[Federal Register Volume 60, Number 80 (Wednesday, April 26, 1995)]
[Rules and Regulations]
[Pages 20391-20392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10179]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 60, No. 80 / Wednesday, April 26, 1995 / 
Rules and Regulations
[[Page 20391]]

SMALL BUSINESS ADMINISTRATION

13 CFR Part 108


Loans to State and Local Development Companies Accredited Lenders 
Program for Certified Development Companies

AGENCY: Small Business Administration (SBA).

ACTION: Final rule.

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SUMMARY: On October 22, 1994, the President signed Public Law 103-403, 
The Small Business Administration Amendments Act of 1994. Section 212 
of that act added a new section 507 of the Small Business Investment 
act, 15 U.S.C. 695 et seq. That new section authorizes the Small 
Business Administration (SBA) to establish an Accredited Lenders 
Program. This final rule, published in accordance with Public Law 103-
403, implements this new program.

EFFECTIVE DATE: This rule is effective on April 26, 1995.

FOR FURTHER INFORMATION CONTACT:
LeAnn Oliver, Acting Director, Office of Rural Affairs and Economic 
Development Small Business Administration, 409 3rd Street S.W., Suite 
8300 Washington, D.C. 20416, 202-205-6485.

SUPPLEMENTARY INFORMATION: Public Law 103-403, enacted October 22, 
1994, required SBA to establish an Accredited Lenders Program for 
Certified Development Companies, which provides for expedited 
processing of loan applications and servicing actions by SBA field 
offices for qualified development companies. The Accredited Lender 
Program (ALP) is intended to build upon the successful Certified 
Lenders Program (CLP) for the SBA's General Business Loan program and 
the pilot Accredited Lenders Program for Certified Development 
Companies which has been administered by SBA since 1991.
    During 1991, SBA established an ``Accredited Lender Program'' for 
Certified Development Companies (CDCs) on a demonstration program basis 
with selected development companies through the United States. During 
the Demonstration program, SBA Field Offices worked with the selected 
development companies to expedite processing of requests for guarantee 
approval and servicing actions submitted by them. The program was 
premised upon rewarding CDCs which have developed a good partnership 
with their SBA Field Office in promoting local economic development and 
have demonstrated a good track record in the submission of 
documentation needed for making and servicing of sound loans. The 
positive experience of the demonstration program led to its statutory 
authorization which makes the Accredited Lender Program a permanent 
tool for the improvement of the program.
    The concept of the ALP demonstration program was based on a similar 
program developed for lenders participating with the SBA 7(a) General 
Business Loan program (CLP) which has also been authorized by statute. 
Under that program, CLP lenders are required to submit a complete loan 
package as well as a draft loan authorization ready for SBA review of 
eligibility, credit analysis and legal sufficiency. In consideration 
for the receipt of a completed loan application package, SBA agrees to 
issue an approved loan authorization to a CLP lender within three 
working days.
    Similar to the CLP lender in the General Business Loan program, 
under these regulations if adopted in final form, an ALP-CDC will be 
required to submit complete loan applications and draft loan 
authorizations to SBA in order to expedite SBA's review of eligibility, 
credit analysis and legal sufficiency and enable SBA to quickly 
authorize a guaranty; and completely documented requests for a loan 
servicing action which will enable SBA to expedite processing of such a 
request. In exchange SBA will agree to provide three business day 
processing for such submissions. Notwithstanding a requester's ALP 
status, SBA will retain the right to reject incomplete packages or 
requests, thereby denying ALP consideration to individual actions on a 
case by case basis.
    In order to attain ALP status a CDC will be required to meet 
minimum standards with regard to lending activity and demonstrated 
proficiency in quality of its loan packaging, closing and servicing. An 
ALP-CDC and an SBA field office will function as a team for purposes of 
the ALP program. SBA's agreement to expedite approval of loans and 
servicing actions will be premised upon the SBA confidence in the 
judgment and quality of work of the ALP-CDC which is based upon a good 
relationship and good communication between the SBA field office and 
ALP-CDC staffs.
    In that regard, under these regulations, if adopted, SBA field 
offices will nominate CDCs for ALP status. SBA's Director of Economic 
Development and Rural Affairs will be the deciding official for 
admission to the program and for suspension or revocation of the status 
of a company once admitted. Criteria for nomination which are expressed 
in the proposed regulations reflect the intent that only successful 
CDCs which demonstrate a high degree of program proficiency will attain 
ALP status. ALP status will be granted for periods of two years and 
will be renewable based on request by the CDC and favorable review by 
SBA.

Compliance With Executive Orders 12612, 12778, and 12866, the 
Regulatory Flexibility Act and the Paperwork Reduction Act

    For purposes of the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., SBA certifies that this rule will not have a significant economic 
impact on a substantial number of small entities.
    SBA certifies that this rule will not constitute a significant 
regulatory action for purposes of Executive Order 12866, since the 
change is not likely to result in an annual effect on the economy of 
$100 million or more.
    SBA certifies that this rule will not impose additional reporting 
or recordkeeping requirements which would be subject to the Paperwork 
Reduction Act, 44 U.S.C. Ch. 35.
    SBA certifies that this rule will not have Federalism implications 
warranting the preparation of a Federalism Assessment in accordance 
with Executive Order 12612.
    SBA certifies that this rule is drafted, to the extent practicable, 
in accordance [[Page 20392]] with the standards set forth in Section 2 
of Executive Order 12778.
    This rule is published as a final rule in conformity with the 
statutory deadline established in section 212 of Public Law 103-403.

(Catalog of Federal Domestic Assistance Program Nos. 59.036, 
Certified Development Company Loans (503 Loans); 59.041, Certified 
Development Company Loans (504 Loans).

List of Subjects in 13 CFR Part 108

    Loan programs--business, Small businesses.

    For the reasons set forth above, SBA is amending part 108 of title 
13 of the Code of Federal Regulations 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.

    2. Section 108.2 is amended by adding definitions of the following 
terms in the appropriate alphabetical order: ``Accredited Lender'' and 
``ALP'' to read as follows:


Sec. 108.2  Definitions.

* * * * *
    Accredited Lender means a 503 Company which has met the eligibility 
requirements of Sec. 108.508-3 and which has executed with SBA the ALP 
Agreement.
    ALP means the Accredited Lenders Program as provided for in 
Sec. 108.508.
* * * * *
    3. A new undesignated center heading and Secs. 108.508-1 through 
108.508-5 are added to read as follows:

Accredited Lenders Program


Sec. 108.508-1  Objective and characteristics of Certified Lenders 
Program.

    (a) Purpose. The purpose of this subpart is to authorize for 
designated 503 companies, hereinafter called Accredited Lenders, 
expedited approval by SBA of loan processing, closing and servicing 
functions on specified terms and conditions.
    (b) Objective of Accredited Lender Status. SBA will process an 
application for authorization of a guarantee or a loan servicing action 
submitted by an Accredited Lender within three business days from 
receipt of a complete application for authorization or a fully 
documented request for a loan servicing action, as the case may be. SBA 
reserves the right to reject any such application or request for 
incompleteness or other regulatory deficiency.


Sec. 108.508-2  Application procedure.

    In order to be designated an Accredited Lender, a 503 company shall 
apply for designation to the SBA District or Branch Office where 
responsible for the area in which its headquarters is located by 
submitting a statement of its eligibility demonstrating satisfaction of 
the criteria contained in Sec. 108.508-3. The relevant District or 
Branch Office will review all such applications using SBA's ``rule of 
two procedure'' and forward only favorable recommendations to the 
Director, Office of Rural Affairs and Economic Development for final 
determination. The Director will advise all relevant District or Branch 
Office of his or her final decision on any such recommendation. 
Favorable decisions by the Director will be followed by accreditations 
by the relevant District or Branch Office. Unfavorable decisions by the 
Director will be communicated to the applicant by the Director.


Sec. 108.508-3  Eligibility.

    In evaluating the application of a 503 Company to become an 
Accredited Lender, SBA must make a favorable determination based upon 
its consideration of the following factors:
    (a) The 503 Company must have been an active participant in the 
development company loan program for not less than the preceding 12 
months;
    (b) The 503 Company must have well-trained, qualified loan officers 
who are knowledgeable concerning SBA's lending policies and procedures 
for the development company loan program;
    (c) The 503 Company must have demonstrated the ability to process, 
close, and service loans under the development company program;
    (d) The 503 Company must have had a loss rate on its portfolio of 
loans made under the development company program that is reasonable and 
acceptable to the SBA;
    (e) The 503 Company must have demonstrated to SBA's satisfaction a 
history of submitting to SBA complete and accurate debenture guaranty 
application packages;
    (f) The 503 Company must have demonstrated the ability to work with 
the sponsoring SBA office in a cooperative and constructive manner; and
    (g) The 503 Company must have demonstrated to SBA's satisfaction 
the ability to serve small business credit needs through the 
development company program.


Sec. 108.508-4  Term of designation.

    Any designation of a 503 Company to be an Accredited Lender shall 
be for a term of two years, renewable for additional two year terms at 
the discretion of SBA upon the application of the 503 Company.


Sec. 108.508-5  Suspension or revocation.

    The Director may suspend or revoke the accreditation of an 
Accredited Lender for good cause by forwarding a written statement of 
suspension or revocation to the Accredited Lender. Such statement shall 
specify the nature of the sanction and the reasons therefore. The 
decision to suspend or revoke accreditation may be appealed to the 
Associate Deputy Administrator for Economic Development whose decision 
on any such appeal shall be the final decision of SBA. Examples of good 
cause for purposes of these regulations include but are not limited to:

    (a) The 503 Company has not continued to meet the criteria for 
eligibility under Sec. 108.508-3; or
    (b) The 503 Company has failed to adhere to the SBA's rules and 
regulations or is violating any other applicable provision of law.

    Dated: March 2, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-10179 Filed 4-25-95; 8:45 am]
BILLING CODE 8025-01-M