Small business administration microloan

small business administration microloan

Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: September 14, 2001

SUBJECT: Small Business Administration; Microloan Program

SOURCE: Federal Register . September 14, 2001, Vol. 66, No. 179, page 47877

AGENCIES: Small Business Administration (SBA)

ACTION: Direct Final Rule

SYNOPSIS: In accordance with changes required by Consolidated Appropriations Act of 2001 (Public Law 106-554), SBA is revising its microloan program regulations to increase several of the dollar amounts used to define various aspects of the program.

EDITOR'S NOTE: The SBA's microloan program regulations are in Title 13 of the Code of Federal Regulations (CFR), "Chapter 1, Small Business Administration," "Part 120, Business Loans," as "Subpart G, Microloan Program."

For more on another recent change to SBA's microloan program regulations, see the September 11, 2001, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Microloan Program ."

This rule is being published as a "direct final rule," which SBA reserves for rules it believes are noncontroversial. SBA believes this rule is noncontroversial because it is merely implements provisions of Public Law 106-554 and, therefore, will elicit no significant adverse comment. However, if SBA receives any adverse comments, it will withdraw the rule. consider the comments, then possibly publish a proposed rule in a future edition of the Federal Register .

DATES: This rule will become effective on October 15, 2001, without further notice, unless SBA receives adverse comments by November 14, 2001.

ADDRESSES: Send comments to Jody Raskind, Chief, Office of Microenterprise Development, U.S. Small Business Administration, 409 3rd Street, SW, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Jody Raskind, 202-205-6497.

SUPPLEMENTAL INFORMATION: Under the microloan 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 Public Law 106-554 increased several dollar amounts and thresholds used to define various aspects of the microloan program. The following are the changes being made to the microloan program regulations to implement the statutory changes (unless adverse comments are received):

  • In Section 120.701, Definitions, a "microloan" is defined as a loan of not more than $35,000 (formerly $25,000) by an intermediary to a small business. Also, 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.

  • Section 120.702, Are there limitations on who can be an Intermediary or on where an Intermediary may operate. is revised to state 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.

  • Section 120.704, How are applications evaluated. is revised so, when 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.

  • Section 120.705, What is a Specialized Intermediary. is revised so that a specialized intermediary would have to maintain a portfolio of microloans averaging $10,000 (up from $7,500).

  • Paragraph (b) of Section 120.707, What conditions apply to loans by Intermediaries to Microloan borrowers. is revised 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, Section 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. Finally, Section 120.707(c) is amended to reflect the statutory change which increased the dollar amount of loans where the interest rate changes to $10,000 (up from $7,500).

  • Paragraph (a) of Section 120.714, How does a non-Intermediary get a grant. is revised 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. In addition, Section 120.714(b) is revised to increase (1) the number of grants it can make to non-Intermediaries each year to 55 (up from 25), and (2) the amount of the grant to $200,000 (up from $125,000).
  • FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com .

    Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

    Source: fedgovcontracts.com

    Category: Payday loans

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