[Federal Register Volume 60, Number 102 (Friday, May 26, 1995)]
[Rules and Regulations]
[Pages 27870-27871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12647]
=======================================================================
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Part 116
Policies of General Application
AGENCY: Small Business Administration (SBA).
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: On October 22, 1994, the President signed Public Law 103-403,
The Small Business Administration Reauthorization and Amendments Act of
1994. Section 612 of that Act requires SBA to promulgate regulations by
April 22, 1995 which require certification by any recipient of
financial assistance under the Small Business Act that such recipient
is not delinquent on a court order or other formal agreement requiring
payment of child support. This interim final rule, published in
accordance with Public Law 103-403, implements this requirement.
DATES: This rule becomes effective May 26, 1995. Comments by June 26,
1995.
ADDRESSES: Comments should be sent to John R. Cox, Associate
Administrator for Financial Assistance, Small Business Administration,
409 Third Street, SW., Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
John R. Cox, (202) 205-6490.
SUPPLEMENTARY INFORMATION: Public Law 103-403 required SBA, among other
things, to promulgate regulations which require certification by any
recipient of Agency financial assistance under the Small Business Act
that the recipient is not delinquent on a court order or other formal
agreement requiring payment of child support. In that regard, Section
612 of Pub. L. 103-403, October 22, 1994, states:
(f) Certification of Compliance with Child Support
Obligations.--
(1) In General. For financial assistance approved after the
promulgation of final regulations to implement this section, each
recipient of financial assistance under this Act, including a
recipient of a direct loan or a loan guarantee, shall certify that
the recipient is not more than 60 days delinquent under the terms of
any--
(A) administrative order;
(B) court order; or
(C) repayment agreement entered into between the recipient and
the custodial parent or State agency providing child support
enforcement services, that requires the recipient to pay child
support, as such is defined in section 462(b) of the Social Security
Act.
(2) Enforcement. Not later than 6 months after the date of
enactment of this subsection, the Administration shall promulgate
such regulations as may be necessary to enforce compliance with the
requirements of this subsection.
[Emphasis added.]
The Conference Report language on this section is useful in
providing guidance for implementing this requirement. (See Report 103-
824 to accompany S. 2060.) It provides:
Sec. 612. Certification of compliance with child support
obligations.
Both bills contained provisions requiring SBA borrowers to
certify that they are not in violation of any court order or
agreement requiring the payment of child support. The conference
report contains the same provision with a clarification with court
orders, administrative orders, or agreements, specifically 60 days
or more in arrears.
While intending to strengthen federal policy in support of
family support obligations, the conferees recognize that economic
circumstances may from time to time cause a parent to be late in
such payments. It is not the intent of the conferees to subject
minor lapses to the criminal and civil penalties contained in both
the Small Business Act and the False Statements Act for false
representations made to the agency in the course of a loan
application or other application for assistance. Hence, the
conference agreement provides for a certification that the applicant
is not more than 60 days late in making any child support payment
required by court order or agreement. Loan applicants should be
advised of this provision at the outset of the
[[Page 27871]] application process, but certification pursuant to
this section may be made as part of the loan closing.
Thus, certification at the time of application does not appear to
be required, although it may be used as a means for ``weeding out''
delinquents. In the alternative, certification at the time of closing
is consistent with the intent of Congress, and these regulations
require such certification.
SBA has also determined that the intent of the legislation is to
require individuals who are subject to agreements requiring the payment
of child support to make the required certifications. Many of the
applicants for SBA financial assistance are corporations, partnerships
and sole proprietorships. For purposes of these regulations, SBA will
require any owner or partner holding 50% or more of the voting
interests of an applicant (a principal) to certify.
Finally, SBA takes the position that the statute intends coverage
only for its business loan and disaster loan program; i.e. financial
assistance made available under the Small Business Act. Therefore, only
applicants for assistance under those programs will be required to make
the required certifications.
In practice, after the effective date of these regulations, SBA or
its participating lender will notify the principals of all applicants
for assistance under the business and disaster loan programs at the
time of application that they must certify to compliance with
outstanding court orders or agreements requiring the payment of child
support. The required certification will be made a condition of the
loan authorization which if not satisfied will be a ground for not
closing the loan.
Compliance With Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act, 5 U.S.C. 601 et seq., and the Paperwork
Reduction Act, 44 U.S.C. Ch. 35
For purposes of the Regulatory Flexibility Act, 5 U.S.C. 601 et
seq., SBA certifies that this final rule does not have a significant
economic impact on a substantial number of small entities.
BAS certifies that this final rule does not constitute a
significant regulatory action for the 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 final rule does not impose additional
reporting or recordkeeping requirements which would be subject to the
Paperwork Reduction Act, 44 U.S.C. Chapter 35.
This final rule does not have federalism implications warranting
the preparation of a Federalism Assessment in accordance with Executive
Order 12612.
For purposes of Executive Order 12778, SBA certifies that this
final rule is drafted, to the extent practicable, in accordance with
the standards set forth in section 2 of that Order.
Because this final rule reflects a reporting requirement imposed by
Pub. L. 103-403, and is required to be effective by April 22, 1995, SBA
is publishing this final rule without opportunity for prior public
comment pursuant to 5 U.S.C. 553(b)(A). However, SBA solicits and will
consider any comments it receives with respect to this final rule in
making future adjustments.
(Catalog of Federal Domestic Assistance Program Nos. 59.001, 59.002,
59.008, 59.012, 59.021)
List of Subjects in 13 CFR Part 116
Small businesses.
Accordingly, pursuant to the authority contained in section 5(b)(6)
of the Small Business Act, 15 U.S.C. 634(b)(6), SBA amends part 116,
chapter I, title 13, Code of Federal Regulations, as follows:
1. Subpart F is added to read as follows:
Subpart F--Compliance With Child Support Obligations.
116.42 Policy.
116.43 Certification.
116.44 Recipient.
Authority: Sec. 612 of Pub. L. 103-403, 108 Stat. 4175.
Subpart F--Compliance With Child Support Obligations
Sec. 116.42 Policy.
It is the policy of SBA that each recipient of financial assistance
under the Small Business Act shall certify that the recipient is not
more than 60 days delinquent under any administrative order, court
order, or repayment agreement between the recipient and the custodial
parent or a State agency providing child support enforcement services
that requires the recipient to pay child support as that term is
defined in section 462(b) of the Social Security Act.
Sec. 116.43 Certification.
The certification required to comply with the statement of policy
expressed in Sec. 116.41 shall be a condition of all financial
assistance granted under sections 7 (a) and (b) of the Small Business
Act.
Sec. 116.44 Recipient.
For purposes of this subpart the term recipient shall mean an owner
of 50% or more of the ownership interest of an applicant for assistance
under section 7 (a) or (b) of the Small Business Act.
Dated: April 26, 1995.
Cassandra M. Pulley,
Deputy Administrator.
[FR Doc. 95-12647 Filed 5-25-95; 8:45 am]
BILLING CODE 8025-01-M