[Federal Register Volume 64, Number 156 (Friday, August 13, 1999)]
[Rules and Regulations]
[Pages 44109-44110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21062]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120


Liquidation of Collateral And Sale of Commercial Loans

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: With this rule, SBA amends its regulation regarding the 
liquidation and sale of loans. As part of a government-wide initiative, 
federal credit agencies are being directed by the Office of Management 
and Budget (OMB) to sell their loan portfolios. Initially, SBA intends 
to sell its portfolio of direct and purchased loans made under the 
authorities of the 7(a) and 501, 502, 503, and 504 programs. This will 
include both secured and unsecured loans in performing and non-
performing status. The loans will be sold to qualified bidders by means 
of competitive procedures at publicly advertised sales. Bidder 
qualifications will be set for each sale in accordance with the terms 
and conditions of each sale. SBA also intends to sell its disaster home 
loans and disaster business loans, but will publish separate 
regulations regarding these sales.

DATES: This rule is effective August 13, 1999.

FOR FURTHER INFORMATION CONTACT: Richard Blewett, 202-205-4202.

SUPPLEMENTARY INFORMATION: SBA promulgates, without change, a rule 
which it proposed on June 29, 1999 (64 FR 34745). SBA received no 
comments to the proposed rule.

    13 CFR 120.540 sets forth SBA's policy for the liquidation of 
collateral and the sale of commercial loans. SBA amends and expands 
this rule to include the sale of direct and purchased loans in asset 
sales. Pub. L. 104-134, the ``Debt Collection Improvement Act of 
1996,'' enacted on April 26, 1996, provides that, ``the head of an 
executive * * * agency may sell, subject to section 504(b) of the 
Federal Credit Reform Act of 1990 and using competitive procedures, any 
non-tax debt owed to the United States that is delinquent for more than 
90 days.'' 31 U.S.C. 3711(i)(1).
    The Small Business Act, 15 U.S.C. 634(b)(2), provides in pertinent 
part that ``(The Administrator) may sell at public or private sale * * 
* in (her) discretion any evidence of debt * * * personal property, or 
security * * *'' It further provides, in 15 U.S.C. 634(b)(7) that the 
Administrator may ``take any and all actions * * * when [she] 
determines such actions are necessary or desirable in * * * liquidating 
or otherwise dealing with or realizing on loans * * *''
    Pursuant to this statutory authority, SBA is establishing an Asset 
Sales Program to sell portions of its direct and participation loan 
portfolios. Under the new regulation, SBA may sell its direct and 
participation loans in bulk through competitive procedures at publicly 
advertised sales.

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 final 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 final 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 final 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 
final rule has no federalism implications warranting preparation of a 
Federalism Assessment. For purposes of Executive Order 12988, SBA 
certifies that this final 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 120

    Loan programs--business.

    For the reasons stated in the preamble, the Small Business 
Administration amends 13 CFR part 120 as follows:

PART 120--BUSINESS LOANS

    1. The authority citation for part 120 continues to read as 
follows:

    Authority: 15 U.S.C. 634 (b)(6) and 636(a) and (h).

    2. In Sec. 120.540, revise the section heading, add paragraph 
(b)(4), and revise paragraph (d) to read as follows:

[[Page 44110]]

Sec. 120.540  What are SBA's policies concerning the liquidation of 
collateral and the sale of business loans?

* * * * *
    (b) * * *
    (4) Sell direct and purchased 7(a) and 501, 502, 503 and 504 loans 
in asset sales. SBA will offer these loans for sale to qualified 
bidders by means of competitive procedures at publicly advertised 
sales. Bidder qualifications will be set for each sale in accordance 
with the terms and conditions of each sale.
* * * * *
    (d) Recoveries and security interests shared. SBA and the Lender 
will share pro rata (in accordance with their respective interests in a 
loan) all loan payments or recoveries, including proceeds from asset 
sales, all reasonable expenses (including advances for the care, 
preservation, and maintenance of collateral securing the loan and the 
payment of senior lienholders), and any security interest or guarantee 
(excluding SBA's guarantee) which the Lender or SBA may hold or receive 
in connection with a loan.
* * * * *
    Dated: August 10, 1999.
Aida Alvarez,
Administrator.
[FR Doc. 99-21062 Filed 8-12-99; 8:45 am]
BILLING CODE 8025-01-P