[Federal Register Volume 70, Number 221 (Thursday, November 17, 2005)]
[Rules and Regulations]
[Pages 69645-69646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-22834]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120


Gulf Opportunity Pilot Loan Program (GO Loan Pilot); Waiver of 
Regulatory Provisions

AGENCY: U.S. Small Business Administration (SBA).

ACTION: Notice of waiver of regulatory provisions.

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SUMMARY: The U.S. Small Business Administration (SBA) announces the 
waiver for SBA's GO Loan Pilot of certain Agency regulations applicable 
to the 7(a) Business Loan Program, including those relating to personal 
assets of borrowers, interest rates and provisions that prohibit 
lenders from charging certain fees. SBA's GO Loan Pilot provides 
expedited small business financing to those communities severely 
impacted by Hurricanes Katrina and Rita. SBA intends for these waivers 
to minimize the burden on businesses applying for loans through the GO 
Loan Pilot and to provide incentives for lenders to participate in the 
pilot.

DATES: The waiver is effective for GO Loan Pilot loans approved from

[[Page 69646]]

November 17, 2005 until September 30, 2006.

FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial 
Assistance, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416; Telephone (202) 205-6490, e-mail address: 
[email protected].

SUPPLEMENTARY INFORMATION: SBA is continuing to respond to the 
unprecedented devastation incurred by those small businesses located in 
the communities affected by Hurricanes Katrina and Rita. The Agency has 
announced a new initiative called the GO Loan Pilot, which is one 
important component of the Agency's response. The GO Loan Pilot 
generally will apply the policies and procedures in place for the 
Agency's SBAExpress program, although there will be several substantial 
differences. The pilot is designed to streamline SBA financing on an 
emergency basis to those small businesses located in, locating to or 
re-locating in the parishes/counties that have been Presidentially-
declared as disaster areas resulting from Hurricanes Katrina and Rita, 
plus any contiguous parishes/counties. The maximum loan amount under 
the pilot is $150,000 and loans carry a full 85 percent guaranty by 
SBA. The GO Loan Pilot will be available for use in FY 2006 and will 
expire on September 30, 2006.
    To maximize the effectiveness of the GO Loan Pilot, SBA is waiving 
certain Agency regulations for the 7(a) Business Loan Program. These 
waivers will also minimize the burdens on the businesses applying for 
loans through the GO Loan Pilot and provide incentives for lenders to 
participate in the pilot.
    Under Sec.  120.102 of SBA's regulations (13 CFR 120.102), an 
applicant for an SBA-guaranteed loan through the 7(a) program must show 
that the desired funds are not available from the personal resources of 
any owner of 20 percent or more of the equity of the applicant. If such 
personal resources are readily available, SBA requires that those 
resources above a certain amount, which varies with the size of the 
loan, must be injected into the applicant firm's financing package to 
reduce the amount of SBA's funding. Under the GO Loan Pilot, the 
maximum loan amount is limited to $150,000, so under standard 7(a) 
program procedures, each 20 percent or more owner of the applicant 
business normally would be required to inject any personal liquid 
assets which are in excess of two times the total financing package, or 
in excess of $100,000, whichever is greater.
    However, in recognition of the scope and magnitude of the 
destruction suffered by these communities as a result of Hurricanes 
Katrina and Rita, and the need for immediate reconstruction, SBA 
believes that, due to other disaster-related exigencies, prospective 
borrowers under the GO Loan Pilot will be unable to expediently meet 
SBA's requirement that personal resources above a certain amount must 
be injected into the firm's capitalization. Therefore, to further 
facilitate and expedite the processing of SBA loans under the GO Loan 
Pilot, and to avoid over-taxing the resources of financially-strapped 
borrowers, SBA is waiving Sec.  120.102 for loans approved under this 
pilot.
    Under Sec. Sec.  120.213 through 120.215, SBA prescribes the 
maximum interest rates that a Lender may charge a borrower. For loans 
approved under the GO Loan Pilot, SBA is waiving the regulatory 
provisions set out at Sec. Sec.  120.213(a), 120.214(a) through (e) and 
120.215. GO Loan Pilot lenders may charge the interest rates applicable 
to the SBAExpress program as set forth in the SBAExpress Program Guide, 
available on SBA's Web site at http://www.sba.gov/banking/exguide.pdf. 
SBA is also waiving Sec.  120.222, which prohibits lenders from 
charging certain fees to borrowers. Thus, under the Pilot, lenders will 
be permitted to charge the same fees on GO Loans as they charge on 
their non-SBA guaranteed commercial loans. SBA is waiving Sec. Sec.  
120.213(a), 120.214(a) through (e), 120.215 and 120.222 to provide 
incentives to lenders to participate in the pilot program.
    SBA's waiver of these provisions is authorized by Sec.  120.3 of 
its regulations (13 CFR 120.3). These waivers apply only to those loans 
approved under the GO Loan Pilot and will last only for the duration of 
the pilot, which expires September 30, 2006. As part of the GO Loan 
Pilot, these waivers apply only to those small businesses located in, 
locating to or re-locating in the parishes/counties that have been 
Presidentially-declared as disaster areas resulting from Hurricanes 
Katrina or Rita, plus any contiguous parishes/counties. (A list of all 
eligible parishes/counties is located at http://www.sba.gov/financing/index.html.)

    Authority: 15 U.S.C. 636(a)(24); 13 CFR 120.3.

Hector V. Barreto,
Administrator.
[FR Doc. 05-22834 Filed 11-16-05; 8:45 am]
BILLING CODE 8025-01-P