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Disaster Home Loans: FEMA Interaction

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Information about this document as published in the Federal Register.

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U.S. Small Business Administration.


Direct final rule.


SBA is amending its disaster assistance regulations to reflect changes to the Small Business Act (Act) made by the Food, Conservation, and Energy Act of 2008, which require SBA to promulgate regulations in consultation with the Administrator of the Federal Emergency Management Agency (FEMA) to ensure that each application for disaster assistance is processed by SBA or another appropriate agency in a prompt manner. This direct final rule clarifies SBA's process of timely coordination with FEMA and other agencies for delivering Federal disaster assistance to homeowners and renters who have sustained property damage as a result of a disaster declared by the President.


Effective Date: This rule is effective April 8, 2010 without further action, unless significant adverse comment is received on or before March 24, 2010. If significant adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.


You may submit comments, identified by RIN 3245-AF97, by any of the following methods: (1) Federal Rulemaking Portal:, following the specific instructions for submitting comments; (2) FAX (202) 481-2226; or E-mail:; or (3) Mail/Hand Delivery/Courier: James E. Rivera, Associate Administrator for Disaster Assistance, 409 3rd Street, SW., Washington, DC 20416.

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Roger B. Garland, Office of Disaster Assistance, 202-205-6734 or

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SBA makes disaster assistance loans to homeowners, renters, and businesses adversely affected by a disaster event. SBA works closely with FEMA and other Federal, State, and local agencies in the delivery of disaster assistance to victims. Under a Presidential disaster declaration, FEMA serves as the coordinating agency for all Federal agencies providing disaster assistance, including SBA. Most disaster victims register through FEMA for Federal disaster assistance. Upon registration, FEMA may provide home repair grant assistance to homeowners, within certain limits. FEMA then refers victims to SBA to be considered for disaster loan assistance for home repair and personal property loss. If SBA is unable to approve a loan, a homeowner or renter is referred by SBA to FEMA's Federal Assistance to Individuals and Households Program (IHP) to be considered for further grant assistance. Additionally, if disaster assistance is available from State/local or other agencies (e.g., American Red Cross), SBA may refer the disaster victim to the appropriate agency.

The Food, Conservation, and Energy Act of 2008, Public Law 110-246 (the Farm Act), enacted on June 18, 2008, requires SBA to ensure that its disaster assistance programs are coordinated, to the maximum extent practicable, with FEMA's disaster assistance programs. This statute also requires SBA to establish regulations, in consultation with FEMA, to ensure that each application for disaster assistance is submitted as quickly as practicable to SBA or directed to the appropriate agency under the circumstances. SBA has consulted with FEMA and is publishing this direct final rule to codify the process for timely coordination with FEMA and other agencies, and to clarify for the public the initial phases of obtaining disaster assistance.

Section-by-Section Analysis

In order to reflect the provisions of the Farm Act, SBA is adding new section 123.108 to its regulations to reflect that when the President makes a disaster declaration, an applicant for disaster loan assistance for homeowners or renters may be eligible for FEMA IHP grant assistance. The new section specifies that, after registering with FEMA, the applicant may be referred to SBA for home loan assistance. If SBA declines the application, or if the damage amount exceeds the maximum SBA loan amount, SBA may refer the applicant to FEMA or another appropriate agency for possible grant assistance. This new section, which describes existing procedures, makes clear that any such referral will be made on a timely basis.

Consideration of Comments

SBA believes that this rule is routine and non-controversial since it simply implements the statute, and SBA anticipates no significant adverse comments to the rulemaking. If SBA receives any adverse comments, it will publish a timely withdrawal of this direct final rule.

Compliance With Executive Orders 12866, 12988, 13132 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork Reduction Act (44 U.S.C. Ch. 35)

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this rule does not constitute a significant regulatory action under Executive Order 12866.

Executive Order 12988

This action meets applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

Executive Order 13132

The final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government, because the rule does not alter the current relationship between federal, state, and local disaster authorities. Therefore, for the purposes of Executive Order 13132, Federalism, SBA determines that this final rule has Start Printed Page 7546no federalism implications warranting preparation of a federalism assessment.

Paperwork Reduction Act

SBA has determined that this final rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., Chapter 35.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires administrative agencies to consider the effect of their actions on small entities, including small businesses. Pursuant to the RFA, when an agency issues a rule, the agency must prepare an analysis to determine whether the impact of the rule will have a significant economic impact on a substantial number of small entities. However, the RFA requires analysis of a rule only where notice and comment rulemaking are required. Rules are exempt from Administrative Procedure Act (APA) notice and comment requirements and therefore from the RFA requirements when the agency for good cause finds (and incorporates the finding and brief statement of reasons in the rules issued) that notice and public procedure thereon is impracticable, unnecessary, or contrary to the public interest. In this case it would be impracticable given the emergency nature of the recent legislation authorizing the new requirements.

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List of Subjects in 13 CFR Part 123

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For the reasons set forth in the preamble, the Small Business Administration amends

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1. The authority citation for part 123 continues to read as follows:

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Authority: 15 U.S.C. 634(b)(6), 636(b), 636 (c); 657i, Pub. L. 102-395, 106 Stat. 1828; Pub. L. 103-75, 107 Stat. 739; Pub. L. 106-50, 113 Stat. 245; Pub. L. 110-246, 112 Stat. 1651.

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2. Amend Subpart B by adding at the end new § 123.108 to read as follows:

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How do the SBA disaster loan program and the FEMA grant programs interact?

After a Presidential disaster declaration is made, you may be eligible for disaster assistance, including grant assistance, from the Federal Emergency Management Agency's (FEMA) Federal Assistance to Individuals and Households Program (IHP). After you register with FEMA for disaster assistance, FEMA will consider you for IHP assistance, which includes housing assistance grants to repair or replace your damaged primary residence and temporary housing assistance (including rental assistance) to assist you temporarily with a place to live, and assistance with personal property, medical, dental and funeral expenses. FEMA may also refer you to SBA to apply for loan assistance to help repair or rebuild your home and/or to replace personal property destroyed during the disaster. If SBA is unable to approve your loan application, or if you have damage in excess of the SBA loan amount, SBA may refer you, on a timely basis, to FEMA for IHP grant consideration to assist with your unmet personal property and transportation needs. If you are approved for the SBA disaster loan and you have received grant assistance that duplicates the damage covered by the SBA loan, such grant assistance must be deducted from your loan eligibility as described in section 123.101(c) of the regulations. All grant decisions are made by FEMA. Additionally, if additional disaster assistance is available from state, local or other agencies, SBA may refer you to the appropriate agency for consideration.

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Dated: February 16, 2010.

Karen G. Mills,


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[FR Doc. 2010-3395 Filed 2-19-10; 8:45 am]