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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: September 11, 2001

SUBJECT: Small Business Administration; Microloan Program

SOURCE: Federal Register, September 11, 2001, Vol. 66, No. 176, page 47072

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: In accordance with changes required by law, SBA is revising its microloan program regulations to terminate the designation of the program as a "demonstration," allow a nonprofit child care business to qualify for the microloan program, and authorize a microloan intermediary to use up to 25% of grant funds for technical assistance to prospective microloan borrowers. This final rule also establishes procedures for SBA to revoke or suspend a microloan intermediary or non-lending technical assistance provider (NTAP).

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."

EFFECTIVE DATE: October 11, 2001.

FOR FURTHER INFORMATION CONTACT: Jody Raskind, Chief, Microenterprise Development Branch, Office of Financial Assistance, Office of Capital Access, 202-205-6497.

SUPPLEMENTAL INFORMATION: In 1997, the Small Business Reauthorization Act of 1997 (Public Law 105-135) amended SBA's microloan program. To comply with the 1997 act, the SBA is making the following changes to its microloan program regulations:

• The designation "demonstration" is removed wherever it appears.
  
  
• In Section 120.701, Definitions, is added the following definition of an NTAP: "an entity which receives grant funds from SBA to provide technical assistance to microloan borrowers."
  
  
• In paragraph (a) of Section 120.706, What are the terms and conditions of an SBA loan to an Intermediary?, the aggregate amount that a microloan intermediary may borrow from SBA is increased from $2,500,000 to $3,500,000.
  
  
• Paragraph (a) of Section 120.707, What conditions apply to loans by Intermediaries to Microloan borrowers?, is amended to authorize microloan assistance to a borrower to establish a nonprofit child care business (generally, microloan borrowers must engage in for profit activities).
  
  
• Paragraph (b)(1) of Section 120.712, How does an Intermediary get a grant to assist Microloan borrowers?, is amended to increase from 15% to 25% the amount of grant funds a microloan intermediary may use for technical assistance to prospective microloan borrowers. Also, paragraph (c) is amended to allow an intermediary to use up to 25% of the grant funds it receives from SBA to contract with third parties to provide technical assistance to microloan borrowers.
  
  
• Paragraph (b) of Section 120.714, How are grants made to non-lending technical assistance providers (NTAP)?, is revised to permit SBA to make up to 25 grants to NTAPs (under prior rules, SBA could provide the 25 grants for a maximum of 5 annual terms).
  
  
• Paragraph (a) of Section 120.715, Does SBA guarantee any loans an Intermediary obtains from another source?, is amended to clarify that there is no statutorily prescribed limit on the number of loans which SBA is authorized to guarantee to microloan intermediaries.
  
  
• Section 120.716, Suspension or revocation of an Intermediary or NTAP, is added to describe the procedures that SBA will use to suspend or revoke a microloan intermediary or non-lending technical assistance provider (NTAP). It also permits an intermediary or NTAP to appeal a suspension or revocation under the procedures in Part 134, Rules of Procedure Governing Cases Before the Office of Hearings and Appeals.

In addition to the changes in Part 120 is the following change to Part 134:

• Added to Section 134.102, Jurisdiction of OHA [Office of Hearings and Appeals], gives OHA specific authority to consider appeals from an agency decision to suspend or revoke a microloan intermediary or NTAP.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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