[Federal Register Volume 64, Number 129 (Wednesday, July 7, 1999)]
[Proposed Rules]
[Pages 36617-36618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16999]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Pre-Disaster Mitigation Loans

AGENCY: Small Business Administration (SBA).

ACTION: Proposed rule.

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SUMMARY: SBA proposes to amend its disaster loan program regulations to 
implement a pilot program authorized by Congress in 1999. The 
authorization covers 5 fiscal years (from 2000 to 2004) and will allow 
SBA to make low interest, fixed rate loans to small businesses to use 
mitigation measures in support of Project Impact, a formal mitigation 
program established by the Federal Emergency Management Agency (FEMA).

DATES: Submit comments on or before August 6, 1999.

ADDRESSES: Comments should be mailed to Bernard Kulik, Associate 
Administrator, Office of Disaster Assistance, Small Business 
Administration, 409 Third Street, S.W., Washington, DC 20416.

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

SUPPLEMENTARY INFORMATION: SBA proposes to amend part 123 of its 
regulations regarding disaster loans. The proposed amendments would 
allow small businesses to obtain low interest, fixed rate loans to use 
mitigation measures in support of Project Impact. In response to the 
problems of increasing costs and personal devastation caused by 
disasters, Congress has authorized a pilot program for 5 fiscal years 
from 2000 through 2004. The Administration has launched an approach to 
emergency management that moves away from the current reliance on 
response and recovery to an approach that emphasizes preparedness. SBA 
supports this approach and proposes offering pre-disaster mitigation 
loans to assist with disaster preparedness. SBA proposes to provide 
such loans to small businesses within Project Impact communities 
identified by FEMA. Currently, SBA disaster loans may be used only to 
repair or replace what was destroyed or damaged by disaster and provide 
an additional 20 percent for mitigation measures. Therefore, to promote 
preparedness, SBA proposes to amend this section of its regulations to 
provide pre-disaster mitigation loans for small businesses. Such pre-
disaster mitigation loans will allow small businesses to install 
mitigation devices that may prevent future damage.

Compliance With Executive Orders 12612, 12988, and 12866, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

    SBA certifies that this proposed rule is not a significant rule 
within the meaning of Executive Order 12866, since it is not likely to 
have an annual economic effect of $100 million or more, result in a 
major increase in costs or prices, or have a significant adverse effect 
on competition or the U.S. economy.
    SBA certifies that this proposed rule will 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. 601-612.
    SBA certifies that this proposed rule does not impose any 
additional reporting or recordkeeping requirements under the Paperwork 
Reduction Act, 44 U.S.C., chapter 35.
    For purposes of Executive Order 12612, SBA certifies that this 
proposed rule has no federalism implications warranting preparation of 
a Federalism Assessment.
    For purposes of Executive Order 12988, SBA certifies that this 
proposed rule is drafted, to the extent practicable, to accord with the 
standards set forth in paragraph 2 of that Order.

List of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs-business, Reporting and 
recordkeeping requirements, Small businesses.
    For the reasons stated in the preamble, the Small Business 
Administration proposes to amend 13 CFR part 123 as follows:

PART 123--DISASTER LOAN PROGRAM

    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. Revise Sec. 123.107 to read as follows:


Sec. 123.107  What is mitigation?

    Mitigation means specific measures taken by you to protect against 
recurring damage in similar future disasters. Examples include 
retaining walls, sea walls, grading and contouring land, relocating 
utilities and modifying structures. Pre-disaster mitigation is 
addressed in Secs. 123.400 through 123.407. The money that you can 
borrow for mitigation is limited to the lesser of the cost of 
mitigation, or 20 percent of your loan to repair or replace your 
damaged primary residence and personal property. SBA will not accept a 
request for a loan increase for mitigation filed after final 
disbursement of your original loan unless you can show that your 
request was late because of substantial reasons beyond your control.
    3. Add an undesignated centerheading and Secs. 123.400 through 
123.407 to read as follows:


[[Page 36618]]



Pre-disaster Mitigation Loans

Sec.
123.400 What is a pre-disaster mitigation loan?
123.401 What types of mitigating measures are eligible for a pre-
disaster mitigation loan?
123.402 Is my business eligible to apply for a pre-disaster 
mitigation loan?
123.403 When would my business not be eligible to apply for a pre-
disaster mitigation loan?
123.404 How much can my business borrow with a pre-disaster 
mitigation loan?
123.405 What is the interest rate on a pre-disaster mitigation loan?
123.406 How do I apply for a pre-disaster mitigation loan and which 
loans will be funded?
123.407 What happens if my pre-disaster mitigation loan application 
is denied or withdrawn?

Pre-disaster Mitigation Loans


Sec. 123.400  What is a pre-disaster mitigation loan?

    Congress has authorized a pilot program for 5 fiscal years from 
2000 through 2004 for SBA to make low interest, fixed rate loans to 
small businesses to use mitigation measures in support of Project 
Impact, a formal mitigation program established by the Federal 
Emergency Management Agency (FEMA).


Sec. 123.401  What types of mitigating measures are eligible for a pre-
disaster mitigation loan?

    Mitigation means specific measures taken by you to protect your 
real property or leasehold improvements from future disasters in 
Project Impact communities. If you are a landlord, the measures must be 
for protection of commercial rather than residential real property. 
Additionally, SBA will consider providing a pre-disaster mitigation 
loan for relocation if your commercial real property is located in a 
SFHA (Special Flood Hazard Area) and you relocate outside the SFHA but 
remain in the same Project Impact community. If the mitigation measures 
involved a flood hazard, the applicant small business must be located 
in an existing structure in a SFHA. The local Project Impact 
coordinator will confirm that your proposed project is in accordance 
with specific Project Impact priorities and goals of that community. 
SBA will verify each project to determine if the project will 
accomplish the desired mitigation results.


Sec. 123.402  Is my business eligible to apply for a pre-disaster 
mitigation loan?

    Most small business concerns located in a FEMA Project Impact 
community are eligible to apply for a pre-disaster mitigation loan. 
Your small business may be a sole proprietorship, partnership, 
corporation, limited liability company, or other legal entity 
recognized under State law. Your small business must have been in 
existence for at least one year prior to submitting an application for 
this loan.


Sec. 123.403  When would my business not be eligible to apply for a 
pre-disaster mitigation loan?

    Your business is not eligible for a pre-disaster mitigation loan if 
it fits into any of the categories in Sec. 123.101, Sec. 123.201, and 
Sec. 123.301. Your business (together with its affiliates) must be 
small (as defined in part 121 of this chapter) and SBA must determine 
that the business and its owners do not have the financial resources to 
fund the mitigation measures without undue hardship.


Sec. 123.404  How much can my business borrow with a pre-disaster 
mitigation loan?

    Pre-disaster mitigation loans are limited to $50,000 for each 
borrower together with its affiliates. Program funds will be allocated 
on a first come, first served filing basis. SBA will consider 
mitigation measures in excess of $50,000 if the business can show that 
the excess cost can be funded from other sources.


Sec. 123.405  What is the interest rate on a pre-disaster mitigation 
loan?

    Your pre-disaster mitigation loan will have an interest rate of 4 
percent per annum or less.


Sec. 123.406  How do I apply for a pre-disaster mitigation loan and 
which loans will be funded?

    (a) Each State, the District of Columbia, Puerto Rico, and the 
Virgin Islands have at least one Project Impact community. Only those 
small businesses located in the Project Impact communities are eligible 
to apply for a pre-disaster mitigation loan. At the beginning of each 
fiscal year, SBA will publish a notice of the pre-disaster mitigation 
declaration in the Federal Register identifying the type of assistance 
available, the application filing deadline and locations for obtaining 
and filing loan applications. Additionally, SBA will use FEMA and the 
local media to inform potential loan applicants where to obtain loan 
applications. SBA will not accept any applications after the announced 
deadline unless SBA reopens the application filing period.
    (b) Complete an SBA pre-disaster mitigation loan application 
package and attach a written statement from the local Project Impact 
coordinator that the project is in accordance with the specific 
priorities and goals of the local community. SBA will have a 30-day 
application filing period of November 1 through November 30 of each 
fiscal year. Additional application periods may be announced each year 
depending on availability of funds.
    (c) Upon acceptance of a completed application package by the SBA 
Disaster Area Office, that office will notify the Office of Disaster 
Assistance (ODA) of the acceptance. Each application will be processed 
(approval, decline, or withdrawal) by the Area Office and that office 
will notify ODA of the action. ODA will then notify each Area Office of 
which completed approval actions to fund based on the date the 
completed application package was received and availability of loan 
funds.


Sec. 123.407  What happens if my pre-disaster mitigation loan 
application is denied or withdrawn?

    (a) If your loan application is denied refer to Sec. 123.13. 
Additionally, if your application is accepted for reconsideration or 
appeal, SBA will reflect the date of reconsideration or appeal as the 
date the application was received.
    (b) If your loan application is withdrawn, the date of reacceptance 
will be considered as the date the application was received.

    Dated: June 29, 1999.
Aida Alvarez,
Administrator.
[FR Doc. 99-16999 Filed 7-6-99; 8:45 am]
BILLING CODE 8025-01-P