[Federal Register Volume 63, Number 60 (Monday, March 30, 1998)]
[Rules and Regulations]
[Pages 15072-15073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8245]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Disaster Loan Program

AGENCY: Small Business Administration (SBA).

ACTION: Final rule.

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SUMMARY: Under this rule, an SBA disaster loan borrower can request an 
increase in a disaster loan within two years after the loan was 
approved. The increase must be used to cover eligible damages resulting 
from events that occurred after the loan was approved and were beyond 
the borrower's control. Under the rule, the SBA Associate Administrator 
for Disaster Assistance can waive the two year limit because of 
extraordinary circumstances.

DATES: This rule is effective March 30, 1998.

FOR FURTHER INFORMATION CONTACT: Bernard Kulik, 202/205-6734.

SUPPLEMENTARY INFORMATION: SBA makes thousands of physical and economic 
injury disaster loans to repair or replace damaged property or to help 
a business recover from economic injury. Borrowers must use such loans 
only to help them recover from the effects of a specific disaster. 
Borrowers may request increases in their loans after the initial 
disaster loans were made and, where appropriate, SBA will approve the 
request. On November 25, 1997, SBA published a notice of proposed 
rulemaking (62 FR 62707), to define the circumstances under which a 
borrower could request an increase and to limit the time period for the 
request to two years. The SBA Associate Administrator for Disaster 
Assistance (AA/DA) has the authority to waive the two year limit for 
extraordinary and unforeseeable circumstances. SBA received no comments 
from the public on the proposed rule. The final rule is identical to 
the proposed rule.
    Under the rule, a borrower of a disaster loan (whether physical or 
economic injury) can request an increase in the loan amount if the 
eligible cost of repair or replacement of damages increases because of 
events occurring after the loan approval that were beyond the 
borrower's control. For example, a borrower can request an increase of 
a physical disaster loan before the repair, renovation or 
reconstruction is completed if hidden damage is discovered or if 
official building codes changed since SBA approved the physical 
disaster loan. With respect to economic injury disaster loans, 
borrowers can request increases in working capital if they cannot 
resume business activity as quickly as planned because of events beyond 
their control. These examples, while not all inclusive, support a 
borrower's request for an increase in the amount of a disaster loan. 
These kinds of events usually will be apparent within two years after 
SBA approves a disaster loan. However, in extraordinary circumstances, 
the rule permits the AA/DA to waive the two year limitation.

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)

    SBA certifies that this rule does not constitute a significant rule 
within the meaning of Executive Order 12866 and does not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq. It is not likely to have an annual economic effect of $100 million 
or more on the economy, result in a major increase in costs or prices, 
or have a significant adverse effect on competition or the United 
States economy.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
certifies that this rule contains no new reporting or recordkeeping 
requirements.
    For purposes of Executive Order 12612, SBA certifies that this 
proposed rule has no federalism implications warranting the preparation 
of a Federalism Assessment.
    For purposes of Executive Order 12778, SBA certifies that this rule 
is drafted, to the extent practicable, in accordance with the standards 
set forth in section 2 of that Order.

(Catalog of Federal Domestic Assistance Programs, No. 59.012 and 
59.008)

List of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs-business, 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 123, 
chapter I, title 13, Code of Federal Regulations, as follows:

PART 123--DISASTER LOAN ASSISTANCE

    1. The authority citation for part 123 continues to read as 
follows:

    Authority: 15 U.S.C. 634(b)(6), 636(b), 636(c) and 636(f); Pub. 
L. 102-395, 106 Stat. 1828, 1864; and Pub. L. 103-75, 107 Stat. 739.
    2. Sections 123.18, 123.19 and 123.20 are added to read as follows:


Sec. 123.18  Can I request an increase in the amount of a physical 
disaster loan?

    SBA will consider your request for an increase in your loan if you 
can show that the eligible cost of repair or replacement of damages 
increased because of events occurring after the loan approval that were 
beyond your control. An eligible cost is one which is related to the 
disaster for which SBA issued the original loan. For example, if you 
discover hidden damage within a reasonable time after SBA approved your 
original disaster loan and before repair, renovation, or reconstruction 
is complete, you may request an increase. Or, if applicable building 
code requirements were changed since SBA approved your original loan, 
you may request an increase in your loan amount.


123.19  May I request an increase in the amount of an economic injury 
loan?

    SBA will consider your request for an increase in the loan amount 
if you can show that the increase is essential for your business to 
continue and is based on events occurring after SBA approved your 
original loan which were beyond your control. For example, delays may 
have occurred beyond your control which prevent you from resuming your 
normal business activity in a reasonable time frame. Your request for 
an increase in the loan amount must be related to the disaster for 
which the SBA

[[Page 15073]]

economic injury disaster loan was originally made.


Sec. 123.20  How long do I have to request an increase in the amount of 
a physical disaster loan or an economic injury loan?

    You should request a loan increase as soon as possible after you 
discover the need for the increase, but not later than two years after 
SBA approved your physical disaster or economic injury loan. After two 
years, the SBA Associate Administrator for Disaster Assistance (AA/DA) 
may waive this limitation after finding extraordinary and unforeseeable 
circumstances.

    Dated: March 20, 1998.
Aida Alvarez,
Administrator.
[FR Doc. 98-8245 Filed 3-27-98; 8:45 am]
BILLING CODE 8025-01-P