[Federal Register Volume 83, Number 88 (Monday, May 7, 2018)]
[Rules and Regulations]
[Pages 19921-19922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09627]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120


Express Bridge Loan Pilot Program; Modification of Fee Policy

AGENCY: U.S. Small Business Administration.

ACTION: Notification of change to Express Bridge Loan Pilot Program and 
impact on regulatory provision.

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SUMMARY: On October 16, 2017, the U.S. Small Business Administration 
(SBA) published a document announcing the Express Bridge Loan Pilot 
Program (Express Bridge Pilot). In that document, SBA provided an 
overview of the Express Bridge Pilot and modified an Agency regulation 
relating to loan underwriting for loans made under the Express Bridge 
Pilot. SBA continues to refine and improve the design of the Express 
Bridge Pilot and is issuing this document to revise the program 
requirements, including the modification of an Agency regulation 
relating to fees that can be collected from the Applicant or Borrower 
in connection with a loan made under the Express Bridge Pilot.

DATES: The revised program requirements described in this document 
apply to all Express Bridge Pilot loans approved on or after May 7, 
2018, and the Express Bridge Pilot will remain available through 
September 30, 2020.

FOR FURTHER INFORMATION CONTACT: Dianna Seaborn, Director, Office of 
Financial Assistance, U.S. Small Business Administration, 409 Third 
Street SW, Washington, DC 20416; Telephone (202) 205-3645; email 
address: [email protected].

SUPPLEMENTARY INFORMATION: On October 16, 2017, SBA published a 
document announcing the Express Bridge Pilot. (82 FR 47958) The Express 
Bridge Pilot is designed to supplement the Agency's disaster response 
capabilities and authorizes the Agency's 7(a) Lenders with SBA Express 
lending authority to deliver expedited SBA-guaranteed financing on an 
emergency basis for disaster-related purposes to small businesses 
located in communities impacted by a Presidentially-declared disaster, 
while the businesses apply for and await long-term financing (including 
through SBA's direct disaster loan program, if eligible).
    The Express Bridge Pilot applies the policies and procedures in 
place for the Agency's SBA Express program, except as outlined in the 
Federal Register document published on October 16, 2017. Pursuant to 
the authority provided to SBA under 13 CFR 120.3 to suspend, modify or 
waive certain regulations in establishing and testing pilot loan 
initiatives, SBA modified the regulation at 13 CFR 120.150 (``What are 
SBA's lending criteria?''), which applies to loans made in the 7(a) 
Business Loan Program. SBA modified the regulation in order to minimize 
the burdens on the businesses applying for loans through the Express 
Bridge Pilot and to expand the opportunities for SBA Express lenders to 
participate in the pilot.
    SBA continues to refine and improve the design of the Express 
Bridge Pilot and, therefore, is issuing this document to clarify the 
fees that Lenders or third parties are able to collect from Applicants 
or Borrowers in connection with loans made under the pilot. All Express 
Bridge Pilot loans are subject to the same upfront guaranty fees 
required for 7(a) loans of similar size and maturity as set forth in 13 
CFR 120.220. In addition, all Express Bridge Pilot loans are subject to 
the same Lender's annual service fee required for all 7(a) loans as set 
forth in 13 CFR 120.220(f).
    In order to ensure that Applicants and Borrowers are charged only 
those additional fees reasonably necessary in connection with an 
Express Bridge Pilot loan, SBA is modifying the regulation at 13 CFR 
120.221 (``Fees and expenses which the Lender may collect from a loan 
applicant or Borrower''), using the term modify as contemplated under 
13 CFR 120.3, to permit Lenders to collect only the following:

[[Page 19922]]

    1. Lender Fees: An SBA Express Lender must not impose any fees or 
direct costs on an Express Bridge Pilot Applicant or Borrower, except 
for the following:
    a. Application Fee: SBA Express Lenders may charge an Express 
Bridge Pilot Applicant an application fee. The maximum permissible 
application fee is 2% of the loan amount or $250, whichever is greater. 
If an application fee is charged, it must be disclosed on SBA Form 
159(7a), Fee Disclosure Form and Compensation Agreement for Agent 
Services in Connection with a SBA 7(a) Loan. If an undisbursed loan is 
canceled, the Lender may retain the application fee;
    b. Late Payment Fee: A late payment fee not to exceed 5 percent of 
the scheduled Express Bridge Pilot loan payment; and
    c. Liquidation Costs: The reasonable direct costs of liquidation.
    2. Prohibition on all other fees and charges, including by loan 
packagers, referral agents or brokers. Except as permitted in 1. above, 
no other fee or costs may be charged to an Express Bridge Pilot 
Applicant or Borrower by the Lender. In addition, no fee or costs may 
be charged to an Express Bridge Pilot Applicant or Borrower by any 
third party in connection with an Express Bridge Pilot loan, including 
any referral fee, broker's fee, or similar fee.
    The modification of this regulation will permit SBA Express lenders 
to recoup some of their costs in processing the application, without 
subjecting the Applicant to excessive or unnecessary fees for these 
small guaranteed loans that are intended to provide immediate cash to 
assist the small business with rebuilding and continuing or restarting 
its operations while awaiting long-term disaster financing. SBA 
believes that the costs of the program should be kept as low as 
possible to aid the disaster-affected small business. The application 
fee is optional; therefore an SBA Express Lender may choose not to 
collect an application fee from an Express Bridge Pilot Applicant. 
Additionally, because an Express Bridge Pilot loan Applicant must have 
had an existing banking relationship with the SBA Express lender, there 
is no need for either the Applicant or the Lender to pay a referral 
fee, broker's fee, or similar fee for these loans.
    SBA's modification of 13 CFR 120.221 is authorized by 13 CFR 120.3 
of its regulations, which provides that the SBA Administrator may 
suspend, modify or waive rules for a limited period of time to test new 
programs or ideas. This modification applies only to loans made under 
the Express Bridge Pilot and will last only for the duration of the 
pilot, which expires September 30, 2020. As part of the Express Bridge 
Pilot, this modification applies only to those small businesses that 
were located, as of the date of the applicable disaster, in counties 
that have been Presidentially-declared as disaster areas, plus any 
contiguous counties. A listing of Presidentially-declared disaster 
declarations, including primary and contiguous counties can be located 
at www.sba.gov/disaster.
    All other SBA terms and conditions and regulatory waivers related 
to the Express Bridge Pilot remain unchanged.
    SBA will provide more detailed guidance in the form of a program 
guide, which will be available on SBA's website, http://www.sba.gov. 
SBA may also provide additional guidance, if needed, through SBA 
notices, which also will be published on SBA's website, http://www.sba.gov.

    Authority: 15 U.S.C. 636(a)(25); 13 CFR 120.3.

    Dated: April 26, 2018.
Linda E. McMahon,
Administrator.
[FR Doc. 2018-09627 Filed 5-4-18; 8:45 am]
 BILLING CODE 8025-01-P