[Federal Register Volume 60, Number 174 (Friday, September 8, 1995)]
[Proposed Rules]
[Pages 46789-46790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22064]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 108
Loans to State and Local Development Companies Section 504 Loan
Program Amendments
AGENCY: Small Business Administration.
ACTION: Notice of proposed rulemaking.
SUMMARY: This proposed rule revises the regulations governing the
collection of fees and the utilization of interest accruing in accounts
established to administer the 504 loan program in order to permit the
flexibility required in negotiating with private sector entities for
the delivery of the 504 program.
DATES: Comments must be received on or before October 10, 1995.
ADDRESSES: Comments should be sent to LeAnn M. Oliver, Acting Director,
Office of Rural Affairs and Economic Development, Small Business
Administration, 409 3rd Street SW., suite 8300, Washington DC 20416.
FOR FURTHER INFORMATION CONTACT: LeAnn M. Oliver, Acting Director,
Office of Rural Affairs and Economic Development, Small Business
Administration, Telephone (202) 205-6485.
SUPPLEMENTARY INFORMATION: The proposed rule would amend the rule
governing the Central Servicing Agent (CSA) functions. The existing 504
program regulations were promulgated based upon the Agency's experience
with a predecessor program. Sufficient experience has accumulated to
allow the codification of approaches that have arisen in the
administration of the program. This rule clarifies that: (1) Fees can
be collected from the borrower of the proceeds of a debenture
guaranteed under the program as a one-time initiation fee or a monthly
servicing fee, (2) fees can be paid to the CSA from either a specific
borrower's payment or from aggregated funds collected pursuant to a
master service agreement, and (3) clarifies that 503 companies are to
receive periodic pro rata disbursements of interest accruing on loan
payments in the Master Reserve Account pending the debenture payment
date.
Compliance with Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act and the Paperwork Reduction Act.
Executive Order 12866 and Regulatory Flexibility Act
SBA certifies that this proposed rule, if adopted, would not be a
significant regulatory action for purposes of Executive Order 12866
and, for purposes of the Regulatory Flexibility Act, 5 U.S.C. 601 et
seq., would not have a significant economic impact on a substantial
number of small entities, for the following reasons:
1. It would not result in an annual economic effect of $100 million
or more or adversely affect in a material way the economy, a sector or
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities.
2. It would not create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency.
3. It would not materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and
obligations of recipients thereof.
4. It would not raise novel legal or policy issues arising out of
legal mandates, the President's priorities, or the principles set forth
in E.O. 12866
Executive Order 12612
SBA certifies that this rule, if adopted, would have no Federalism
implications warranting the preparation of a Federalism Assessment in
accordance with Executive Order 12612.
Paperwork Reduction Act
For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA
hereby certifies that this proposed rule, if adopted, would impose no
new reporting or recordkeeping requirements.
Executive Order 12778
SBA certifies that this proposed rule is drafted, the extent
practicable, in accordance with the standards set forth in section 2 of
E.O. 12778.
List of Subjects in 13 CFR Part 108
Loan programs/business, Small businesses.
For the reasons set forth above, part 108 of the Code of Federal
Regulations is amended as follows:
PART 108--[AMENDED]
1. The authority citation for part 108 continues to read as
follows:
Authority: 15 U.S.C. 687(c), 695, 696, 697a, 697b, 697c.
Assistance Under Sections 504 and 505
Sec. 108.504 [Amended]
2. Section 108.504(e) is revised to read as follows:
* * * * *
(e) Central Servicing Agent. This subsection supersedes
Sec. 108.503-11 for loans funded under Section 504 and is applicable to
all such loans whenever funded.
(1) SBA, in a master servicing agreement, shall designate a Central
Servicing Agent (CSA) to act for all 503 companies participating in the
sale of 504 Debentures, to ensure uniformity
[[Page 46790]]
and the orderly flow of funds among 504 loan recipients, 503 companies,
and the Trustee or Transfer Agent (see Sec. 108.505(f)(3) of this
part). Pursuant to such master servicing agreement, in consideration of
SBA's guaranty of the 503 company's debenture(s), the 503 Company, with
the borrower's consent shall enter into a servicing agent agreement
(504 program), SBA Form 1506, with the CSA. Execution of such form
shall constitute acceptance by the 503 company and the borrower of the
terms of the master servicing agreement. Amendments may be made in the
terms and conditions of the master servicing agreement as necessary to
adapt to changing program needs.
(2) The borrower may be charged an initiation fee and/or a monthly
servicing fee as prescribed by Form 1506, which shall be in addition to
the fees and charges permitted by Sec. 108.503-6 of this part.
(3) The CSA may be compensated through an initiation fee and/or a
monthly service fee. Pursuant to instructions in the master servicing
agreement, the CSA's compensation may be paid from initiation fees on
specific loans or from aggregated service fees.
(4) SBA Form 1506 shall prescribe the deposits into and the
disbursements from a master reserve account, set up by the CSA pursuant
to said master servicing agreement. The master reserve account shall be
funded by a reserve deposit, and a funding fee to be published from
time to time in the Federal Register, and by principal and interest
payments of 504 loans. SBA shall add funds pursuant to its guaranty to
insure the full and timely payment of the debentures in the event a
borrower fails to make full and timely payment on its 504 loan. Funds
in the master reserve account shall be used to defray expenses of the
program described under paragraph (b) of this section. Interest
accruing on loan payments between the date of monthly payment and the
debenture payment date shall be paid to the 503 company servicing the
loan and shall be disbursed to 503 companies periodically on a pro rata
basis. Funds in the master reserve escrow account representing interest
earned prior to October 1991 and not distributed to a specific 503
company may be expended by SBA for the purposes of program
administration.
* * * * *
(Catalog of Federal Domestic Assistance 59.036 Certified Development
Company Loans (503 Loans); 59.041 Certified Development Company
Loans (504 Loans)).
Dated: June 29, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-22064 Filed 9-7-95; 8:45 am]
BILLING CODE 8025-01-P
