[Federal Register Volume 62, Number 227 (Tuesday, November 25, 1997)]
[Proposed Rules]
[Pages 62707-62708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30847]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Disaster Loan Program

AGENCY: Small Business Administration (SBA).

ACTION: Proposed rule.

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SUMMARY: Under this proposed rule, an SBA disaster loan borrower could 
request an increase in a disaster loan within two years after the loan 
was approved. The increase must be used to cover eligible damages 
resulting from events that occurred after the loan was approved and 
were beyond the borrower's control. Under the proposed rule, the SBA 
Associate Administrator for Disaster Assistance could waive the two 
year limit because of extraordinary circumstances.

DATES: Comments must be submitted on or before December 26, 1997.

ADDRESSES: Comments should be mailed to Bernard Kulik, Associate 
Administrator for Disaster Assistance, Small Business Administration, 
409 Third Street, S.W., Washington, D.C. 20416.

FOR FURTHER INFORMATION CONTACT: Bernard Kulik, 202/205-6734.

SUPPLEMENTARY INFORMATION: SBA makes thousands of physical and economic 
injury disaster loans to repair or replace damaged property or to help 
a business recover from economic injury. Borrowers must use such loans 
only to help them recover from the effects of a specific disaster. 
Borrowers may request increases in their loans after the initial 
disaster loans were made and, where appropriate, SBA will approve the 
request. Under this proposed rule, SBA is defining the circumstances 
under which a borrower can request an increase and limiting the time 
period for the request to two years. The SBA Associate Administrator 
for Disaster Assistance (AA/DA) would have the authority to waive the 
two year limit for extraordinary and unforeseeable circumstances.
    Under the proposed rule, a borrower of a disaster loan (whether 
physical or economic injury) could request an increase in the loan 
amount if the eligible cost of repair or replacement of damages 
increases because of events occurring after the loan approval that were 
beyond the borrower's control. For example, a borrower can request an 
increase of a physical disaster loan before the repair, renovation or 
reconstruction is completed if hidden damage is discovered or if 
official building codes changed since SBA approved the physical 
disaster loan. With respect to economic injury disaster loans, 
borrowers could request an increase in working capital if they could 
not resume business activity as quickly as planned because of events 
beyond their control. These examples, while not all inclusive, would 
support a borrower's request for an increase in the amount of a 
disaster loan. These kinds of events usually will be apparent within 
two years after SBA approves a disaster loan. However, in extraordinary 
circumstances, the proposed rule would permit the AA/DA to waive the 
two year limitation.

Compliance With Executive Orders 12612, 12778, and 12866, the 
Regulatory Flexibility Act (5 U.S.C. 601, et seq.), and the Paperwork 
Reduction Act (44 U.S.C. Ch. 35)

    SBA certifies that this proposed rule does not constitute a 
significant rule within the meaning of Executive Order 12866 and 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 et seq. It is not likely to have an annual economic effect of $100 
million or more on the economy, result in a major increase in costs or 
prices, or have a significant adverse effect on competition or the 
United States economy.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
certifies that this proposed rule contains no new reporting or 
recordkeeping requirements.
    For purposes of Executive Order 12612, SBA certifies that this 
proposed rule has no federalism implications warranting the preparation 
of a Federalism Assessment.
    For purposes of Executive Order 12778, SBA certifies that this rule 
is drafted, to the extent practicable, in accordance with the standards 
set forth in section 2 of that Order.

(Catalog of Federal Domestic Assistance Programs, No. 59.012 and 
59.008)

List of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs-business, Small Businesses.

    Accordingly, pursuant to the authority contained in section 5(b)(6) 
of the Small Business Act (15 U.S.C. 634(b)(6)), SBA proposes to amend 
part 123, chapter I, title 13, Code of Federal Regulations, as follows:

PART 123--DISASTER LOAN ASSISTANCE

    1. The authority citation for Part 123 would continue 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. Sections 123.18, 123.19 and 123.20 would be added to read as 
follows:


Sec. 123.18  Can I request an increase in the amount of a physical 
disaster loan?

    SBA will consider your request for an increase in your loan if you 
can show that the eligible cost of repair or replacement of damages 
increased because of events occurring after the loan approval that were 
beyond your control. An eligible cost is one which is

[[Page 62708]]

related to the disaster for which SBA issued the original loan. For 
example, if you discover hidden damage within a reasonable time after 
SBA approved your original disaster loan and before repair, renovation, 
or reconstruction is complete, you may request an increase. Or, if 
applicable building code requirements were changed since SBA approved 
your original loan, you may request an increase in your loan amount.


Sec. 123.19  Can I request an increase in the amount of an economic 
injury loan?

    SBA will consider your request for an increase in the loan amount 
if you can show that the increase is essential for your business to 
continue and is based on events occurring after SBA approved your 
original loan which were beyond your control. For example, delays may 
have occurred beyond your control which prevent you from resuming your 
normal business activity in a reasonable time frame. Your request for 
an increase in the loan amount must be related to the disaster for 
which the SBA economic injury disaster loan was originally made.


Sec. 123.20  How long do I have to request an increase in the amount of 
a physical disaster loan or an economic injury loan?

    You should request a loan increase as soon as possible after you 
discover the need for the increase, but not later than two years after 
SBA approved your physical disaster or economic injury loan. After two 
years, the SBA Associate Administrator for Disaster Assistance (AA/DA) 
may waive this limitation after finding extraordinary and unforeseeable 
circumstances.

    Dated: November 14, 1997.
Aida Alvarez,
Administrator.
[FR Doc. 97-30847 Filed 11-24-97; 8:45 am]
BILLING CODE 8025-01-P