Small Business Administration (SBA).
Direct final rule.
The Consolidated Appropriations Act, 2001 (“2000 legislation”) was enacted on December 21, 2000. It made several changes to SBA's microloan program, increasing in several places the dollar amounts used to define aspects of the program. Because there is no need for SBA to interpret the statutory changes, SBA is implementing them with this direct final rule.
Unless adverse comment is received prior to October 15, 2001, the rule will become effective as a final rule on November 14, 2001. If adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.
Send written comments to Jody Raskind, Chief, Office of Microenterprise Development, U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Jody Raskind, (202) 205-6497.End Further Info End Preamble Start Supplemental Information
Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) (“Act”) sets forth the statutory rules with respect to SBA's microloan program which authorizes SBA to assist small businesses that need small amounts of financial assistance. Under the program, SBA makes direct and guaranteed loans available to intermediaries who use the proceeds to make microloans to eligible borrowers. SBA is also authorized to make grants to intermediaries and other qualified nonprofit entities to be used for marketing, management, and technical assistance.
Section 210 of Pub. L. 106-554 (“2000 legislation”) amended section 7(m) of the Act, and this direct final rule implements the statutory changes by conforming SBA's regulations to the statutory changes. Thus, SBA is amending § 120.701 of its regulations to define a Microloan as a loan of not more than $35,000 (formerly $25,000) by an intermediary to a small business. The definition of Specialized Intermediary is changed to mean an intermediary that maintains a portfolio of microloans averaging $10,000 (up from $7,500) or less. SBA is amending § 120.702 of its regulations to reflect that an organization, to become an intermediary, must have made and serviced short-term fixed rate loans of not more than $35,000 (up from $25,000) to newly established or growing small businesses for at least one year.
SBA is amending § 120.704 of its regulations so that in selecting intermediaries for the microloan program, SBA will give priority to applicants that maintain a portfolio of loans averaging $10,000 (up from $7,500) or less. SBA is amending § 120.705 so that a specialized intermediary would have to maintain a portfolio of microloans averaging $10,000 (up from $7,500).
SBA is amending § 120.707(b) of its regulations to reflect that an intermediary may not make a microloan of more than $20,000 (up from $15,000) unless the borrower demonstrates that it is unable to obtain credit elsewhere. In addition, § 120.707(b) is amended to show that an intermediary may not make a loan of more than $35,000 (up from $25,000), and no borrower may owe an intermediary more than $35,000 (up from $25,000) at any one time. SBA is amending § 120.707(c) to reflect the statutory change which increased the dollar amount to $10,000 (up from $7,500).
SBA is amending § 120.714(a) of its regulations so that any eligible nonprofit entity that is not an intermediary may apply to SBA for a grant for the purpose of assisting eligible businesses to obtain private sector financing in amounts of $35,000 (up from $25,000) or less. SBA is amending § 120.714(b) to reflect the statutory changes which increased the (1) number of grants it can make to non-Intermediaries each year to 55 (up from 25), and (2) amount of the grant to $200,000 (up from $125,000).Start Printed Page 47878
SBA is publishing this regulation as a direct final rule because SBA believes the rule is noncontroversial since it is merely implementing changes required by P.L. 106-554 without any need for interpretations by SBA. As such, SBA believes that this rule will not elicit any significant adverse comment.
Compliance With Executive Orders 13132, 12988, and 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork Reduction Act (44 U.S.C., Ch. 35)
For the purposes of Executive Order 13132, SBA has determined that this direct final rule has no federalism implications warranting preparation of a federalism assessment.
This direct final rule does not constitute a “significant” regulatory action under Executive Order 12866 and therefore, was not reviewed by the Office of Management and Budget.
SBA certifies that this direct final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rule is merely implementing changes required by Pub. L. 106-554 without any need for interpretations by SBA. Any impact on small entities results from the 2000 legislation and not from this rulemaking.
SBA certifies that this final rule does not impose any additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., chapter 35.
For purposes of Executive Order 12988, SBA certifies that this final rule is drafted, to the extent practicable, to accord with the standards set forth in paragraph 3 of that Order.Start List of Subjects
List of Subjects in 13 CFR Part 120End List of Subjects Start Amendment Part
For the reasons set forth above, SBA amendsEnd Amendment Part Start Amendment Part
1.The authority citation for part 120 continues to read as follows:End Amendment Part
2. Amend § 120.701 by revising paragraphs (f) and (i) to read as follows:
(f) Microloan is a short-term, fixed interest rate loan of not more than $35,000 made by an Intermediary to an eligible small business.
* * *
(i) Specialized Intermediary is an Intermediary which maintains a portfolio of Microloans averaging $10,000 or less.
3. Revise § 120.702(a)(1) to read as follows:End Amendment Part
(a) * * *
(1) Have made and serviced short-term fixed rate loans of not more than $35,000 to newly established or growing small businesses for at least one year: and
4. Revise § 120.704(b) to read as follows:End Amendment Part
(a) * * *
(b) Preference for organizations which make very small loans. In selecting Intermediaries, SBA will give priority to applicants which maintain a portfolio of loans averaging $10,000 or less.
5. Amend § 120.705 by revising the second sentence to read as follows:End Amendment Part
* * * An Intermediary qualifies as a Specialized Intermediary if it maintains a portfolio of Microloans averaging $10,000 or less. * * *
6. Amend § 120.707 as follows:End Amendment Part
a. By revising the second and third sentences of paragraph (b); and
b. Revising paragraphs (c)(1) and (c)(2).
(b) * * * An Intermediary may not make a Microloan of more than $20,000 unless the borrower demonstrates that it is unable to obtain credit elsewhere at comparable interest rates and that it has good prospects for success. An Intermediary may not make a Microloan of more than $35,000, and no borrower may owe an Intermediary more than $35,000 at any one time. * * *
(c) * * *
(1) On loans of more than $10,000, the interest rate charged on the SBA loan to the Intermediary, plus 7.75 percentage points; and
(2) On loans of $10,000 or less, the interest rate charged on the SBA loan to the Intermediary, plus 8.5 percentage points.
7. Amend § 120.714 as follows:End Amendment Part
a. By revising the first sentence of paragraph (a); and
b. By revising paragraph (b).
(a) Grant procedure for non-Intermediaries. Any nonprofit entity that is not an Intermediary may apply to SBA for a grant to provide marketing, management and technical assistance to low-income individuals for the purpose of assisting them in obtaining private sector financing in amounts of $35,000 or less. * * *
(b) Number and amount of grants. In each year of the Microloan Program, SBA may make no more than 55 grants to non-Intermediaries for terms of up to five years. A grant may not exceed $200,000.
Dated: June 26, 2001.
[FR Doc. 01-22959 Filed 9-13-01; 8:45 am]
BILLING CODE 8025-01-P