[Federal Register Volume 64, Number 129 (Wednesday, July 7, 1999)]
[Proposed Rules]
[Pages 36617-36618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16999]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 123
Pre-Disaster Mitigation Loans
AGENCY: Small Business Administration (SBA).
ACTION: Proposed rule.
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SUMMARY: SBA proposes to amend its disaster loan program regulations to
implement a pilot program authorized by Congress in 1999. The
authorization covers 5 fiscal years (from 2000 to 2004) and will allow
SBA to make low interest, fixed rate loans to small businesses to use
mitigation measures in support of Project Impact, a formal mitigation
program established by the Federal Emergency Management Agency (FEMA).
DATES: Submit comments on or before August 6, 1999.
ADDRESSES: Comments should be mailed to Bernard Kulik, Associate
Administrator, Office of Disaster Assistance, Small Business
Administration, 409 Third Street, S.W., Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT: Bernard Kulik, 202-205-6734.
SUPPLEMENTARY INFORMATION: SBA proposes to amend part 123 of its
regulations regarding disaster loans. The proposed amendments would
allow small businesses to obtain low interest, fixed rate loans to use
mitigation measures in support of Project Impact. In response to the
problems of increasing costs and personal devastation caused by
disasters, Congress has authorized a pilot program for 5 fiscal years
from 2000 through 2004. The Administration has launched an approach to
emergency management that moves away from the current reliance on
response and recovery to an approach that emphasizes preparedness. SBA
supports this approach and proposes offering pre-disaster mitigation
loans to assist with disaster preparedness. SBA proposes to provide
such loans to small businesses within Project Impact communities
identified by FEMA. Currently, SBA disaster loans may be used only to
repair or replace what was destroyed or damaged by disaster and provide
an additional 20 percent for mitigation measures. Therefore, to promote
preparedness, SBA proposes to amend this section of its regulations to
provide pre-disaster mitigation loans for small businesses. Such pre-
disaster mitigation loans will allow small businesses to install
mitigation devices that may prevent future damage.
Compliance With Executive Orders 12612, 12988, and 12866, the
Regulatory Flexibility Act (5 U.S.C. 601-612), and the Paperwork
Reduction Act (44 U.S.C. Ch. 35)
SBA certifies that this proposed rule is not a significant rule
within the meaning of Executive Order 12866, since it is not likely to
have an annual economic effect of $100 million or more, result in a
major increase in costs or prices, or have a significant adverse effect
on competition or the U.S. economy.
SBA certifies that this proposed rule will not have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612.
SBA certifies that this proposed rule does not impose any
additional reporting or recordkeeping requirements under the Paperwork
Reduction Act, 44 U.S.C., chapter 35.
For purposes of Executive Order 12612, SBA certifies that this
proposed rule has no federalism implications warranting preparation of
a Federalism Assessment.
For purposes of Executive Order 12988, SBA certifies that this
proposed rule is drafted, to the extent practicable, to accord with the
standards set forth in paragraph 2 of that Order.
List of Subjects in 13 CFR Part 123
Disaster assistance, Loan programs-business, Reporting and
recordkeeping requirements, Small businesses.
For the reasons stated in the preamble, the Small Business
Administration proposes to amend 13 CFR part 123 as follows:
PART 123--DISASTER LOAN PROGRAM
1. The authority citation for part 123 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), 636(b), 636(c) and 636(f); Pub.
L. 102-395, 106 Stat. 1828, 1864; and Pub. L. 103-75, 107 Stat. 739.
2. Revise Sec. 123.107 to read as follows:
Sec. 123.107 What is mitigation?
Mitigation means specific measures taken by you to protect against
recurring damage in similar future disasters. Examples include
retaining walls, sea walls, grading and contouring land, relocating
utilities and modifying structures. Pre-disaster mitigation is
addressed in Secs. 123.400 through 123.407. The money that you can
borrow for mitigation is limited to the lesser of the cost of
mitigation, or 20 percent of your loan to repair or replace your
damaged primary residence and personal property. SBA will not accept a
request for a loan increase for mitigation filed after final
disbursement of your original loan unless you can show that your
request was late because of substantial reasons beyond your control.
3. Add an undesignated centerheading and Secs. 123.400 through
123.407 to read as follows:
[[Page 36618]]
Pre-disaster Mitigation Loans
Sec.
123.400 What is a pre-disaster mitigation loan?
123.401 What types of mitigating measures are eligible for a pre-
disaster mitigation loan?
123.402 Is my business eligible to apply for a pre-disaster
mitigation loan?
123.403 When would my business not be eligible to apply for a pre-
disaster mitigation loan?
123.404 How much can my business borrow with a pre-disaster
mitigation loan?
123.405 What is the interest rate on a pre-disaster mitigation loan?
123.406 How do I apply for a pre-disaster mitigation loan and which
loans will be funded?
123.407 What happens if my pre-disaster mitigation loan application
is denied or withdrawn?
Pre-disaster Mitigation Loans
Sec. 123.400 What is a pre-disaster mitigation loan?
Congress has authorized a pilot program for 5 fiscal years from
2000 through 2004 for SBA to make low interest, fixed rate loans to
small businesses to use mitigation measures in support of Project
Impact, a formal mitigation program established by the Federal
Emergency Management Agency (FEMA).
Sec. 123.401 What types of mitigating measures are eligible for a pre-
disaster mitigation loan?
Mitigation means specific measures taken by you to protect your
real property or leasehold improvements from future disasters in
Project Impact communities. If you are a landlord, the measures must be
for protection of commercial rather than residential real property.
Additionally, SBA will consider providing a pre-disaster mitigation
loan for relocation if your commercial real property is located in a
SFHA (Special Flood Hazard Area) and you relocate outside the SFHA but
remain in the same Project Impact community. If the mitigation measures
involved a flood hazard, the applicant small business must be located
in an existing structure in a SFHA. The local Project Impact
coordinator will confirm that your proposed project is in accordance
with specific Project Impact priorities and goals of that community.
SBA will verify each project to determine if the project will
accomplish the desired mitigation results.
Sec. 123.402 Is my business eligible to apply for a pre-disaster
mitigation loan?
Most small business concerns located in a FEMA Project Impact
community are eligible to apply for a pre-disaster mitigation loan.
Your small business may be a sole proprietorship, partnership,
corporation, limited liability company, or other legal entity
recognized under State law. Your small business must have been in
existence for at least one year prior to submitting an application for
this loan.
Sec. 123.403 When would my business not be eligible to apply for a
pre-disaster mitigation loan?
Your business is not eligible for a pre-disaster mitigation loan if
it fits into any of the categories in Sec. 123.101, Sec. 123.201, and
Sec. 123.301. Your business (together with its affiliates) must be
small (as defined in part 121 of this chapter) and SBA must determine
that the business and its owners do not have the financial resources to
fund the mitigation measures without undue hardship.
Sec. 123.404 How much can my business borrow with a pre-disaster
mitigation loan?
Pre-disaster mitigation loans are limited to $50,000 for each
borrower together with its affiliates. Program funds will be allocated
on a first come, first served filing basis. SBA will consider
mitigation measures in excess of $50,000 if the business can show that
the excess cost can be funded from other sources.
Sec. 123.405 What is the interest rate on a pre-disaster mitigation
loan?
Your pre-disaster mitigation loan will have an interest rate of 4
percent per annum or less.
Sec. 123.406 How do I apply for a pre-disaster mitigation loan and
which loans will be funded?
(a) Each State, the District of Columbia, Puerto Rico, and the
Virgin Islands have at least one Project Impact community. Only those
small businesses located in the Project Impact communities are eligible
to apply for a pre-disaster mitigation loan. At the beginning of each
fiscal year, SBA will publish a notice of the pre-disaster mitigation
declaration in the Federal Register identifying the type of assistance
available, the application filing deadline and locations for obtaining
and filing loan applications. Additionally, SBA will use FEMA and the
local media to inform potential loan applicants where to obtain loan
applications. SBA will not accept any applications after the announced
deadline unless SBA reopens the application filing period.
(b) Complete an SBA pre-disaster mitigation loan application
package and attach a written statement from the local Project Impact
coordinator that the project is in accordance with the specific
priorities and goals of the local community. SBA will have a 30-day
application filing period of November 1 through November 30 of each
fiscal year. Additional application periods may be announced each year
depending on availability of funds.
(c) Upon acceptance of a completed application package by the SBA
Disaster Area Office, that office will notify the Office of Disaster
Assistance (ODA) of the acceptance. Each application will be processed
(approval, decline, or withdrawal) by the Area Office and that office
will notify ODA of the action. ODA will then notify each Area Office of
which completed approval actions to fund based on the date the
completed application package was received and availability of loan
funds.
Sec. 123.407 What happens if my pre-disaster mitigation loan
application is denied or withdrawn?
(a) If your loan application is denied refer to Sec. 123.13.
Additionally, if your application is accepted for reconsideration or
appeal, SBA will reflect the date of reconsideration or appeal as the
date the application was received.
(b) If your loan application is withdrawn, the date of reacceptance
will be considered as the date the application was received.
Dated: June 29, 1999.
Aida Alvarez,
Administrator.
[FR Doc. 99-16999 Filed 7-6-99; 8:45 am]
BILLING CODE 8025-01-P
