Report 2016-133 Recommendation 11 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 #11 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)
To make certain that loan committee members are aware of statutory requirements, SAFE-BIDCO should revise its financing assistance policy to ensure that it contains all required language, including emphasizing consideration of applications that will increase employment of disadvantaged, disabled, or unemployed persons or increase employment of youth residing in areas of high youth unemployment and delinquency.
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
The Finance Policy will be amended to incorporate all language required by financing sources (now incorporated by reference) and other statutory requirements not already included. Said policy will be distributed to Loan Committee members after the review and approval of the Board of Directors at the September 2017 Board meeting.
- Estimated Completion Date: October 2017
- Response Date: June 2017
California State Auditor's Assessment of 60-Day Status: Pending
Agency responses received are posted verbatim.