[Federal Register Volume 76, Number 190 (Friday, September 30, 2011)]
[Notices]
[Pages 60960-60961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25186]


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SMALL BUSINESS ADMINISTRATION


Gulf Opportunity Pilot Loan Program (GO Loan Pilot)

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

ACTION: Notice of extension of waiver of regulatory provisions.

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SUMMARY: This notice announces the extension of SBA's GO Loan Pilot, 
with modifications, until December 31, 2013. Due to the scope and 
magnitude of the devastation to Presidentially-declared disaster areas 
resulting from Hurricanes Katrina and Rita, as well as the further 
devastation by the April 2011 severe storms, tornadoes and flooding 
along the Mississippi River and its tributaries, and most recently 
Tropical Storm Lee, which together have had a long-term negative impact 
on the recovery of small businesses in the region, the Agency is 
extending its full guaranty and streamlined and centralized loan 
processing available through the GO Loan Pilot to small businesses in 
the eligible parishes/counties through December 31, 2013.

DATES: The waiver of regulatory provisions published in the Federal 
Register on November 17, 2005, is extended with modifications until 
December 31, 2013.

FOR FURTHER INFORMATION CONTACT: W. Sloan Coleman, Office of Financial 
Assistance, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416; Telephone (202) 205-7737; [email protected].

SUPPLEMENTARY INFORMATION: On November 8, 2005, SBA initiated the GO 
Loan Pilot program, which was designed to provide expedited small 
business financial assistance to businesses located in those 
communities severely impacted by Hurricanes Katrina and Rita. Under 
this unique initiative, SBA provides its full (85%) guaranty and 
streamlined and centralized loan processing to all eligible lenders 
that agree to make expedited SBA 7(a) loans available to 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.
    To maximize the effectiveness of the GO Loan Pilot, on November 17, 
2005, SBA published a notice in the Federal Register waiving for the GO 
Loan Pilot certain Agency regulations for the 7(a) Business Loan 
Program. (70 FR 69645). The pilot, including the waiver of regulations, 
was designed as a temporary program and was originally scheduled to 
expire on September 30, 2006, but was extended to September 30, 2011. 
The Agency believes, however, that there is a continuing, substantial 
need for the specific SBA assistance provided by this pilot in the 
affected areas. SBA, therefore, is extending the GO Loan Pilot, but 
with a modification to the previous regulatory waiver published in the 
Federal Register on November 17, 2005, as described more fully below.
    Under SBA's regulations at 13 CFR120.102, 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. As stated in the Federal Register notice 
published on November 17, 2005, this regulation was waived ``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.'' Because the devastation caused by Hurricanes 
Katrina and Rita occurred more than six years ago, SBA no longer 
believes it is necessary to waive this regulation for loans under the 
GO Loan Pilot and, therefore, is not extending the waiver of 13 CFR 
120.102.
    SBA is extending the waiver of all other regulatory provisions 
published in the Federal Register on November 17, 2005 as part of the 
GO Loan Pilot program. Specifically, SBA is continuing to waive 13 CFR 
120.213(a), 120.214(a) through (e), and 120.215 in order to allow GO 
Loan Pilot Lenders to charge the interest rates applicable to the SBA 
Express Program as set forth in SOP 50 10 5, Subpart B, Chapter 3. (SOP 
50 10 5 may be found on SBA's Web site at http://www.sba.gov/for-lenders, then click on Standard Operating Procedures for a listing of 
SOPs.) SBA is also continuing to waive 13 CFR Sec.  120.222 in order to 
permit GO Loan Pilot lenders to charge the same fees on GO Loans as 
they charge on their similarly sized non-SBA guaranteed commercial 
loans.
    When compared to other similarly-sized Section 7(a) loans, the GO 
Loan

[[Page 60961]]

Pilot portfolio is performing very well, at about one-half the rate of 
liquidation and one-quarter the rate of loan purchase compared to all 
other 7(a) loans of $150,000 or less. In addition, the demand for GO 
Loans has continued during FY2011 in response to the ongoing need to 
rebuild the Gulf Coast areas devastated by Hurricanes Katrina and Rita 
and the setback in these efforts caused by the several natural 
disasters that affected the region this year. The approximate number of 
GO Loans is only slightly less than the number of loans approved in FY 
2010 at approximately 520 loans.
    Thus, the Agency believes it is appropriate to extend this unique 
and vital program through December 31, 2013, with no further extensions 
after that. In the interim, the Agency will determine whether a program 
should be developed that provides for disaster recovery financial 
assistance under SBA's 7(a) Business Loan Program that could be applied 
to any region that meets a predetermined set of criteria. Accordingly, 
the SBA is also extending its waiver of the Agency regulations 
identified in the Federal Register notice at 70 FR 69645 with the 
exception noted above through December 31, 2013 only.
    SBA's waiver of these regulations is authorized by 13 CFR 120.3. 
These waivers apply only to those loans approved under the GO Loan 
Pilot, which expires December 31, 2013. As part of the GO Loan Pilot, 
these waivers apply only to those small businesses located in, locating 
to, or relocating 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 will be included in an SBA procedural notice 
that will announce the extension of the GO Loan Pilot.

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

    Dated: September 26, 2011.
Steven J. Smits,
Associate Administrator, Office of Capital Access.
[FR Doc. 2011-25186 Filed 9-29-11; 8:45 am]
BILLING CODE 8025-01-P