SBA Notice of Proposed Rulemaking on Express Loan Programs and Affiliation Programs

Small Business Administration

Notice of Proposed Rulemaking

On September 28, 2018, the U.S. Small Business Administration (SBA or Agency) posted a notice of proposed rulemaking on Express Loan Programs; Affiliation Programs.  The proposal amends various regulations governing its business loan programs, including the SBA Express and Export Express Loan Programs and the Microloan and Development Company (504) loan programs. This proposed rule would:

1. Incorporate into the regulations governing the 7(a) Loan Program the requirements specifically applicable to the SBA Express and Export Express Loan Programs;
2. Add a new regulation to require certain owners of the small business Applicant to inject excess liquid assets into the business to reduce the amount of SBA-guaranteed funds that otherwise would be needed;
3. Revise the regulations concerning allowable fees for the 7(a) Loan Program to limit the fees payable by the small business Applicant and to clarify what SBA considers reasonable with respect to such fees;
4. Amend the regulation that explains the Agency’s policy governing SBA-guaranteed loans to qualified employee trusts to require that all such applications be processed under non-delegated procedures;
5. Incorporate a change to implement SBA’s long-standing policy regarding the responsibility of a Lender for the contingent liabilities (including repairs and denials) for Lenders purchasing 7(a) loans from the Federal Deposit Insurance Corporation (FDIC) (as receiver, conservator, or other liquidator of a failed insured depository institution), whether such loans are acquired through a loan sale where SBA has not already purchased the guaranty or through a whole bank transfer;
6. Revise the regulations governing the use of microloan grant funds by Microloan Intermediaries and extend the maximum maturity of a microloan;
7. Modify the affiliation principles applicable to SBA’s financial assistance programs to include additional circumstances when a small business Applicant will be deemed to be affiliated with another entity for purposes of determining the small business Applicant’s size;
8. Amend the regulation identifying when the size status of an Applicant for financial assistance is determined with respect to applications under the SBA Express and Export Express Loan Programs; and
9. Make technical corrections to the regulation identifying prohibited fees in the 7(a) Loan Program and the regulation discussing the application for the Accredited Lenders Program (ALP) in the 504 Loan Program, as well as conforming amendments to two existing regulations for consistency with the proposed regulations governing SBA Express and Export Express, and a conforming amendment to one existing regulation for consistency with the proposed changes to the allowable fees that may be charged in connection with a 7(a) loan.

Link to NPRM: https://www.regulations.gov/document?D=SBA-2018-0009-0001

Comments must be received on or before November 27, 2018.

You may submit comments by any one of the following methods:

• Federal eRulemaking Portal: Submit electronic comments here.
• Mail: Kimberly Chuday or Thomas Heou, Office of Financial Assistance, Office of Capital Access, Small Business Administration, 409 Third Street SW, Washington, DC 20416.
• Hand Delivery/Courier: Same as mail address.

If you have any questions or concerns, please contact Assistant Chief Counsel Jennifer A. Smith – 202.205.6943.