Report 2016-133 Recommendation 10 Responses
Report 2016-133: SAFE-BIDCO: At Risk of Insolvency, It Needs Increased Oversight if It Is to Receive State Funding and Continue to Help Small Businesses in California Gain Financing (Release Date: April 2017)
Recommendation #10 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)
To ensure consistency of its reviews and approvals of loan applications, SAFE-BIDCO should establish a process to provide all loan committee members with its financing assistance policy.
6-Month Agency Response
SAFE-BIDCO did not provide a response for the reason noted below in the State Auditor's Assessment of Status.
- Estimated Completion Date:
- Response Date: December 2017
California State Auditor's Assessment of 6-Month Status: Resolved
SAFE-BIDCO was seized by the California Department of Business Oversight (Business Oversight) in September 2017 and is no longer in operation. Business Oversight in July 2017 required SAFE-BIDCO to prepare plans to liquidate the business. On September 15, 2017, citing our April 2017 audit in part, Business Oversight issued an order taking possession of SAFE-BIDCO and appointing an agent to assist in liquidating the entity. Business Oversight noted in its order many of the same concerns we identified in our audit, including SAFE-BIDCO's operating losses, declining capital, and declining loan production. In particular, Business Oversight found that SAFE-BIDCO had no viable plan for improving its sustainability or protecting its creditors. Business Oversight's action to liquidate SAFE-BIDCO has effectively resolved the need for our recommendations.
60-Day Agency Response
Once the Finance Policy is amended in September 2017, to incorporate the language required by item number 11 herein, copies of the amended policy will be distributed to all Loan Committee Members.
- Estimated Completion Date: October 2017
- Response Date: June 2017
California State Auditor's Assessment of 60-Day Status: Pending
In item 11, SAFE-BIDCO states that it will amend its Finance Policy to incorporate all statutory requirements and present the amended policy to its board for approval in September 2017.
Agency responses received are posted verbatim.