Rule2024-09520
Microloan Program; Changes to the Microloan Program Under the Economic Aid To Hard-Hit Small Businesses, Nonprofits, and Venues Act
Primary source
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Published
May 2, 2024
Effective
June 17, 2024
Issuing agencies
Small Business Administration
Abstract
The U.S. Small Business Administration (SBA) is amending its Microloan Program regulations to reflect statutory changes to the Microloan Program contained in the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. The changes increase the total amount an Intermediary may borrow under the Microloan Program per year and in aggregate, expand eligibility for Intermediaries to receive a bonus grant and add the necessary definitions, and revise the eligible base grant award amount for Intermediaries under certain circumstances. This direct final rule conforms the regulations to the Act by adopting the new statutory requirements without change.
Full Text
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<title>Federal Register, Volume 89 Issue 86 (Thursday, May 2, 2024)</title>
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[Federal Register Volume 89, Number 86 (Thursday, May 2, 2024)]
[Rules and Regulations]
[Pages 35688-35690]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-09520]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket No. SBA-2023-0010]
RIN 3245-AH83
Microloan Program; Changes to the Microloan Program Under the
Economic Aid To Hard-Hit Small Businesses, Nonprofits, and Venues Act
AGENCY: U.S. Small Business Administration (SBA).
ACTION: Direct final rule.
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SUMMARY: The U.S. Small Business Administration (SBA) is amending its
Microloan Program regulations to reflect statutory changes to the
Microloan Program contained in the Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and Venues Act. The changes increase the total
amount an Intermediary may borrow under the Microloan Program per year
and in aggregate, expand eligibility for Intermediaries to receive a
bonus grant and add the necessary definitions, and revise the eligible
base grant award amount for Intermediaries under certain circumstances.
This direct final rule conforms the regulations to the Act by adopting
the new statutory requirements without change.
DATES: This rule is effective June 17, 2024 without further action,
unless significant adverse comment is received by June 3, 2024. If
significant adverse comment is received, SBA will publish a timely
withdrawal of the rule in the Federal Register.
ADDRESSES: You may submit comments, identified by docket number SBA-
2023-0010, by any of the following methods:
(1) Federal Rulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>,
following the specific instructions for submitting comments;
(2) Email: <a href="/cdn-cgi/l/email-protection#e6a287888f838ac8b3968e878ba6958487c8818990"><span class="__cf_email__" data-cfemail="3175505f58545d1f644159505c714253501f565e47">[email protected]</span></a>; or
(3) Mail/Hand Delivery/Courier: Daniel Upham, Chief,
Microenterprise Development Division, 409 3rd Street SW, 8th Floor,
Washington, DC 20416.
SBA will post all comments on <a href="http://www.regulations.gov">http://www.regulations.gov</a>. If you
wish to submit confidential business information (CBI) as defined in
the User Notice at <a href="http://www.regulations.gov">http://www.regulations.gov</a>, please submit the
information to Daniel Upham, Chief, Microenterprise Development
Division, 409 3rd Street SW, 8th Floor, Washington, DC 20416. Highlight
the information that you consider to be CBI and explain why you believe
this information should be held confidential. SBA will review the
information and make the final determination as to whether to publish
the information.
FOR FURTHER INFORMATION CONTACT: Daniel Upham, Microenterprise
Development Division, (202) 205-7001 or <a href="/cdn-cgi/l/email-protection#1357727d7a767f3d46637b727e536071723d747c65"><span class="__cf_email__" data-cfemail="d397b2bdbab6bffd86a3bbb2be93a0b1b2fdb4bca5">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
A. General Information
The U.S. Small Business Administration (SBA) is amending its
Microloan rules to reflect statutory changes from section 329 of the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
(Pub. L. 116-260), enacted December 27, 2020 (the Economic Aid Act).
SBA's Microloan Program is authorized by section 7(m) of the Small
Business Act, (15 U.S.C. 636(m)) and 13 CFR part 120, subpart G. The
Microloan Program provides loans up to $50,000 to help small businesses
and certain not-for-profit childcare centers start up and expand. SBA
provides funds to specially designated intermediary lenders, which are
nonprofit community-based organizations with experience in lending as
well as management and technical assistance. These intermediaries
administer the Microloan Program for eligible borrowers.
SBA is amending Sec. Sec. 120.701, 120.706, and 120.712 to
incorporate Microloan Program changes required by the Economic Aid Act.
The specific regulatory changes are detailed below in the section-by-
section analysis.
B. Section-by-Section Analysis
1. Sec. 120.701 Definitions
Section 329 of the Economic Aid Act established two new
definitions: ``Economically Distressed Area'' and ``Rural Area.'' To
recognize these additions, the definitions for the Microloan Program
are revised.
2. 120.706 What are the terms and conditions of an SBA loan to an
Intermediary?
The Economic Aid Act permanently increased the maximum amount an
Intermediary may borrow from SBA to $3,000,000 per year, with an
aggregate outstanding limit of $7,000,000. The maximum amount an
Intermediary may borrow during its first year of participation remains
$750,000.
3. 120.712 How does an Intermediary get a grant to assist Microloan
borrowers?
The Economic Aid Act provides a new minimum base grant amount of 25
percent of an Intermediary's total outstanding SBA loan balance
applicable in fiscal years in which the amount appropriated for TA
grants is sufficient to provide all Intermediaries with a grant equal
to 25 percent or more of their total outstanding SBA loan balances. In
these fiscal years, the maximum base grant amount is 30 percent of an
Intermediary's total outstanding SBA loan balance. Intermediaries
eligible for bonus grants may receive an additional grant for a total
eligible maximum grant amount of 35 percent of the total outstanding
SBA loan balance. SBA has revised paragraph (a) to reflect these
statutory changes.
Currently, Intermediaries that maintain a portfolio of Microloans
averaging $10,000 or less are eligible for a bonus grant equal to 5
percent of the Intermediary's total outstanding SBA loan balance. The
Economic Aid Act expands eligibility for bonus grants to: (a)
Intermediaries that provide not less than 25 percent of their
Microloans to small businesses located in or owned by one or more
residents of an economically distressed area and (b) Intermediaries
with a Microloan portfolio of which at least 25 percent is serving
rural areas. SBA has revised paragraph (c) to include these two
additional bonus grant eligibility criteria.
C. Compliance With Executive Orders 12866, 12988, 13132, 13175, and
13563, the Congressional Review Act (5 U.S.C. 801-808), the Paperwork
Reduction Act (44 U.S.C., Ch. 35) and the Regulatory Flexibility Act (5
U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
direct final 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 preemptive effect. The final rule will
[[Page 35689]]
have retroactive effect to the enactment date of the statutory
amendment. These changes will become effective December 28, 2020.
Executive Order 13132
This rule does not have federalism implications as defined in
Executive Order 13132. The direct 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, as specified
in the Executive Order. Therefore, SBA determined that this direct
final rule has no federalism implications warranting preparation of a
Federalism Assessment.
Executive Order 13175
In accordance with Executive Order 13175, SBA has determined this
rulemaking does not include policies that have Tribal implications.
Executive Order 13563
Executive Order 13563, Improving Regulation and Regulatory Review
(January 18, 2011), requires agencies to adopt regulations through a
process that involves public participation, and to the extent feasible,
base regulations on the open exchange of information and perspectives
from affected stakeholders and the public as a whole. SBA has developed
this rule in a manner consistent with these requirements. This direct
final rule makes statutorily required changes.
Congressional Review Act, 5 U.S.C. 801-808
The Office of Management and Budget has determined that this is not
a major rule under 5 U.S.C. 804(2).
Paperwork Reduction Act (44 U.S.C. Ch. 35)
SBA has determined that this direct final rule would not impose any
new reporting or recordkeeping requirements.
Regulatory Flexibility Act (5 U.S.C. 601-612)
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. According 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 allows an agency to certify a rule in lieu of preparing an analysis
if the rulemaking is not expected to have a significant impact on a
substantial number of small entities.
This rule only makes conforming amendments to the regulations due
to recent legislation on the Microloan Program and does not implement
new agency policies. The amendment will affect small entities; however,
SBA has determined that the amendment will not have a significant
economic impact on a substantial number of such entities.
D. Justification for Direct Final Rule--Administrative Procedure Act
In general, SBA publishes a rule for public comment before issuing
a final rule in accordance with the Administrative Procedure Act. 5
U.S.C. 553. The Administrative Procedure Act provides an exception to
this standard rulemaking process, however, where an agency finds good
cause to adopt a rule without prior public participation. 5 U.S.C.
553(b)(3)(B). The good cause requirement is satisfied when prior public
participation is impracticable, unnecessary, or contrary to the public
interest.
SBA is publishing this rule as a direct final rule because public
participation is unnecessary. SBA believes that this rule is routine
and non-controversial since it merely implements changes required by
statute, and SBA anticipates no significant adverse comments to this
rulemaking. This rule will be effective on the date shown in the DATES
section unless SBA receives significant adverse comment on or before
the deadline for comments. Significant adverse comments are comments
that provide strong justifications why the rule should not be adopted
or for changing the rule. SBA does not expect to receive any
significant adverse comments because it is adopting statutory changes.
If SBA receives any significant adverse comments, it will publish a
document in the Federal Register withdrawing this rule before the
effective date. If SBA receives no significant adverse comments, the
rule will be effective 45 days after publication without further
notice.
List of Subjects in 13 CFR Part 120
Definitions, Economically distressed area, Grant, Intermediary,
Microloan, Rural area, Terms and conditions.
For reasons set forth in the preamble, the SBA amends 13 CFR part
120 as follows:
PART 120--MICROLOAN PROGRAM
0
1. The authority citation for 13 CFR part 120 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), (b)(7), (b)(14), (h), and note,
636(a), (h) and (m), and note, 636m, 650, 657t, and note, 657u, and
note, 687(f), 696(3), and (7), and note, and 697, 697a and e, and
note; Pub. L. 116-260, 134 Stat. 1182.
Subpart G--Microloan Program
0
2. Revise Sec. 120.701 to read as follows:
Sec. 120.701 Definitions.
Deposit account is a demand, time, savings, passbook, or similar
account maintained with an insured depository institution (not
including an account evidenced by a Certificate of Deposit).
Economically Distressed Area is a county or equivalent division of
local government of a State in which the small business concern is
located, in which, according to the most recent data available from the
Bureau of the Census, Department of Commerce, not less than 40 percent
of residents have an annual income that is at or below the poverty
level.
Grant is a Federal award of money, or property in lieu of money
(including cooperative agreements) to an eligible grantee that must
account for its use. The term does not include the provision of
technical assistance, revenue sharing, loans, loan guarantees, interest
subsidies, insurance, direct appropriations, or any fellowship or other
lump sum award.
Insured depository institution means any federally insured bank,
savings association, or credit union.
Intermediary is an entity participating in the Microloan Program
which makes and services Microloans to eligible small businesses and
which provides marketing, management, and technical assistance to its
borrowers. It may be:
(1) A private, nonprofit community development corporation or other
entity;
(2) A consortium of private, nonprofit community development
corporations or other entities;
(3) A quasi-governmental economic development entity, other than a
state, county, municipal government or any agency thereof; or
(4) An agency of or a nonprofit entity established by a Native
American Tribal Government.
Microloan is a short-term, fixed interest rate loan of not more
than $50,000 made by an Intermediary to an eligible small business.
Non-Federal sources are sources of funds other than the Federal
Government and may include indirect costs or in-kind contributions paid
for under non-Federal programs. Community Block Development Grants are
considered non-Federal sources.
[[Page 35690]]
Rural Area is any political subdivision or unincorporated area:
(1) In a nonmetropolitan county (as defined by the Secretary of
Agriculture) or its equivalent thereof; or
(2) In a metropolitan county or its equivalent that has a resident
population of less than 20,000 if the Small Business Administration has
determined such political subdivision or area to be rural.
Specialized Intermediary is an Intermediary which maintains a
portfolio of Microloans averaging $10,000 or less.
0
3. Amend Sec. 120.706 by revising paragraph (a) to read as follows:
Sec. 120.706 What are the terms and conditions of an SBA loan to an
Intermediary?
(a) Loan amount. An Intermediary may not borrow more than $750,000
in the first year of participation in the program, or more than
$3,000,000 in any subsequent year. An Intermediary's obligation to SBA
may not exceed an aggregate of $7 million, subject to statutory
limitations on the total amount of funds available per state.
* * * * *
0
4. Amend Sec. 120.712 by revising paragraphs (a) and (c) to read as
follows:
Sec. 120.712 How does an Intermediary get a grant to assist
Microloan borrowers?
(a) General. (1) Except as provided in (a)(2) of this section, an
Intermediary is eligible to receive a base grant of not more than 25
percent of the outstanding balance of all SBA loans to the
Intermediary.
(2) In fiscal years in which the amount appropriated for grants is
sufficient to provide all Intermediaries with a base grant equal to 25
percent or more of their total outstanding SBA loan balances, then the
amount of base grants to eligible Intermediaries will be equal to at
least 25 percent of the outstanding balance of all SBA loans to the
Intermediary and not more than 30 percent of such balance.
(3) The Intermediary must contribute, solely from non-Federal
sources, an amount equal to 25 percent of the grant. Contributions may
be made in cash or in kind.
* * * * *
(c) Intermediaries eligible to receive additional bonus grant
monies. An Intermediary may receive an additional SBA grant equal to
five percent of the outstanding balance of all loans received from SBA
(with no obligation to contribute additional matching funds) if the
Intermediary:
(1) Is a Specialized Intermediary;
(2) Provides not less than 25 percent of its loans to small
business concerns located in or owned by one or more residents of an
Economically Distressed Area; or
(3) Maintains a portfolio of Microloans of which at least 25
percent is serving Rural Areas.
* * * * *
Isabella C. Guzman,
Administrator.
[FR Doc. 2024-09520 Filed 5-1-24; 8:45 am]
BILLING CODE 8026-09-P
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