[Federal Register Volume 64, Number 39 (Monday, March 1, 1999)]
[Notices]
[Pages 10055-10056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4864]
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SMALL BUSINESS ADMINISTRATION
MEETING: New Markets Lending Company; Pilot Program
AGENCY: Small Business Administration.
ACTION: Public Meeting on SBA's Proposed New Markets Lending Company.
(NMLC) pilot loan program for SBA loans made under Section 7(a) of the
Small Business Act.
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SUMMARY: The SBA recognizes that many segments of the small business
community continue to have difficulty accessing capital in the
commercial loan markets. To assist these New Markets small businesses,
the Agency plans to develop and test several innovative new programs
and initiatives designed to more efficiently and effectively deliver
SBA financing to these markets. The proposed NMLC program is one of
these initiatives. SBA envisions the program as a limited term, limited
participation SBA pilot program under which the Agency will select
approximately ten unique, non-depository lending institutions to make
SBA guaranteed loans targeted to New Markets small businesses. This
pilot will be part of the Agency's 7(a) loan program, which provided
guaranties on loans to approximately 42,000 small businesses for about
$9 billion in FY 1998.
SBA expects to define New Markets under the program as current and
prospective small businesses owned by minorities, women, veterans, and
persons with disabilities, who are underrepresented in the population
of business owners compared to their representation in the overall
population, as well as businesses located or locating in Low and
Moderate Income urban and rural areas.
SBA is continuing to develop criteria for participation in the
program, but participants are expected to be selected competitively
using criteria that may include, among others, the following:
Management Capability
The applicant entity or its management team must demonstrate
appropriate experience in managing a loan underwriting, loan making,
loan collection, and loan liquidation operation;
Adequate Capitalization
A minimum capitalization, including leverage limitations to reflect
both balance sheet and off balance sheet assets, will be required. (A
variety of financing structures will be considered, but a minimum
equity injection of $3-$5 million is being considered);
Commitment to Borrower's Development
Applicant must demonstrate a continuing commitment to the
development of the borrower's management capabilities; and,
Public Purpose
Participants must aggressively and continuously target a range of
SBA defined New Markets communities.
The Agency's monitoring and oversight of NMLCs will include annual
safety and soundness examinations, periodic reviews of lender
effectiveness in reaching targeted markets, and compliance reviews
required of other SBA lenders. SBA will develop program guidelines and
procedures shortly and expects to implement the program by October 1,
1999.
HEARING: SBA will hold a public hearing to obtain comments and
suggestions from the public to assist in developing the NMLC concept.
Interested parties will be given a reasonable time for an oral
presentation and may submit written statements of their oral
presentation in advance. If you wish to make a presentation, please
contact Ms. Lula M. Gardner at (202) 205-6485 at least five days before
the hearing. If a large number of participants desire to make
statements, a time limitation on each presentation will be imposed.
Members of the hearing panel may ask questions of the speaker, but
speakers will not be allowed to question each other. Please submit
written questions in advance to the Chair. If the Chair determines them
to be relevant, the Chair will direct them to the appropriate panel
member.
DATES: March 11, 1999, 1:30 p.m. to 4:30 p.m.
LOCATION: SBA's Washington District Office Conference Room, 1110
Vermont Avenue, NW, Washington, DC 20005.
POSSIBLE ISSUES: The SBA requests that speakers address the following
issues:
Can this concept help increase SBA lending to New Markets?
How should SBA select NMLC participants?
Should the SBA require that a minimum percentage of
lending by each NMLC be directed to New Markets? If so, what should
that minimum percentage be?
How many firms should be allowed to participate?
What, if any, time limit should be established for the
program?
What level of capitalization should SBA require of NMLC
pilot participants?
What loan volume should SBA expect from NMLCs?
What oversight should SBA apply to this program?
Should SBA give these firms PLP and/or SBAExpress
authority?
What incentives should SBA consider to encourage these
firms to lend in non-traditional markets?
What support should SBA provide lenders to address these
markets?
What will be the likely impact of this program on existing
SBA lenders?
In lieu of the proposed NMLC program, should SBA open the
SBLC program to additional participants?
FOR FURTHER INFORMATION CONTACT: Charles Thomas, Chief, Pilot
[[Page 10056]]
Operations, Office of Financial Assistance, (202) 205-6656.
Arnold S. Rosenthal,
Acting Deputy Associate Administrator for Financial Assistance.
[FR Doc. 99-4864 Filed 2-26-99; 8:45 am]
BILLING CODE 8025-01-P
