[Federal Register Volume 60, Number 80 (Wednesday, April 26, 1995)]
[Rules and Regulations]
[Pages 20391-20392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10179]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 60, No. 80 / Wednesday, April 26, 1995 /
Rules and Regulations
[[Page 20391]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 108
Loans to State and Local Development Companies Accredited Lenders
Program for Certified Development Companies
AGENCY: Small Business Administration (SBA).
ACTION: Final rule.
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SUMMARY: On October 22, 1994, the President signed Public Law 103-403,
The Small Business Administration Amendments Act of 1994. Section 212
of that act added a new section 507 of the Small Business Investment
act, 15 U.S.C. 695 et seq. That new section authorizes the Small
Business Administration (SBA) to establish an Accredited Lenders
Program. This final rule, published in accordance with Public Law 103-
403, implements this new program.
EFFECTIVE DATE: This rule is effective on April 26, 1995.
FOR FURTHER INFORMATION CONTACT:
LeAnn Oliver, Acting Director, Office of Rural Affairs and Economic
Development Small Business Administration, 409 3rd Street S.W., Suite
8300 Washington, D.C. 20416, 202-205-6485.
SUPPLEMENTARY INFORMATION: Public Law 103-403, enacted October 22,
1994, required SBA to establish an Accredited Lenders Program for
Certified Development Companies, which provides for expedited
processing of loan applications and servicing actions by SBA field
offices for qualified development companies. The Accredited Lender
Program (ALP) is intended to build upon the successful Certified
Lenders Program (CLP) for the SBA's General Business Loan program and
the pilot Accredited Lenders Program for Certified Development
Companies which has been administered by SBA since 1991.
During 1991, SBA established an ``Accredited Lender Program'' for
Certified Development Companies (CDCs) on a demonstration program basis
with selected development companies through the United States. During
the Demonstration program, SBA Field Offices worked with the selected
development companies to expedite processing of requests for guarantee
approval and servicing actions submitted by them. The program was
premised upon rewarding CDCs which have developed a good partnership
with their SBA Field Office in promoting local economic development and
have demonstrated a good track record in the submission of
documentation needed for making and servicing of sound loans. The
positive experience of the demonstration program led to its statutory
authorization which makes the Accredited Lender Program a permanent
tool for the improvement of the program.
The concept of the ALP demonstration program was based on a similar
program developed for lenders participating with the SBA 7(a) General
Business Loan program (CLP) which has also been authorized by statute.
Under that program, CLP lenders are required to submit a complete loan
package as well as a draft loan authorization ready for SBA review of
eligibility, credit analysis and legal sufficiency. In consideration
for the receipt of a completed loan application package, SBA agrees to
issue an approved loan authorization to a CLP lender within three
working days.
Similar to the CLP lender in the General Business Loan program,
under these regulations if adopted in final form, an ALP-CDC will be
required to submit complete loan applications and draft loan
authorizations to SBA in order to expedite SBA's review of eligibility,
credit analysis and legal sufficiency and enable SBA to quickly
authorize a guaranty; and completely documented requests for a loan
servicing action which will enable SBA to expedite processing of such a
request. In exchange SBA will agree to provide three business day
processing for such submissions. Notwithstanding a requester's ALP
status, SBA will retain the right to reject incomplete packages or
requests, thereby denying ALP consideration to individual actions on a
case by case basis.
In order to attain ALP status a CDC will be required to meet
minimum standards with regard to lending activity and demonstrated
proficiency in quality of its loan packaging, closing and servicing. An
ALP-CDC and an SBA field office will function as a team for purposes of
the ALP program. SBA's agreement to expedite approval of loans and
servicing actions will be premised upon the SBA confidence in the
judgment and quality of work of the ALP-CDC which is based upon a good
relationship and good communication between the SBA field office and
ALP-CDC staffs.
In that regard, under these regulations, if adopted, SBA field
offices will nominate CDCs for ALP status. SBA's Director of Economic
Development and Rural Affairs will be the deciding official for
admission to the program and for suspension or revocation of the status
of a company once admitted. Criteria for nomination which are expressed
in the proposed regulations reflect the intent that only successful
CDCs which demonstrate a high degree of program proficiency will attain
ALP status. ALP status will be granted for periods of two years and
will be renewable based on request by the CDC and favorable review by
SBA.
Compliance With Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act and the Paperwork Reduction Act
For purposes of the Regulatory Flexibility Act, 5 U.S.C. 601 et
seq., SBA certifies that this rule will not have a significant economic
impact on a substantial number of small entities.
SBA certifies that this rule will not constitute a significant
regulatory action for purposes of Executive Order 12866, since the
change is not likely to result in an annual effect on the economy of
$100 million or more.
SBA certifies that this rule will not impose additional reporting
or recordkeeping requirements which would be subject to the Paperwork
Reduction Act, 44 U.S.C. Ch. 35.
SBA certifies that this rule will not have Federalism implications
warranting the preparation of a Federalism Assessment in accordance
with Executive Order 12612.
SBA certifies that this rule is drafted, to the extent practicable,
in accordance [[Page 20392]] with the standards set forth in Section 2
of Executive Order 12778.
This rule is published as a final rule in conformity with the
statutory deadline established in section 212 of Public Law 103-403.
(Catalog of Federal Domestic Assistance Program Nos. 59.036,
Certified Development Company Loans (503 Loans); 59.041, Certified
Development Company Loans (504 Loans).
List of Subjects in 13 CFR Part 108
Loan programs--business, Small businesses.
For the reasons set forth above, SBA is amending part 108 of title
13 of the Code of Federal Regulations as follows:
PART 108--[AMENDED]
1. The authority citation for part 108 continues to read as
follows:
Authority: 15 U.S.C. 687(c), 695, 696, 697a, 697b, 697c.
2. Section 108.2 is amended by adding definitions of the following
terms in the appropriate alphabetical order: ``Accredited Lender'' and
``ALP'' to read as follows:
Sec. 108.2 Definitions.
* * * * *
Accredited Lender means a 503 Company which has met the eligibility
requirements of Sec. 108.508-3 and which has executed with SBA the ALP
Agreement.
ALP means the Accredited Lenders Program as provided for in
Sec. 108.508.
* * * * *
3. A new undesignated center heading and Secs. 108.508-1 through
108.508-5 are added to read as follows:
Accredited Lenders Program
Sec. 108.508-1 Objective and characteristics of Certified Lenders
Program.
(a) Purpose. The purpose of this subpart is to authorize for
designated 503 companies, hereinafter called Accredited Lenders,
expedited approval by SBA of loan processing, closing and servicing
functions on specified terms and conditions.
(b) Objective of Accredited Lender Status. SBA will process an
application for authorization of a guarantee or a loan servicing action
submitted by an Accredited Lender within three business days from
receipt of a complete application for authorization or a fully
documented request for a loan servicing action, as the case may be. SBA
reserves the right to reject any such application or request for
incompleteness or other regulatory deficiency.
Sec. 108.508-2 Application procedure.
In order to be designated an Accredited Lender, a 503 company shall
apply for designation to the SBA District or Branch Office where
responsible for the area in which its headquarters is located by
submitting a statement of its eligibility demonstrating satisfaction of
the criteria contained in Sec. 108.508-3. The relevant District or
Branch Office will review all such applications using SBA's ``rule of
two procedure'' and forward only favorable recommendations to the
Director, Office of Rural Affairs and Economic Development for final
determination. The Director will advise all relevant District or Branch
Office of his or her final decision on any such recommendation.
Favorable decisions by the Director will be followed by accreditations
by the relevant District or Branch Office. Unfavorable decisions by the
Director will be communicated to the applicant by the Director.
Sec. 108.508-3 Eligibility.
In evaluating the application of a 503 Company to become an
Accredited Lender, SBA must make a favorable determination based upon
its consideration of the following factors:
(a) The 503 Company must have been an active participant in the
development company loan program for not less than the preceding 12
months;
(b) The 503 Company must have well-trained, qualified loan officers
who are knowledgeable concerning SBA's lending policies and procedures
for the development company loan program;
(c) The 503 Company must have demonstrated the ability to process,
close, and service loans under the development company program;
(d) The 503 Company must have had a loss rate on its portfolio of
loans made under the development company program that is reasonable and
acceptable to the SBA;
(e) The 503 Company must have demonstrated to SBA's satisfaction a
history of submitting to SBA complete and accurate debenture guaranty
application packages;
(f) The 503 Company must have demonstrated the ability to work with
the sponsoring SBA office in a cooperative and constructive manner; and
(g) The 503 Company must have demonstrated to SBA's satisfaction
the ability to serve small business credit needs through the
development company program.
Sec. 108.508-4 Term of designation.
Any designation of a 503 Company to be an Accredited Lender shall
be for a term of two years, renewable for additional two year terms at
the discretion of SBA upon the application of the 503 Company.
Sec. 108.508-5 Suspension or revocation.
The Director may suspend or revoke the accreditation of an
Accredited Lender for good cause by forwarding a written statement of
suspension or revocation to the Accredited Lender. Such statement shall
specify the nature of the sanction and the reasons therefore. The
decision to suspend or revoke accreditation may be appealed to the
Associate Deputy Administrator for Economic Development whose decision
on any such appeal shall be the final decision of SBA. Examples of good
cause for purposes of these regulations include but are not limited to:
(a) The 503 Company has not continued to meet the criteria for
eligibility under Sec. 108.508-3; or
(b) The 503 Company has failed to adhere to the SBA's rules and
regulations or is violating any other applicable provision of law.
Dated: March 2, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-10179 Filed 4-25-95; 8:45 am]
BILLING CODE 8025-01-M