[Federal Register Volume 80, Number 114 (Monday, June 15, 2015)]
[Rules and Regulations]
[Pages 34043-34047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14413]



13 CFR Part 120

[Docket No. SBA-2013-0002]
RIN 3245-AG53

Microloan Program Expanded Eligibility and Other Program Changes

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

ACTION: Final rule.


SUMMARY: This rule finalizes the proposed rule that the U.S. Small 
Business Administration (``SBA'') issued for the Microloan Program to 
accomplish the goals of expanding the pool of eligible microborrowers, 
increasing minimum microloan production standards, removing the 
requirement that Intermediaries deposit funds only in interest bearing 
accounts, and allowing Microloan Program Intermediaries to use credit 
unions as depositories for their Microloan Revolving Funds (MRFs) and 
Loan Loss Reserve Funds (LLRFs). The rule also includes technical 
amendments that conform the regulations to current statutory authority.

DATES: This rule is effective July 15, 2015.

FOR FURTHER INFORMATION CONTACT: Grady Hedgespeth, Director, Office of 
Economic Opportunity: ATTN: Daniel Upham, Chief, Microenterprise 
Development Division, Office of Economic Opportunity, Small Business 
Administration, 409 3rd Street SW., Washington, DC 20416, telephone 


I. Background

    Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) (``Act'') 
authorizes SBA's Microloan Program, which assists small businesses that 
need small amounts of financial assistance. Under the program, SBA 
makes direct loans to Intermediaries, as defined in Sec.  120.701(e), 
that use the loan proceeds to make microloans to eligible borrowers. 
SBA is also authorized to make grants to Intermediaries to be used for 
marketing, management, and technical assistance.
    On March 17, 2014, SBA published a proposed rule in the Federal 
Register in order to clarify certain program requirements that have 
caused confusion and in response to feedback from existing 
Intermediaries. The changes proposed by SBA included: (1) revising the 
definition of insured depository institution in Sec.  120.701(d) to 
specifically include Federally-insured credit unions; (2) amending 
Sec.  120.707(a) to allow Intermediaries to make loans to businesses 
with an Associate, as defined in Sec.  120.10, who is currently on 
probation or parole, except in limited circumstances; (3) removing the 
requirement that Deposit Accounts, as defined in Sec.  120.701(a), be 
interest-bearing; and (4) increasing the minimum number of microloans 
Intermediaries are required to close and fund each year. The proposed 
rule also included a technical amendment to conform the regulations to 
current statutory authority. The comment period was open until May 16, 
    A summary of the comments received on the four proposed changes 
follows. There were no comments on the technical amendment. The final 
rule also includes two additional technical amendments that remove 
provisions with expired statutory authority, as further described 

II. Summary of Comments Received

    SBA received 19 written comments on the proposed rule during the 
comment period. Three of the comments addressed issues unrelated to the 
proposed rule changes; the remaining 16 comments were carefully 
considered. Commenters included several trade associations/advocacy 
groups and Intermediaries currently participating in the Microloan 
program. In general, commenters were supportive of the proposed 
changes. A section-by-section discussion of the comments received and 
the changes made follows.
    A. Use of Federally-Insured Credit Unions. SBA received six 
comments regarding the proposal to revise the definition of insured 
depository institution in Sec.  120.701(d) to specifically include 
Federally-insured credit unions. This change would clarify that 
Federally-insured credit unions are approved depositories for Microloan 
Revolving Funds and Loan Loss Reserve Funds. Five of the commenters, 
including two national advocacy groups, fully supported the revision, 
citing the need for Intermediaries to be able to use financial 
institutions that best meet their needs. One commenter opposed the 
change based on an overall opinion that credit unions have a 
competitive advantage over banks.
    SBA agrees that Microloan Program Intermediaries should be allowed 
to use the type of depository institution that best meets their needs, 
as long as the institution is federally insured. Proposed Sec.  
120.701(d) is adopted without change.
    B. Expanded Eligibility. SBA received ten comments regarding the 
proposal to allow Intermediaries to make loans to businesses with an 
Associate who is currently on probation or parole, most of which were 
supportive of the change. One commenter indicated that SBA should 
better define a ``crime involving fraud or dishonesty.'' An industry 
organization requested that SBA clarify that the change would allow 
Intermediaries to choose to make loans to businesses with an Associate 
on probation or parole, but would not require Intermediaries to make 
such loans. The organization also indicated that one of its members 
felt that these particular microloans may call for a high level of 
collateralization. The organization also asked why this allowance was 
being made only for the Microloan program, and not for SBA's guaranteed 
business loan programs (7(a) and 504). Another commenter stated the 
need for a high level of trust in the borrower by the Intermediary.
    Expanding eligibility for the Microloan Program will allow for 
increased creation of new businesses and will reduce the Federal 
barriers to successful reentry of formerly incarcerated individuals, 
who often have difficulty finding steady employment. The Agency 
developed this revision to the Microloan Program eligibility 
requirements as a result of a regulatory review conducted in connection 
with SBA's participation on the Federal Interagency Reentry Council. 
SBA's Microloan Program offers an opportunity for formerly incarcerated 
individuals who meet the Intermediaries' lending criteria to receive 
financing and technical assistance to start their own businesses.
    Risk to the taxpayer is mitigated because the Intermediary makes 
lending decisions locally, and provides microborrowers with training 
and technical assistance to help them learn to manage, market, and grow 
their small businesses. Furthermore, unlike in SBA's 7(a) and 504 
programs, microloans are not guaranteed by SBA. Intermediaries are 
responsible for ensuring that their borrowers repay, and Intermediaries 
are obligated to repay their loans to SBA regardless of the performance 
of the microloans funded using those loan proceeds.
    SBA agrees that a clarified definition of ``crime involving fraud 
or dishonesty'' should be provided and will do so via updates to the 
Microloan Program Standard Operating Procedures (SOP 52 00), which 
provides details regarding Microloan Program

[[Page 34044]]

operations. The SOP will provide examples of crimes involving fraud or 
dishonesty, such as larceny, theft, embezzlement, and forgery. As to 
the comment suggesting that loans to the expanded population would have 
to be highly collateralized due to the ``inherent risk of recidivism,'' 
there was no accompanying data or research provided by the commenter 
that demonstrated a higher level of risk of repayment in this 
community. As with all other microloans, Intermediaries that choose to 
make loans to this newly eligible population may follow their own 
policies and procedures, including the same collateral policies 
applicable to their other borrowers, as long as they do not conflict 
with Microloan Program requirements. In addition, while this change to 
the rule expands borrower eligibility, it does not impose any 
requirements on Intermediaries to make loans to this newly eligible 
population. Proposed Sec.  120.707 is adopted without change.
    C. Interest Bearing Deposit Accounts. SBA received seven comments 
regarding removal of the requirement that Microloan Revolving Funds and 
Loan Loss Reserve Funds be held in deposit accounts that are interest 
bearing. All were in full favor of removal of the restriction. The 
provision is adopted as proposed.
    D. Increased Minimum Microloan Requirement. SBA received 13 
comments regarding Sec.  120.716, which proposed to increase the 
minimum number of loans that an Intermediary must make each Federal 
fiscal year from four loans to twelve loans, and also specifically 
stated that Intermediaries that do not meet the minimum loan 
requirement are not eligible to receive new grant funding.
    One commenter questioned whether it would be possible for an 
Intermediary to meet the minimum loan requirement during the last years 
of the term of the Intermediary's SBA loan, when the loan balance may 
not support an additional twelve loans. SBA does not believe that this 
comment warrants a change in the final rule, for a number of reasons. 
The minimum loan requirement is an overall requirement, not one based 
on each SBA loan to an Intermediary. The majority of Intermediaries in 
the Microloan program have multiple outstanding SBA loans; therefore it 
is rare for an Intermediary to rely on only one SBA loan as the source 
of its Microloan funds.
    A trade organization questioned SBA's proposal to establish an 
across the board 12 loan minimum threshold for all lenders and 
suggested that SBA consider looking at other indicators in addition to 
the volume of loans made, such as the total amount of loans made. SBA 
believes that number of loans, rather than dollar volume of loans, is 
the most appropriate indicator for the Microloan Program. The Act 
specifically states that one of the purposes of the Program is to 
enable Intermediaries ``to provide small-scale loans, particularly 
loans in amounts averaging not more than $10,000.'' (15 U.S.C. 
636(m)(1)(A)(iii)(I)). In addition, the statute provides incentives, 
including lower costs of funds and additional grant funding, to 
Intermediaries that make smaller loans. Furthermore, despite the recent 
increase in the maximum microloan amount to $50,000, Congress did not 
similarly raise the average dollar amount threshold required to qualify 
for the incentives mentioned above.
    Assuming the same number of loans per year, the volume of lending 
for an Intermediary with an average loan size of less than $10,000 is 
significantly less than the volume of lending for an Intermediary with 
an average loan size above $25,000. Therefore, SBA does not feel it is 
appropriate to measure Intermediaries based on volume of dollars 
loaned. Such a measure would disproportionally harm Intermediaries that 
make the smallest dollar loans and provide Intermediaries with an 
incentive to do larger loans. Given these facts, SBA believes that a 
standard based on number of loans is more consistent with Congressional 
intent than a standard based on dollar volume of loans.
    The current minimum loan requirement is four loans per year. 
Proposed Sec.  120.716 would have gradually increased the minimum loan 
requirement over a three-year period to twelve loans per year. Most of 
the commenters generally supported increasing the minimum number of 
microloans from the current requirement. Five commenters supported 
increasing the requirement to twelve loans per year, as proposed. 
Several commenters supported a smaller increase in the minimum loan 
requirement, such as six, eight or ten loans per year. Some commenters 
were concerned that rural Intermediaries, small Intermediaries, and 
Intermediaries serving smaller geographic areas would be unable to meet 
a twelve loan requirement, and would therefore become ineligible to 
receive grant funding. Several of these commenters recommended a 
prorated approach to grant funding so as not to penalize the microloan 
borrowers of Intermediaries that fail to make the minimum required 
number of loans.
    In response to these comments, SBA has reduced the minimum loan 
requirement from twelve loans to ten loans and modified the rule to 
provide a corrective action process and possible eligibility for 
reduced grants for Intermediaries that make less than the minimum 
required number of loans. As in the proposed rule, there will be a 
gradual ramp-up period: six microloans in fiscal year 2016, eight 
microloans in fiscal year 2017, and ten microloans in fiscal year 2018 
and thereafter. SBA also added a provision to clarify that the minimum 
loan requirement for fiscal year 2015 remains four microloans. Based on 
average loan data for active Intermediaries (i.e., Intermediaries that 
make at least four loans per year) over the past five years, 
approximately 61 active Intermediaries would need to increase loan 
production in order to meet the proposed rule requirement of twelve 
loans per year. Using this same data, 51 active Intermediaries would 
need to increase production to meet the requirement of ten loans per 
year. This represents a 16% decrease in the number of Intermediaries 
that will be affected by the new loan production requirement of ten 
loans per year. Section 120.716(a) has been revised to incorporate this 
lower minimum loan requirement.
    In addition, SBA has revised Sec.  120.716(b) to include a 
corrective action process for Intermediaries that do not meet the 
minimum loan requirement. SBA determines whether an Intermediary is 
eligible for grant funding based on the number of microloans made in 
the previous Federal fiscal year. Under the proposed rule, an 
Intermediary that did not make the minimum number of microloans in the 
previous year would be ineligible for any grant funds. In response to 
comments received on the proposed rule, SBA revised Sec.  120.716(b) to 
allow Intermediaries that do not meet the minimum loan requirement to 
submit corrective action plans to SBA. An Intermediary that submits an 
acceptable corrective action plan may be awarded a reduced grant. This 
change makes it possible for Intermediaries that have not met the 
minimum loan requirement, but are taking steps to improve loan 
production, to still receive some grant funding. Conditions for reduced 
grants and details on corrective action plan submission requirements 
will be provided in the Microloan SOP.
    Several commenters also pointed out that it could be difficult for 
a new Intermediary to make the required number of loans per year, and 
suggested an exception for these Intermediaries. In response to these 
comments, SBA

[[Page 34045]]

revised Sec.  120.716(a) to provide that a new Intermediary is not 
required to meet the minimum loan requirement during the year it enters 
the program.
    Another commenter asked whether an Intermediary that has multiple 
loans from SBA is required to meet minimum loan requirements for each 
such SBA loan. The minimum loan requirement is an overall requirement; 
it does not increase based on the number of loans the Intermediary has 
outstanding from SBA.
    An advocacy group that supported the proposed minimum loan 
requirement nonetheless raised a concern that an increase in the 
minimum loan requirement might create a gap in the availability of 
funds for businesses in need of larger loans in the $20,000 to $50,000 
range, because Intermediaries would make more small-dollar loans in 
order to meet the requirements. SBA does not anticipate that 
Intermediaries with average loan sizes of $20,000 or more (which 
currently make up 39% of all Intermediaries) will significantly alter 
their lending practices as a result of the increased loan production 
requirements. Furthermore, none of the comments from current 
Intermediaries indicated that average loan sizes would be likely to 
change as a result of the increased loan requirement.

III. Additional Technical Amendments

    The final rule revises Sec.  120.712(d), Intermediaries eligible to 
receive additional grant monies, to remove subparagraph (1), which 
provided additional grant eligibility for an Intermediary that makes at 
least 25 percent of its loans to small businesses located in or owned 
by residents of an Economically Distressed Area. The authority to 
provide additional grants to such Intermediaries expired on October 1, 
1997. See Public Law 103-403, section 208(c). Under current statutory 
authority, only Intermediaries that maintain a microloan portfolio 
averaging $10,000 or less, defined as Specialized Intermediaries in 
Sec.  120.701, are eligible to receive additional grant funding.
    The final rule also removes the definition of Economically 
Distressed Area in Sec.  120.701(b), because that term was only present 
in former Sec.  120.712(c) and (d)(1). As stated above, subparagraph 
(1) of Sec.  120.712(d) was removed because the statutory authority for 
the provision expired. Similarly, as stated in the proposed rule, the 
authority for Sec.  120.712(c) was removed from the statute in 2010.
    These additional technical amendments serve only to conform program 
regulations to current SBA statutory authority; they do not change 
existing Agency practice, nor do they have any effect on program 

Compliance With Executive Orders 12866, 12988, 13132, and 13563, the 
Paperwork Reduction Act (44 U.S.C. Ch.35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 13563 and Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is a significant regulatory action for purposes of Executive 
Order 12866. However, this is not a major rule under the Congressional 
Review Act, 5 U.S.C. 800. A Regulatory Impact Analysis was published in 
the proposed rule. In summary, the regulatory objectives include: 
allowing Federally-insured credit unions to hold MRF and LLRF accounts; 
allowing any Microloan Program Intermediary to make a microloan (loan 
of $50,000 or less) to a business with an Associate who is on probation 
or parole; removing the requirement that the Microloan Revolving Fund 
(MRF) and Loan Loss Reserve Fund (LLRF) be held in interest bearing 
deposit accounts; increasing the minimum number of loans that an 
Intermediary must make annually in order to qualify for grant funding; 
and, adding technical amendments that conform the regulations to 
current statutory authority. No comments were received regarding the 
Regulatory Impact Analysis.
    A description of the need for this regulatory action and the 
benefits and costs associated with this action, including possible 
distributional impacts that relate to Executive Order 13563, were 
included in the Regulatory Impact Analysis under Executive Order 12866. 
The changes would impact approximately 50 Microloan Intermediaries that 
generally make fewer than 10 loans per year but more than three loans. 
It is anticipated that the costs to the Intermediaries will be only 
those associated with the operating expenses associated with making and 
servicing an increased number of loans. SBA does not anticipate any 
impact on the program's subsidy model and believes that Intermediaries 
will continue to make prudent lending decisions. SBA also anticipates 
improved use of resources as more microloans are made.
    Based on the analysis of the Federal Interagency Reentry Council 
from 2010 (http://csgjusticecenter.org/nrrc/facts-and-trends/) there 
are some 4.9 million probationers and parolees. Therefore, SBA believes 
that the regulatory changes will expand access to capital for people 
who are not easily employable, but who have the capacity to operate a 
small business, will reduce program costs, and better utilize taxpayer 

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    SBA has determined that this final rule will not have substantial, 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, for 
the purpose of Executive Order 13132, SBA has determined that this 
final rule has no federalism implications warranting preparation of a 
federalism assessment.

Executive Order 13563

    Executive Order (E.O.) 13563 reaffirms the principles of E.O. 12866 
while calling for improvements to promote predictability, reduce 
uncertainty, and to use the best, most innovative, and least burdensome 
tools for achieving regulatory ends. E.O. 13563 further emphasizes that 
regulations be based in the best available science and that the 
rulemaking process allow for public participation and the open exchange 
of ideas. This rule has been developed consistent with these 
requirements and is written with the idea of reducing the number and 
burden of regulations.
    The Microloan Program operates through SBA lending partners, which 
are Intermediary lenders. Prior to publication of the proposed rule, 
the Agency presented the proposals in meetings which allowed it to 
reach the vast majority of Microloan Program participants and 
stakeholder trade associations. In this way, the Agency was able to 
gain valuable insight, guidance, and suggestions from interested 

Paperwork Reduction Act, 44 U.S.C., Ch.35

    As discussed above, in response to comments received, SBA is making 
a change in the final rule that will require Intermediaries that are 
not in compliance with the minimum loan standards to submit a 
corrective action plan to the Agency as a condition of

[[Page 34046]]

receiving a grant. Section 120.716(b). However, this change does not 
impose a new reporting requirement. Currently, SBA may require 
microloan Intermediaries that are generally not in compliance with 
program requirements to submit a corrective plan outlining how the 
Intermediary intends to resolve its noncompliance issues. This 
requirement is covered under OMB-approved information collection number 
3245-0365, SBA Lender, Microloan Intermediary, and NTAP Reporting 

Regulatory Flexibility Act, 5 U.S.C. 601-612

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires 
administrative agencies to consider the economic impact of their 
actions on small entities, including small businesses, small nonprofit 
businesses, and small local governments. The RFA requires the Agency to 
prepare a regulatory flexibility analysis describing the economic 
impact that the rule will have on small entities, or certify that the 
rule will not have a significant economic impact on a substantial 
number of small entities.
    SBA has determined that although the rulemaking will impact all of 
the approximately 145 Intermediaries, such impact will not be 
significant. All of the Intermediaries are small nonprofit or quasi-
governmental entities. Approximately 63 existing Intermediaries (43 
percent), including Intermediaries that are not currently active, will 
be required to increase loan production in order to meet new minimum 
lending requirements. To minimize hardship, SBA will increase the 
minimum lending requirement in a graduated fashion: six microloans in 
2016, 8 microloans in 2017, and 10 microloans in 2018 and thereafter. 
This graduated increase will provide Intermediaries with time to ramp 
up loan production to meet the higher requirements. SBA anticipates 
that a small number of Intermediaries may choose to end their 
participation in the Microloan Program as a result of the new 
requirements. However, these entities are making so few loans, and 
generating such a small amount of revenue from these microloans, that 
exiting the program will not cause a significant economic impact for 
the Intermediaries or for potential borrowers. The 63 affected 
Intermediaries represent an estimated 315 total microloans for 
approximately $5.3 million, or 5 microloans per Intermediary. Over the 
past five years, the Microloan Program has averaged 4,180 microloans 
totaling $49.3 million. Therefore, even if all of the affected 
Intermediaries left the program, the impact would reduce microloan 
volumes by just 7.5 percent in terms of number of loans and 10.9 
percent in terms of volume of loans. These estimates assume that all 63 
impacted Intermediaries would leave the Program. SBA believes that the 
number of Intermediaries choosing to leave the Program would actually 
be significantly less, further reducing potential economic impact. In 
addition, although failure to meet the minimum loan requirement is 
grounds for an enforcement action under Sec.  120.1425, SBA does not 
currently anticipate using the minimum loan requirement as the sole 
basis for taking enforcement actions against Intermediaries.
    SBA estimates that entities leaving the program will lose 
approximately $23,000 in annual revenue associated with microloans that 
would have been made under the SBA Microloan Program. The $23,000 
represents approximate annual interest and fee income for five 
microloans of $17,000. An organization making just five microloans a 
year is not sustainable and must rely on other sources of income to 
operate. Microloan Intermediaries average more than $1.25 million in 
annual revenues; $23,000 in lost revenue represents less than 2 percent 
of total annual revenues per affected Intermediary.
    No comments were received regarding economic impact except that 
some small Intermediaries indicated concern that they would not be able 
to appropriately serve rural areas. This concern has been addressed in 
the final rule by reducing the minimum loan requirement from twelve 
loans to ten loans per year and providing a corrective action process 
by which Intermediaries that do not meet the minimum loan requirement 
may still be eligible for grant funding at a reduced amount. 
Accordingly, the SBA Administrator hereby certifies that this final 
rule will not have a significant economic impact on a substantial 
number of small entities.

List of Subjects in 13 CFR Part 120

    Community development, Equal employment opportunity, Loan 
programs--business, Reporting and recordkeeping requirements, Small 

    For reasons stated in the preamble, the U.S. Small Business 
Administration amends 13 CFR part 120 as follows:


1. The authority citation for 13 CFR part 120 continues to read as 

    Authority: 15 U.S.C. 634(b)(6), (b)(7), (b)(14), (h), and note 
636(a), (h), and (m), 650, 687(f), 696(3), and 697(a) and (e); Pub. 
Law 111-5, 123 Stat. 115, Pub. Law 111-240, 124 Stat 2504.

2. In Sec.  120.701, remove paragraph (b) and redesignate paragraphs 
(c) through (i) as paragraphs (b) through (h) respectively, and revise 
newly redesignated paragraph (c) to read as follows:

Sec.  120.701  Definitions.

* * * * *
    (c) Insured depository institution means any Federally insured 
bank, savings association, or credit union.
* * * * *

3. Amend Sec.  120.707 by revising paragraph (a) to read as follows:

Sec.  120.707  What conditions apply to loans by Intermediaries to 
Microloan borrowers?

    (a) Except as otherwise provided in this paragraph, an Intermediary 
may only make Microloans to small businesses eligible to receive 
financial assistance under this part. A borrower may also use Microloan 
proceeds to establish a nonprofit child care business. An Intermediary 
may also make Microloans to businesses with an Associate who is 
currently on probation or parole; provided, however, that the Associate 
is not on probation or parole for an offense involving fraud or 
dishonesty or, in the case of a child care business, is not on 
probation or parole for an offense against children. Proceeds from 
Microloans may be used only for working capital and acquisition of 
materials, supplies, furniture, fixtures, and equipment. SBA does not 
review Microloans for creditworthiness.
* * * * *

4. Amend Sec.  120.709 by revising the first sentence to read as 

Sec.  120.709  What is the Microloan Revolving Fund?

    The Microloan Revolving Fund (``MRF'') is a Deposit Account into 
which an Intermediary must deposit the proceeds from SBA loans, its 
contributions from non-Federal sources, and payments from its Microloan 
borrowers. * * *

5. Amend Sec.  120.710 by revising paragraph (a) to read as follows:

Sec.  120.710  What is the Loan Loss Reserve Fund?

    (a) General. The Loan Loss Reserve Fund (``LLRF'') is a Deposit 
Account which an Intermediary must establish to pay any shortage in the 
MRF caused by delinquencies or losses on Microloans.
* * * * *

[[Page 34047]]

6. Amend Sec.  120.712 by removing paragraph (c) and redesignating 
paragraphs (d) and (e) as paragraphs (c) and (d) respectively, and 
revising newly redesignated paragraph (c) to read as follows:

Sec.  120.712  How does an Intermediary get a grant to assist Microloan 

* * * * *
    (c) Intermediaries eligible to receive additional grant monies. An 
Intermediary may receive an additional SBA grant equal to five percent 
of the outstanding balance of all loans received from SBA (with no 
obligation to contribute additional matching funds) if the Intermediary 
is a Specialized Intermediary.
* * * * *

7. Add new Sec.  120.716 to read as follows:

Sec.  120.716  What is the minimum number of loans an Intermediary must 
make each Federal fiscal year?

    (a) Minimum loan requirement. Intermediaries must close and fund 
the required number of microloans per year (October 1-September 30) as 
follows, except that an Intermediary entering the program will not be 
required to meet the minimum in that year:
    (1) For fiscal year 2015, four microloans,
    (2) For fiscal year 2016, six microloans,
    (3) For fiscal year 2017, eight microloans, and
    (4) For fiscal years 2018 and thereafter, ten microloans per year.
    (b) Intermediaries that do not meet the minimum loan requirement 
are not eligible to receive new grant funding unless they submit a 
corrective action plan acceptable to SBA, in its discretion. 
Intermediaries that have submitted acceptable corrective action plans 
may receive a reduced grant at SBA's discretion.

8. Amend Sec.  120.1425 by revising paragraph (d)(2) to read as 

Sec.  120.1425  Grounds for enforcement actions--Intermediaries 
participating in the Microloan Program and NTAPs.

* * * * *
    (d) * * *
    (2) Failure to close and fund the required number of microloans per 
year under Sec.  120.716.
* * * * *

Maria Contreras-Sweet,
[FR Doc. 2015-14413 Filed 6-12-15; 8:45 am]