Mahoning Valley Manufacturer's FoundationNon-Profit

Finding Number: 2021-01 Federal Program: Administration Certified Development Company Loans (504 Loans) - CFDA No. 59.041 Statement of Criteria: Upon closing and disbursing funds, the Organization is required to review documents from loan holders as part of the review and evaluation. Statements of Condition: During discussions with Regional Business Assistance Corporation?s Executive Director, William Pazmino, he indicated there was an SBA portfolio review on August 25, 2021, of the 504 program during the audit period. During the SBA?s review, the following were noted as deficiencies. 1. Upon review of the SBA report, the SBA indicated the following documents were not included in the closing and disbursement of the loans; IRS Tax Transcripts, Standby Note/Standby Agreements and Hazard Insurance. The Review revealed three deficiencies since the previous review related to a lack of receipt and review of IRS tax transcripts. The Review revealed one deficiency since the previous review, from three applicable loans, related to the lack of a Standby Note / Standby Agreement in the file. The Review revealed one deficiency related to the lack of a Lender?s Loss Payable clause on hazard insurance at closing. No deficiencies were noted since the previous review. Four additional hazard insurance deficiencies related to Servicing and a related Repeat Finding are noted below. 2. Upon review of the SBA report, the SBA indicated that there was one intensive servicing deficiency related to the Liquidation Plan for a loan. This process includes the submission of a Liquidation Plan for if a loan defaults within 30 days of the purchase. Per the SBA, this is a repeat finding. 3. Upon review of the SBA report, the SBA indicated that RBAC did not adequately document and submit Wrap-up Reports to the SBA Commercial Loan Servicing Center, as required by 13 CFR ?120.540(a) and SOP 50 55, ch. 28, para. B. Four deficiencies were cited. Although the CDC?s Credit Policy includes requirements for documenting and submitting Wrap-up Reports to the SBA, the CDC does not follow these requirements in practice. The lack of adequate Wrap-up Reporting can hinder post charge-off collection efforts and result in subsequent losses for SBA. Statement of Cause: Documents required to be assembled/collected at the close and disbursement were not obtained and provided to the appropriate parties. Statements of Effect: The required documents to servicing the loans to help evaluate their risk levels were not provided to the SBA and retained by the CDC, which is required. Managements Response: Regional Business Assistance Corporation revised its policies, procedures, and internal controls to properly document Standby Notes and Standby Agreement repayment terms, Wrap-up Reports, as well as hazard insurance in accordance with SBA Loan Program Requirements. This was revised as of September 9, 2021. SBA Response: The SBA reviewed the corrective actions proposed above and indicated the corrective action plan responses are satisfactory as of November 26, 2021.

Finding Number: 2021-02 Federal Program: Administration Certified Development Company Loans (504 Loans) - CFDA No. 59.041 Statement of Criteria: As part of the continuing servicing of the loan after disbursement, the Organization is required to review servicing documents from loan holders as part of the evaluation. Statements of Condition: During discussions with Regional Business Assistance Corporation?s Executive Director, William Pazmino, he indicated there was an SBA portfolio review on August 25, 2021, of the 504 program during the audit period. During the SBA?s review, Hazard Insurance was noted as deficient for four loans tested by the SBA. 1. Upon review of the SBA report, the SBA indicated there were four instances of deficiencies related to loans without updated documentation of current hazard insurance. One deficiency related to a lack of current hazard insurance coverage, and three deficiencies were for the lack of a Lender?s Loss Payable clause on current hazard insurance. In total, there were five deficiencies occurring during closing and servicing, four of which occurred since the previous review; one of these related to a lack of current hazard insurance and four related to the lack of a Lender?s Loss Payable clause on hazard insurance. This was also noted by Hill, Barth & King, LLC during testing as of September 30, 2021, for two loans tested. Statement of Cause: Documents required to be received annually for loans that have been disbursed were not obtained and documented accordingly. Statements of Effect: The required documents to servicing the loans to help evaluate the loan risk levels were not properly evaluated and retained by the CDC, which is required. Managements Response: Regional Business Assistance Corporation revised its policies, procedures, and retrained their staff to make sure proper certificates of insurance are obtained in a timely manner. This was revised as of September 9, 2021. SBA Response: The SBA reviewed the corrective actions proposed above and indicated the corrective action plan responses are satisfactory as of November 26, 2021.