[Federal Register Volume 64, Number 39 (Monday, March 1, 1999)]
[Notices]
[Pages 10055-10056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4864]


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SMALL BUSINESS ADMINISTRATION


MEETING: New Markets Lending Company; Pilot Program

AGENCY: Small Business Administration.

ACTION: Public Meeting on SBA's Proposed New Markets Lending Company. 
(NMLC) pilot loan program for SBA loans made under Section 7(a) of the 
Small Business Act.

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SUMMARY: The SBA recognizes that many segments of the small business 
community continue to have difficulty accessing capital in the 
commercial loan markets. To assist these New Markets small businesses, 
the Agency plans to develop and test several innovative new programs 
and initiatives designed to more efficiently and effectively deliver 
SBA financing to these markets. The proposed NMLC program is one of 
these initiatives. SBA envisions the program as a limited term, limited 
participation SBA pilot program under which the Agency will select 
approximately ten unique, non-depository lending institutions to make 
SBA guaranteed loans targeted to New Markets small businesses. This 
pilot will be part of the Agency's 7(a) loan program, which provided 
guaranties on loans to approximately 42,000 small businesses for about 
$9 billion in FY 1998.
    SBA expects to define New Markets under the program as current and 
prospective small businesses owned by minorities, women, veterans, and 
persons with disabilities, who are underrepresented in the population 
of business owners compared to their representation in the overall 
population, as well as businesses located or locating in Low and 
Moderate Income urban and rural areas.
    SBA is continuing to develop criteria for participation in the 
program, but participants are expected to be selected competitively 
using criteria that may include, among others, the following:

Management Capability

    The applicant entity or its management team must demonstrate 
appropriate experience in managing a loan underwriting, loan making, 
loan collection, and loan liquidation operation;

Adequate Capitalization

    A minimum capitalization, including leverage limitations to reflect 
both balance sheet and off balance sheet assets, will be required. (A 
variety of financing structures will be considered, but a minimum 
equity injection of $3-$5 million is being considered);

Commitment to Borrower's Development

    Applicant must demonstrate a continuing commitment to the 
development of the borrower's management capabilities; and,

Public Purpose

    Participants must aggressively and continuously target a range of 
SBA defined New Markets communities.
    The Agency's monitoring and oversight of NMLCs will include annual 
safety and soundness examinations, periodic reviews of lender 
effectiveness in reaching targeted markets, and compliance reviews 
required of other SBA lenders. SBA will develop program guidelines and 
procedures shortly and expects to implement the program by October 1, 
1999.

HEARING: SBA will hold a public hearing to obtain comments and 
suggestions from the public to assist in developing the NMLC concept. 
Interested parties will be given a reasonable time for an oral 
presentation and may submit written statements of their oral 
presentation in advance. If you wish to make a presentation, please 
contact Ms. Lula M. Gardner at (202) 205-6485 at least five days before 
the hearing. If a large number of participants desire to make 
statements, a time limitation on each presentation will be imposed.
    Members of the hearing panel may ask questions of the speaker, but 
speakers will not be allowed to question each other. Please submit 
written questions in advance to the Chair. If the Chair determines them 
to be relevant, the Chair will direct them to the appropriate panel 
member.

DATES: March 11, 1999, 1:30 p.m. to 4:30 p.m.

LOCATION: SBA's Washington District Office Conference Room, 1110 
Vermont Avenue, NW, Washington, DC 20005.

POSSIBLE ISSUES: The SBA requests that speakers address the following 
issues:
     Can this concept help increase SBA lending to New Markets?
     How should SBA select NMLC participants?
     Should the SBA require that a minimum percentage of 
lending by each NMLC be directed to New Markets? If so, what should 
that minimum percentage be?
     How many firms should be allowed to participate?
     What, if any, time limit should be established for the 
program?
     What level of capitalization should SBA require of NMLC 
pilot participants?
     What loan volume should SBA expect from NMLCs?
     What oversight should SBA apply to this program?
     Should SBA give these firms PLP and/or SBAExpress 
authority?
     What incentives should SBA consider to encourage these 
firms to lend in non-traditional markets?
     What support should SBA provide lenders to address these 
markets?
     What will be the likely impact of this program on existing 
SBA lenders?
     In lieu of the proposed NMLC program, should SBA open the 
SBLC program to additional participants?

FOR FURTHER INFORMATION CONTACT: Charles Thomas, Chief, Pilot

[[Page 10056]]

Operations, Office of Financial Assistance, (202) 205-6656.
Arnold S. Rosenthal,
Acting Deputy Associate Administrator for Financial Assistance.
[FR Doc. 99-4864 Filed 2-26-99; 8:45 am]
BILLING CODE 8025-01-P