00-19339. Business Loan Programs

AGENCY:

Small Business Administration.

ACTION:

Final rule; correcting amendment.

SUMMARY:

The U.S. Small Business Administration (SBA) published a final rule governing 7(a) loan securitizations on February 10, 1999. In that rule, SBA inadvertently omitted a sentence in the section covering capital requirements for securitizing institutions (“securitizers”). This document adds that sentence.

DATES:

Effective on August 14, 2000.

FOR FURTHER INFORMATION CONTACT:

James W. Hammersley, Director, Secondary Market Sales, [phone].

SUPPLEMENTARY INFORMATION:

SBA published a final rule in the Federal Register on February 10, 1999, (64 FR 6503), governing 7(a) loan securitizations. This correction adds a sentence to § 120.425(a), on capital requirements, that was inadvertently omitted. Section 120.425(a) provides that all “securitizers must be considered to be ‘well capitalized’ by their regulator.” It further states that “SBA, as the regulator, will consider a nondepository institution to be ‘well capitalized’ if it maintains a minimum unencumbered paid in capital and paid in surplus equal to at least 10 percent of its assets, excluding the guaranteed portion of 7(a) loans.” This correction adds that “[t]he capital charge applies to the remaining balance outstanding on the unguaranteed portion of the securitizer's 7(a) loans in its portfolio and in any securitization pools.”

This correction is consistent with notice provided in the preamble to the final rule published on February 10, 1999 (64 FR 6503). That preamble stated that commenters requested SBA to clarify that “the capital charge applies not only to the unguaranteed portion of the securitizer's 7(a) loans in the portfolio but also to the remaining balance outstanding in the securitization pools” and that SBA “incorporated” this clarification “into the final rule.”

By making this correction, SBA is incorporating the clarification, as intended, into the final rule.

List of Subjects in 13 CFR Part 120

• Loan programs—business
• Small businesses

Accordingly, SBA amends 13 CFR part 120 by making the following correcting amendment:

PART 120—[CORRECTED]

1. The authority citation for part 120 continues to read as follows:

Authority: 15 U.S.C. 634(b)(6) and 636(a) and (h).

2. In § 120.425, amend paragraph (a) by adding a new sentence after the fourth sentence to read as follows:

§ 120.425

What are the minimum elements that SBA will require before consenting to a securitization?

* * * * *

(a) * * * The capital charge applies to the remaining balance outstanding on the unguaranteed portion of the securitizer's 7(a) loans in its portfolio and in any securitization pools. * * *

* * * * *

Aida Alvarez,

Administrator.