[Federal Register Volume 65, Number 63 (Friday, March 31, 2000)]
[Rules and Regulations]
[Pages 17132-17133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7944]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120


Liquidation of Collateral, Sale of Loans

AGENCY: Small Business Administration (SBA).

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. 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). This final rule will permit SBA to sell its physical 
disaster home loans, physical disaster business loans and economic 
injury disaster loans (collectively referred to as Disaster Assistance 
Loans) in addition to direct and purchased commercial 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: This rule is effective May 1, 2000.

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

SUPPLEMENTARY INFORMATION: SBA promulgates without change, a rule which 
it proposed on January 10, 2000 (65 FR 1349). SBA received no comments 
on the proposed rule and thus, is publishing the final rule as 
proposed.
    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 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)

    SBA has determined 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 has determined 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. This 
regulation concerns the ability of SBA to sell disaster loans as part 
of SBA's Asset Sales Program. 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

[[Page 17133]]

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 be 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 has determined 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 13132, SBA has determined that this 
final rule has no federalism implications.
    For purposes of Executive Order 12988, SBA has determined that this 
final rule is drafted, to the extent practicable, to accord with the 
standards set forth in section 3 of that Order.

List of Subjects in 13 CFR Part 120

    Loan programs--business.

    For the reasons stated in the preamble, SBA 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 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: March 21, 2000.
Aida Alvarez,
Administrator.
[FR Doc. 00-7944 Filed 3-30-00; 8:45 am]
BILLING CODE 8025-01-P