, approval, and maintenance?