[Federal Register Volume 72, Number 120 (Friday, June 22, 2007)]
[Pages 34501-34502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12099]



Patriot Express Pilot Loan Initiative

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

[[Page 34502]]

ACTION: Notice of SBA's establishment of the Patriot Express Pilot Loan 


SUMMARY: To support the entrepreneurial sector of the Nation's military 
community that are being significantly affected by what is expected to 
be a protracted war on terror, SBA is introducing a 7(a) pilot loan 
initiative to provide needed financial assistance to these 
entrepreneurs. Under this initiative, which will operate as a pilot 
through December 31, 2010, SBA will provide streamlined documentation 
and expedited loan processing and its 75-85 percent guaranty for loans 
up to $500,000 made to eligible members of the military community.

DATES: The Patriot Express Pilot Loan Initiative will operate through 
December 31, 2010, after which the SBA will evaluate its performance 
and make a decision whether to modify and/or continue the initiative.

FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial 
Assistance, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416; Telephone (202) 205-6656; [email protected].

SUPPLEMENTARY INFORMATION: Under the Patriot Express Pilot Loan 
Initiative, SBA is implementing a 7(a) loan product targeted to the 
small business financing needs of the military community and is 
incorporating that initiative into a comprehensive, new strategy that 
integrates, markets and promotes SBA's available financial, procurement 
and technical assistance programs to this community. The Patriot 
Express Pilot Loan Initiative will adopt many of the streamlined 
documentation and expedited processes and procedures of SBA's highly 
successful SBAExpress loan program; however, there will be several 
critical differences. SBA's guaranty of up to 85 percent will apply to 
Patriot Express loans of $150,000 or less and its guaranty of up to 75 
percent will apply to Patriot Express loans above $150,000, which 
contrasts with the 50 percent SBA guaranty that is applicable to all 
SBAExpress loans. Also, the maximum loan amount under the Patriot 
Express Pilot Loan Initiative is $500,000, compared to the maximum loan 
amount of $350,000 available under the SBAExpress loan program. Lenders 
must use their existing prudent collateral practices for Patriot 
Express loans. For loans above $350,000, lenders must obtain all 
available collateral. Maximum interest rates for Patriot Express loans 
are the same as those allowed under SBA regulations for the 7(a) 
program, as opposed to the higher interest rates allowed under the 
SBAExpress program.
    In addition to the standard 7(a) loan eligibility requirements, 
eligibility for Patriot Express loans will be limited to certain 
members of the military community, and lenders will be required to 
document each borrower's eligibility using approved Department of 
Defense or Veterans' Administration documentation and that 
documentation must be furnished to SBA with any purchase request. In an 
effort to support a substantial segment of the military community 
affected by military call-ups, SBA is making the following persons 
eligible for Patriot Express: (1) Veterans (other than dishonorably 
discharged); (2) Service-disabled veterans; (3) Active-duty military 
participating in the military's Transition Assistance Program for 
potential retirees within 24 months of separation and discharging 
active duty members within 12 months of discharge; (4) Reservists and 
National Guard members; and (5) The current spouse of the above and the 
widowed spouse of a service member or veteran who died during service 
or of a service-connected disability. However, SBA emphasizes that this 
definition of eligibility for the Patriot Express Pilot Loan Initiative 
will be limited to just Patriot Express 7(a) loans, and it will not 
apply to other SBA loan programs, procurement programs, etc. Lender 
participants in the Patriot Express Pilot Loan Initiative will be 
limited to SBAExpress lenders and PLP lenders, which must meet certain 
SBA prescribed proficiency and performance standards. Lenders that are 
not either PLP or SBAExpress lenders may apply to participate in 
SBAExpress and Patriot Express at the same time. Additionally, Patriot 
Express lenders must maintain a satisfactory lending performance as 
determined by SBA, in its sole discretion, to retain authority to make 
Patriot Express loans.
    Pursuant to the authority provided to SBA under 13 CFR 120.3 to 
waive certain regulations in establishing and testing pilot loan 
initiatives for some stated period of time, SBA will waive the 
following regulations, which otherwise apply to 7(a) loans, for loans 
made under the Patriot Express Pilot Loan Initiative only: (1) Sec.  
120.130(c), which prohibits revolving lines of credit, is waived in 
order to allow revolving lines of credit under the Patriot Express 
Pilot Loan Initiative; (2) Sec.  120.150, which specifies certain 
credit criteria, is waived in order for SBA to delegate the credit 
decision to the lender, but lenders are still required to use their 
existing, proven, and prudent loan practices used for similarly sized 
non SBA guaranteed small business loans; (3) Sec.  120.160(b) and (c), 
which require hazard insurance and appraisals is waived and SBA will 
defer to the lender's existing, prudent policy used for its similarly 
sized non-SBA guaranteed small business loans regarding hazard 
insurance and appraisals; and (4) Sec.  120.191, which specifies the 
information a 7(a) loan application must include is waived to allow 
lenders to use mostly their own documents consistent with the 
documentation requirements for SBAExpress loans.

    Authority: 13 CFR 120.3

Grady B. Hedgespeth,
Director/Office of Financial Assistance.
[FR Doc. E7-12099 Filed 6-21-07; 8:45 am]