[Federal Register Volume 65, Number 6 (Monday, January 10, 2000)]
[Proposed Rules]
[Pages 1349-1350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-426]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120


Liquidation of Collateral

AGENCY: Small Business Administration (SBA).

ACTION: Proposed rule.

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SUMMARY: SBA proposes to amend 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. Previously, SBA amended its 
regulations to permit the sale of direct and purchased loans made under 
the authorities of the 7(a) and 501, 502, 503, and 504 programs (64 FR 
44109). SBA now proposes to sell its physical disaster home loans, 
physical disaster business loans and economic injury disaster loans 
(collectively referred to as Disaster Assistance Loans). This will 
include sales of both secured and unsecured Disaster Assistance Loans 
in performing and non-performing status. The Disaster Assistance 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.

DATES: Submit comments on or before February 9, 2000.

ADDRESSES: Comments should be mailed to Arnold S. Rosenthal, Assistant 
Administrator for Portfolio Management, Small Business Administration, 
409 Third Street, SW, Washington, DC 20416.

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

SUPPLEMENTARY INFORMATION: 13 CFR 120.540 sets forth SBA's policy for 
the liquidation of collateral and the sale of commercial loans. SBA now 
proposes to amend and expand this rule to include the sale of Disaster 
Assistance Loans in asset sales.
    Public Law 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 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.

Compliance With Executive Orders 13132, 12988, and 12866, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35).

    This proposed rule is not a significant rule within the meaning of 
Executive

[[Page 1350]]

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.
    This regulation concerns the ability of SBA to sell disaster loans 
as part of SBA's Asset Sales Programs. There will be no economic impact 
upon the small businesses that received those loans because the loans 
that will be sold are merely changing ownership, so no new funding is 
involved. The purchaser of the loans will be bound by the terms of the 
loan documents in the same manner as SBA. The Agency does not 
anticipate that any additional costs will placed upon small entities. 
Therefore, SBA believes that there will be no economic impact on small 
businesses.
    Nevertheless, even if it is assumed that there is an economic 
impact, this rule would still only have a minimal effect on an 
insubstantial number of small businesses. This is because SBA's total 
disaster business loan portfolio at the end of FY 1999 was 64,832 
loans, as contrasted with an estimated total of 24 million small 
businesses in the United States (as estimated by SBA's Office of 
Advocacy).
    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 13132, 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 3 of that Order.

List of Subjects in 13 CFR Part 120

    Loan programs--business.

    For the reasons stated in the preamble, SBA proposes to amend 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. Revise the section heading in Sec. 120.540 and amend the first 
sentence of paragraph (b)(4) as follows:


Sec. 120.540  What are SBA's policies concerning the liquidation of 
collateral and the sale of business loans and physical disaster 
assistance loans, physical disaster business loans and economic injury 
disaster loans?

* * * * *
    (b) * * *
    (4) Sell direct and purchased 7(a) and 501, 502, 503 and 504 loans 
and physical disaster home loans, physical disaster business loans and 
economic injury disaster loans in asset sales. * * *
* * * * *
    Dated: December 23, 1999.
Aida Alvarez,
Administrator.
[FR Doc. 00-426 Filed 1-7-00; 8:45 am]
BILLING CODE 8025-01-P