29010 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations

By order of the Board of Governors of the

Federal Reserve System, May 22, 2001.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 01–13373 Filed 5–25–01; 8:45 am]

BILLING CODE 6210–01–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 119

RIN 3245–AE52

PRIME Act Grants

AGENCY: Small Business Administration.

ACTION: Final rule.

SUMMARY: This final rule adds new

regulations to set up the Program for

Investment in Microentrepreneurs Act

(‘‘PRIME’’ or ‘‘the Act’’), created by Title

VII of the Gramm-Leach-Bliley Act,

enacted November 12, 1999. This rule

sets forth the Act’s grant requirements

for qualified Microenterprise

Development Organizations (‘‘MDOs’’)

to: train and provide technical

assistance to disadvantaged

microentrepreneurs; build MDO’s

capacity to give disadvantaged

microentrepreneurs such training and

technical assistance; research and

develop best practices for training and

technical assistance programs for

disadvantaged microentrepreneurs, and

perform such other activities as the

Administrator or designee determines

are consistent with the Act.

PRIME grants will enable MDOs to

reach more disadvantaged

microentrepreneurs with training and

technical assistance, which will make a

difference in their ability to start, grow,

and sustain microenterprises in

economically distressed, high

unemployment areas. SBA will award a

minimum of 75 percent of available

funds to MDOs to use for training and

technical assistance to disadvantaged

microentrepreneurs. At a minimum,

another 15 percent will be used to build

MDOs’ capacity to give more training

and technical assistance. SBA will use

the remaining funds to make grants for

research and development on best

practices or other purposes to improve

MDOs’ services to PRIME’s ultimate

beneficiaries—disadvantaged

microentrepreneurs.

DATES: This rule is effective on June 28,

2001.

FOR FURTHER INFORMATION CONTACT: Jody

Raskind, Chief, Microenterprise

Development Branch, 202–205–6497.

SUPPLEMENTARY INFORMATION:

Introduction

Congress recognized that many

disadvantaged microentrepreneurs lack

sufficient training and education to gain

access to capital and to conduct other

activities necessary to establish,

maintain, and expand their businesses.

It enacted the Program for Investment in

Microentrepreneurs Act (‘‘PRIME’’ or

‘‘the Act’’) to augment training and

technical assistance under the Small

Business Act and other legislation.

PRIME grants to qualified

Microenterprise Development

Organizations (‘‘MDOs’’) will help meet

training and technical assistance needs

for disadvantaged microentrepreneurs,

thereby encouraging entrepreneurship

and capital formation at the community

level.

The congressional mandate to provide

cognitive support to the target market

through the Act is recognition that many

low income and very low-income

entrepreneurs need training and

technical assistance to start, operate,

strengthen, or expand their businesses.

In order to achieve measurable success,

technical assistance providers must be

accessible, consistent and committed to

the entrepreneur’s progress over

extended periods of time. The

competency and capacity of these

providers must also be measured.

Research into the outcomes of support,

its long-term effect, and how best to

continue assistance is essential in

determining the value of support over

the long run.

The U.S. Department of Commerce’s

Characteristics of Business Ownership

shows that in 1987, approximately 17

percent (2.3 million) of businesses in

the United States were operated by lowincome and very low-income

microentrepreneurs. Since then a

variety of economic developments,

including corporate downsizing,

declining availability of lower skilled

manufacturing jobs and expanded

opportunities in the technology field,

have combined to make microenterprise

an increasingly more viable option in

the U.S. economy.

The Aspen Institute estimated that

during 1997 microlenders nationwide

provided business assistance to 172,000

microentrepreneurs, a mere fraction of

low- and very-low income individuals

involved in microenterprise. The

Institute further estimated that of that

number, about 57,000 actively pursued

and benefited from sustained businessbased training and technical assistance.

Of those, approximately 6,000 received

loans.

One of the major constraints is the

cost of providing this training and

technical assistance. Current private

sector sources simply are not meeting

the need. The Act, therefore, focuses on

expanding the cultivation, support and

motivation of these low- and very-low

income microentrepreneurs. It will also

help build the capacity of the

microenterprise industry in order to

deliver vital services to a much greater

segment of the 2.3 million or more low

income and very low income

microentrepreneurs. One of the goals of

the PRIME program is to be a resource

for MDOs as they grow and develop and

ultimately become self-sustaining.

The Act authorizes the U.S. Small

Business Administration (‘‘SBA’’) to

make grants to ‘‘qualified organizations’’

to fund training and technical assistance

for disadvantaged microentrepreneurs.

It also authorizes SBA to make grants to

increase the training and technical

assistance capacities of MDOs. Further,

it authorizes funding for grants for

research and development, and other

undertakings deemed by the

Administrator or designee to be

consistent with the purposes of the Act.

The PRIME program requires that grants

made by SBA be matched by grantees

from non-Federal sources. These

regulations set up four categories of

Technical Assistance Grants targeted to

these purposes.

Grants made either for the purpose of

providing technical assistance to

disadvantaged microentrepreneurs or

for capacity building purposes initially

will be awarded, on a competitive basis,

in amounts not less than $50,000. Such

grants may be renewable, annually, for

up to four additional years. Renewal of

an existing grant will take place at the

discretion of the SBA and will be based

on the availability of funds and the

individual grantee’s performance in

terms of goals met, milestones achieved,

and demonstrated results.

Grants for research and development

will also be awarded on a competitive

basis, though not subject to a minimum

award. These grants may also be

renewed based on the appropriateness

of extended funding periods,

availability of funds, and appropriation

and performance.

PRIME will be implemented with a

clear focus on the applicants’ abilities to

meet the purposes of the Act.

Accountability and outcomes will be an

ongoing consideration during the grant

period. Applicants for funding for

technical assistance to disadvantaged

microentrepreneurs will be evaluated

based on such items as technical

capabilities; market penetration

potential; ability to meet stated goals;

historical performance; key personnel;

resource management; community

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations 29011

partnering and collaboration with state

and local entities; accountability for

outcomes; program sustainability; and

replicability of program design.

Applicants for funding as capacity

builders will be similarly evaluated.

Continued performance of these two

groups will be measured in terms of

such items as number of clients served;

range and quality of service; number of

businesses started, stabilized, expanded,

and/or funded; number of jobs created;

business survival rates; capital

formation; and non-business outcomes

such as wage employment.

On October 10, 2000, SBA published

the proposed rule for the PRIME

program in the Federal Register (65 FR

60256). SBA received 13 timely

comments in response to the proposed

rule. What follows is a summary of the

comments received and the actions

taken in response to those comments.

Review of Comments

SBA received 3 comments on § 119.2,

which sets forth definitions found in the

Act and further defines terms not

included in the Act. Two of the

commenters expressed an interest in

having the definition of ‘‘training and

technical assistance’’ clarified to convey

that the examples of training and

technical assistance which SBA

included in the proposed rule are not

conclusive. SBA adopted this comment

by adding the language, ‘‘such as, but

not limited to,’’ before the specific

examples. One of the above mentioned

commenters also requested that the

definition of training and technical

assistance include, ‘‘services which may

address additional barriers to success

that low and very low income

entrepreneurs may face.’’ Although SBA

can appreciate what this commenter is

trying to accomplish with the

recommended language, SBA has

decided not to include such language

until we can more clearly identify

existing barriers. The PRIME program is

a new initiative and the legislation

enacting the program specifically

defines ‘‘training and technical

assistance.’’ As the program develops,

and as we are able to more clearly

identify barriers, SBA will consider

expanding the definition of training and

technical assistance in line with the

statutory purpose of the PRIME

program.

The third commenter on § 119.2 asked

that the definition of ‘‘capacity

building’’ be expanded to include

purposes beyond an MDO’s ability to

provide training and technical

assistance to disadvantaged

microentrepreneurs. As with the

definition of training and technical

assistance, the definition of capacity

building is clearly set forth in the Act

enacting the PRIME program. SBA

believes that the definition of capacity

building, as it appears in the Act,

accurately portrays the intent of

Congress and the purposes of the PRIME

program. Therefore, SBA does not feel

that it would be appropriate to expand

the purposes beyond those articulated

by Congress. In addition, SBA deleted

the definition of the term ‘‘emerging

microenterprise development

organization or program’’ based upon

comments received on § 119.12, which

are discussed in that part of this

Supplementary Information.

SBA received 3 comments in response

to proposed § 119.3, which lists

organizations eligible to apply for

PRIME grants. One commenter asked us

to specify that Internal Revenue Service

(IRS) classified organizations such as

501(c)(3)s are eligible to apply for

PRIME grants. SBA does not feel this

change is necessary. When addressing

eligible organization within the rule for

the PRIME program, SBA has not

specified any IRS paragraph citations

(e.g., 501, 509); rather, SBA simply

articulates the statutory requirement

that the eligible organizations be nonprofits. Organizations such as 501(c)(3)s

would satisfy the non-profit language

used in the rule.

A second commenter on § 119.3 asked

SBA to include specific language listing

the local governments or agencies of

local governments eligible for PRIME

grants. SBA did not adopt this change

because the Act authorizing PRIME

specifically states that only non-profit

entities are eligible organizations. The

Act does allow for non-profit agencies to

work, ‘‘in conjunction with’’ local

governments or agencies of local

governments however, eligible

organizations themselves consist only of

non-profits.

The final comment on § 119.3 asked

for clarification that faith based

organizations are eligible to apply for

grant programs. SBA did not include

any explicit language to that effect

because there is no explicit statutory

language disqualifying faith based

organizations from participating in the

program. SBA will need to review each

faith based organization application to

determine, on a case-by-case basis,

whether there are any constitutional

First Amendment issues presented.

SBA received four comments on

§ 119.4, which lists the uses for PRIME

grants permitted by the Act. One

commenter suggested that we revise the

rule text to allow capacity building

grants to go directly to MDOs for

building their own capacity. SBA did

not adopt this change because it is

unnecessary. The PRIME program

already allows for grants for the

purposes recommended by the

commenter under the heading of

‘‘Technical Assistance Grants.’’

‘‘Capacity Building Grants,’’ on the

other hand, by statute, are awarded to

MDOs for the benefit of building the

capacity of other MDOs.

The remaining commenters on this

section also asked SBA to make the

definition of ‘‘training and technical

assistance’’ more flexible. SBA fulfilled

this request by amending the definition

of training and technical assistance in

§ 119.2 to include the language, ‘‘such

as, but not limited to’’ before the list of

examples.

SBA received nine comments on

§ 119.5, which lays out the Act’s

parameters for allocating and

apportioning PRIME grant awards. All

of the commenters expressed concern

that this section appears to require that

at least 50 percent of each grantee’s total

award amount must serve ‘‘very low

income’’ persons. SBA has amended the

language of this section to clarify that

because the PRIME program seeks to

reach as many disadvantaged

entrepreneurs as possible, the focus of

§ 119.5 is on the number and the quality

of the grants reaching the disadvantaged

entrepreneurs, not the amount of the

grants. The section conveys that at least

50 percent of the total number of grants

awarded under the PRIME program, as

a whole, must serve ‘‘very low income’’

persons.

SBA did not receive any comments in

response to proposed § 119.6, which

stated that awards for training and

technical assistance will not be less than

$50,000. However, SBA amended this

section to conform with the change

made to § 119.7 (How long and in what

amounts will grant funding be available

to a single grantee?)(See below). In this

final rule, the minimum award for

training and technical assistance and

capacity building grants will be not less

than $50,000 during the initial year of

the grant.

SBA received a total of 9 comments

on § 119.7, which explains for how long

and in what amounts grant funding will

be available to a single grantee. All of

the commenters were opposed to

declining award amounts in the option

years. SBA understands the commenters

concerns however, we have maintained

a ‘‘step down’’ approach to the award

amounts for the option years. SBA

believes that this step down approach

will allow SBA to accommodate new

grantees every year while providing

existing grantees with enough funding

to pursue their plans. Therefore, the

29012 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations

section provides that for Technical

Assistance and Capacity Building

Grants, after the initial grant, grant

awards for following option years will

be in amounts not to exceed 67 percent

of the initial grant amount. SBA did not

treat Research and Development Grants

and Discretionary Grants similarly. SBA

believes that these grants, by their very

nature, require more flexibility. Often

projects, such as research projects, are

more unpredictable in terms of when

milestones will be achieved and what

direction the research will take upon

attainment of each milestone. Therefore,

for these types of grants, after making

the initial grant, option year grant

awards will be approved at SBA’s

discretion.

In addition, to address the concerns

raised by these comments, SBA made

two other changes to § 119.7. First, SBA

modified the language of subsection (a)

to clarify the discussion of option year

funding. Secondly, SBA added a new

subsection (d) to clarify that grantees in

the final year of a project may request

a one-time extension for up to 12

months under OMB Circular A–110,

paragraph .25(e)(2). The purpose of this

revision is to place grantees on notice

that extensions may be requested under

the PRIME Program.

SBA also made one other amendment

to § 119.7 in an effort to clarify the

language of the section. We have

amended the heading to read, ‘‘How

long and in what amounts will grant

funding be available to a single

grantee?’’ (Emphasis added). This

heading more accurately describes the

content of the text, which follows the

heading.

SBA received only one comment on

§ 119.8, which sets forth the matching

requirements for grantees. The

commenter was concerned that a

request for a waiver from the matching

requirements would count against them.

In an effort to confirm that this is not

the case, SBA amended some of the

language within paragraph (c) and (d)

and added new paragraphs (e) and (f).

SBA’s intent within this section is to

convey that a request for a waiver

should be made sincerely and only

when absolutely necessary. Obviously,

SBA wants to avoid issuing unnecessary

waivers in order to ensure that program

funds will be utilized in the most farreaching manner possible. SBA will first

evaluate applications based on merit

alone and will rank order these

applications accordingly. Once SBA

completes this ranking, we will review

the applications for waiver requests and

will grant waiver requests in the same

rank order until waiver request

authority has been expended. If, when

following the rank order, SBA comes to

an application that requests a waiver but

all waiver authority has already been

granted, SBA has no option but to deny

the waiver request and will therefore be

forced to similarly deny the otherwise

meritorious grant proposal. If such a

situation occurs, such an applicant will

not be able to suddenly turn around,

come back to SBA stating that they have

the required match amount and hope to

receive a grant award. Accordingly, as

we have stated, waiver requests should

be made only when necessary.

SBA received two comments in

response to § 119.10, which restates the

Act’s requirement that SBA not prefer

SBA Microloan Program participants

under § 7(m) of the Small Business Act

over non-participants or former

participants in that program. Both

comments supported this position

therefore, the section remains as it was

proposed.

SBA received three comments in

response to § 119.11, which sets forth

the information that will be requested in

an application for funding under

PRIME. All three comments suggested

that the application is too long. These

comments do not affect the regulation

text of this section however, SBA wants

to remind potential applicants that the

application contains both instructions

and requests for information. Not every

page of the application contains a

request for information. Of course, as

the PRIME program progresses, SBA

will look for opportunities to streamline

the application itself.

SBA received six comments on

§ 119.12, which sets forth the criteria

that SBA will use to evaluate grant

applications. All six commenters

indicated that SBA did not give enough

weight to the past experience of the

qualified organizations delivering

technical assistance to disadvantaged

entrepreneurs. After receiving these

comments (which came from almost 50

percent of the total number of

commenters), SBA decided to increase

the weight given to past experience.

Since issuing the proposed rule, and

upon review of comments, SBA more

firmly believes that an organization’s

ability to accomplish the objectives of

the PRIME program may best be

demonstrated by its prior experience

and success in serving disadvantaged

entrepreneurs. Also, based on these

comments, SBA decided to eliminate

the provision in proposed § 119.12(a)(1).

The proposed provision would require

two separate competitions for Technical

Assistance Grants. One competition for

microenterprise development

organizations that had been in operation

for four years or less and one

competition for microenterprise

development organizations that had

been in operation for more than four

years. SBA believes that the adjustments

to the past experience weighting makes

two competitions unnecessary.

SBA received a total of 5 comments

on §§ 119.16, 119.17, both of which

address the reporting, record keeping,

and related requirements of the PRIME

program. All of the commenters were

opposed to the quarterly reporting

requirement and two of the commenters

felt that the information being requested

was unrealistic or excessive. In drafting

these sections, SBA had to take into

account the requirements found within

§ 115 of the Riegle Community

Development and Regulatory

Improvement Act of 1994 (Riegle Act)

(12 U.S.C. 4714) as required by the Act

authorizing PRIME and the applicable

circulars issued by the Office and

Management and Budget (OMB). These

directives, along with SBA’s experience

and the commenters’ concerns, lead us

to amend this section to allow for, in the

case of Technical Assistance and

Capacity Building Grants, quarterly

reporting during the first two years.

Thereafter, the grantees may request that

SBA reduce the frequency of reports.

For recipients of Research and

Development Grants, reports will be

required in accordance with agreed

upon milestones. For Discretionary

Grants, reports will be required as

appropriate for the project, or on a

schedule similar to that provided for

Technical Assistance and Capacity

Building Grant recipients.

Compliance With Executive Order

12866, 12988 and 13132, the Regulatory

Flexibility Act, 5 U.S.C. 601–12, and the

Paperwork Reduction Act, 44 U.S.C.

Ch. 35

The Office of Management and Budget

(‘‘OMB’’) reviewed this rule as a

‘‘significant’’ regulatory action under

Executive Order 12866.

SBA has determined that this final

rule 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. 601–612. Congress has

limited the funding level for this

program therefore, it can only affect a

limited number of small businesses

through making grants to specifically

defined organizations.

The Office of Management and Budget

(OMB) has approved the information

collection requirements contained in

part 119 under the provisions of the

Paperwork Reduction Act, 44 U.S.C. Ch.

35, and has assigned OMB control

number 3245–0329. Information

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations 29013

collected includes application

information submitted by applicants in

response to the Program

Announcements, as provided in

§§ 119.9 and 119.11, and reporting,

recordkeeping and related requirements

related to a grant award, as provided in

§ 119.16. The required information will

be used to evaluate applicants for

PRIME grant awards and to monitor the

financial and performance aspects of the

awards once they are made. SBA

estimates that it will take 80 hours to

respond to the program announcements

and to perform quarterly reporting and

recordkeeping requirements. SBA

estimates 500 applicants, resulting in an

annual hour burden of 40,000 hours for

the PRIME Program. SBA received only

two comments on the proposed

application packages suggesting that the

applications were too long. SBA

responded to these comments earlier in

the preamble to this rule when

addressing the comments made on

§ 119.11. An agency may not conduct or

sponsor, and a person is not required to

respond to a collection of information

unless it displays a currently valid OMB

control number. The OMB control

number associated with this collection

information is 3245–0329.

For purposes of Executive Order

13132, SBA has determined that this

final rule has no federalism implications

because the legislation authorizing it

provides grants to private, non-profit

organizations working directly with

disadvantaged entrepreneurs.

For purposes of Executive Order

12988, SBA certifies that this final rule

is drafted, to the extent practicable, in

accordance with the standards set forth

in section 3 of that Order.

List of Subjects in 13 CFR Part 119

Grant programs—Business, Small

business.

For the reasons stated in the

preamble, SBA adds 13 CFR part 119, as

follows:

PART 119—PROGRAM FOR

INVESTMENT IN

MICROENTREPRENEURS (‘‘PRIME’’

OR ‘‘THE ACT’’)

Sec.

119.1 What is the Program for Investment in

Microentreprenuers (‘‘PRIME’’ or ‘‘the

Act’’)?

119.2 Definitions.

119.3 What types of organizations are

eligible for PRIME grants?

119.4 What services or activities must

PRIME grant funds be used for?

119.5 How are PRIME grant awards

allocated?

119.6 What are the minimum and

maximum amounts for an award?

119.7 How long and for what amounts will

grant funding be available to a single

grantee?

119.8 Are there matching requirements for

grantees?

119.9 How will a qualified organization

apply for PRIME grant awards?

119.10 Will SBA give preferential

consideration to other SBA program

participants?

119.11 What information will be requested

in an application under the PRIME

program?

119.12 What criteria will SBA use to

evaluate applications for funding under

the PRIME program?

119.13 How will an applicant make a

subgrant?

119.14 Are there limitations regarding the

use of program income?

119.15 If a grantee is unable to spend the

entire amount allotted for a single fiscal

year, can the funds be carried over to the

next year?

119.16 What are the reporting, record

keeping, and related requirements for

grantees?

119.17 What types of oversight will SBA

provide to grantees?

119.18 What are the restrictions against

lobbying?

119.19 Is fundraising an allowable expense

under the PRIME program?

119.20 Should grantees and subgrantees

raise conflict of interest matters with

SBA?

Authority: 15 U.S.C. 634(b)(6) and Pub. L.

106–102.

§ 119.1 What is the Program for

Investment in Microentrepreneurs (‘‘PRIME’’

or ‘‘the Act’’)?

PRIME authorizes SBA to make grants

to ‘‘qualified organizations’’ to fund

training and technical assistance for

disadvantaged entrepreneurs, build

these organizations’ own capacity to

give training and technical assistance,

fund research and development of ‘‘best

practices’’ in microenterprise

development and technical assistance

programs for disadvantaged

microentrepreneurs, and to fund other

undertakings the Administrator or

designee deems consistent with these

purposes.

§ 119.2 Definitions.

For the purposes of this part, the

following definitions apply:

Capacity Building Grant means a

grant made under the Act identified

under § 119.4(b).

Capacity building services means

services provided to an organization or

program that is currently, or is

developing as, a microenterprise

development organization or program,

for the purpose of enhancing its ability

to provide training and technical

assistance to disadvantaged

microentrepreneurs.

Collaborative means two or more

nonprofit entities that agree to act

jointly as a qualified organization under

this part.

Developer means a person interested

in starting or acquiring a

microenterprise.

Disadvantaged entrepreneur, or

disadvantaged microentrepreneur,

means the owner, majority owner, or

developer, of a microenterprise who is

also—

(1) A low-income person;

(2) A very low-income person; or

(3) An entrepreneur who lacks

adequate access to capital or other

resources essential for business success,

or is economically disadvantaged, as

defined in this part.

Discretionary Grant means a grant

made under the Act identified under

§ 119.4(d).

Economically disadvantaged

entrepreneur, or economically

disadvantaged microentrepreneur,

means an owner, majority owner, or

developer of a microenterprise whose

ability to compete in the free enterprise

system has been impaired due to

diminished capital and credit

opportunities as compared to others in

the industry such that his or her

ownership of a small business would

help to qualify the small business for

assistance under section 7(j) or section

8(a) programs of the Small Business Act.

Grantee means a recipient of a grant

under the Act.

Group has the same meaning as

‘‘collaborative’’ as defined in this

section.

Indian tribe means any Indian tribe,

band, pueblo, nation, or other organized

group or community, including any

Alaska Native village or regional or

village corporation, as defined in or

established pursuant to the Alaska

Native Claims Settlement Act, which is

recognized as eligible for the special

programs and services the United States

provides to Indians because of their

status as Indians.

Indian tribe jurisdiction means Indian

country, as defined in 18 U.S.C. 1151,

and any other lands, title to which is

either held by the United States in trust

for the benefit of any Indian tribe or

individual or held by any tribe or

individual subject to a restriction by the

United States against alienation, and

any land held by Alaska Native groups,

regional corporations, and village

corporations, as defined in or

established under the Alaska Native

Claims Settlement Act, public domain

Indian allotments, and former Indian

reservations in the State of Oklahoma.

Intermediary means a private,

nonprofit entity serving or seeking to

29014 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations

serve microenterprise development

organizations or programs identified

under § 119.3.

Large microenterprise development

organization or program means a

microenterprise development

organization or program with 10 or more

full time employees or equivalents,

including its executive director, as of

the date it files its application with SBA

for a PRIME grant.

Local community means an

identifiable area and population

constituting a political subdivision of a

state.

Low-income person means a person

having an income, adjusted for family

size, of not more than—

(1) For metropolitan areas, 80 percent

of the median income; and

(2) For non-metropolitan areas, the

greater of—

(i) 80 percent of the area median

income; or

(ii) 80 percent of the statewide nonmetropolitan area median income.

Microenterprise means a sole

proprietorship, partnership or

corporation that—

(1) Has fewer than 5 employees,

including the owner; and

(2) Generally lacks access to

conventional loans, equity, or other

banking services.

Microenterprise development

organization or program means a

nonprofit entity, or a program

administered by such an entity,

including community development

corporations or other nonprofit

development organizations and social

service organizations, that provides

services to disadvantaged

microentrepreneurs.

Qualified organization means an

organization eligible for a PRIME grant

identified under § 119.3.

Research and Development Grant

means a grant made under the Act

identified under § 119.4(c).

Severe constraints on available

sources of matching funds means the

documented inability of a qualified

organization applying for a PRIME grant

to raise matching funds or in-kind

resources from non-Federal sources

during the 2 years immediately prior to

the date of its application because of a

lack of or increased scarcity of monetary

or in-kind resources from potential nonFederal sources.

Small microenterprise development

organization or program means a

microenterprise development

organization or program with less than

10 full time employees or equivalents,

including its executive director, as of

the date it files its application with SBA

for a PRIME grant.

Technical Assistance Grant means a

grant made under the Act identified

under § 119.4(a).

Training and technical assistance

means services and support provided to

disadvantaged entrepreneurs, such as,

but not limited to, assistance intended

to enhance business planning,

marketing, management, financial

management skills, business operations,

or assistance for the purpose of

increasing access to loans and other

financial services.

Very low-income person means

having an income adjusted for family

size of not more than 150 percent of the

poverty line, as defined in section

673(2) of the Community Services Block

Grant Act, 42 U.S.C. 9902(2), including

any revision required by that section.

§ 119.3 What types of organizations are

eligible for PRIME grants?

An organization eligible for a PRIME

grant (‘‘qualified organization’’) is one

that is:

(a) A microenterprise development

organization or program as defined in

§ 119.2(q) (or a group or collaborative

thereof) that has a demonstrated record

of delivering microenterprise services to

disadvantaged microentrepreneurs;

(b) An intermediary, as defined in

§ 119.2(l);

(c) A microenterprise development

organization or program as defined in

§ 119.2(q) that is accountable to a local

community, working with a State or

local government or Indian tribe; or

(d) An Indian tribe acting on its own,

if the Indian tribe can certify that no

private organization or program referred

to in paragraphs (a), (b) and (c) of this

section exists within its jurisdiction.

§ 119.4 What services or activities must

PRIME grant funds be used for?

A recipient of a PRIME grant

(‘‘grantee’’) must use PRIME grants to—

(a) Provide training and technical

assistance to disadvantaged

microentrepreneurs (‘‘Technical

Assistance Grant’’);

(b) Provide training and capacity

building services to microenterprise

development organizations and

programs to assist them to develop

microenterprise training and services

(‘‘Capacity Building Grant’’);

(c) Aid in researching and developing

the best practices in the field of

microenterprise development and

technical assistance programs for

disadvantaged microentrepreneurs

(‘‘Research and Development Grant’’); or

(d) Conduct such other activities as

the Administrator or designee

determines to be consistent with the

purposes of the Act (‘‘Discretionary

Grant’’).

§ 119.5 How are PRIME grant awards

allocated?

(a) At least 50 percent of the number

of grant awards made under this part

will be awarded to qualified

organizations that benefit very lowincome persons, including those

residing on Indian reservations. In

general, SBA will make grant award

decisions to serve diverse populations

by including as recipients both large

and small microenterprise development

organizations, and organizations serving

urban, rural, and Indian tribal

communities.

(b) SBA will allocate the funding

available for awards as follows:

(1) A minimum of 75 percent for

Technical Assistance Grants;

(2) A minimum of 15 percent for

Capacity Building Grants; and

(3) The remaining 10 percent or less

may be allocated by SBA, in its sole

discretion to be used for:

(i) Research and Development Grants;

or

(ii) Discretionary Grants.

§ 119.6 What are the minimum and

maximum amounts for an award?

(a) The minimum grant award for

Technical Assistance and Capacity

Building Grants will be $50,000 during

the first year of the award, subject to the

availability of funds.

(b) There is no minimum grant award

for Research and Development or

Discretionary Grants.

(c) The maximum amount that an

individual grant recipient may receive

in any fiscal year from a single award

or multiple awards, under any of the

purposes of the program, may not

exceed $250,000 or 10 percent of the

total grant funds available for award in

that fiscal year, whichever is less.

§ 119.7 How long and in what amounts will

grant funding be available to a single

grantee?

(a) Generally, the funding period for

a PRIME grant will be one year. Subject

to availability of funds and continuing

authorization, funding may be available

on an annual basis allowing for the

initial grant plus up to four option

years, for a project period of up to five

years. Decisions regarding option year

awards and the funding levels of these

awards will depend upon availability of

funding and the grantee’s performance

as measured against project objectives

and milestones. A grantee that enters

into a cooperative agreement must

submit a separate application to have

the support continued for each

subsequent year. In all cases,

continuation awards require a

determination by SBA that continued

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations 29015

funding is in the best interest of the

Federal government. Neither the

approval of any application nor the

entering into of any cooperative

agreement commits or obligates the

Federal Government in any way to make

any additional, supplemental,

continuation or other award with

respect to any grantee.

(b) For Technical Assistance and

Capacity Building Grants, after a grantee

receives an initial grant, funding for any

option year(s) must be no more than 67

percent of the initial grant amount.

(c) For Research and Development

and Discretionary Grants, after a grantee

receives an initial grant, funding for any

option year(s) will be approved at the

discretion of the SBA.

(d) In the final year of a project,

grantees may apply to extend the

expiration date of a grant if additional

time beyond the established expiration

date is required to assure adequate

completion of the original scope of work

within the funds already made

available. For this purpose, the grantee

may make an extension request for a

one-time, no-cost extension, not to

exceed 12 months, prior to the

established expiration date. Written

notification of such an extension, with

the supporting reasons, must be

received by the SBA Grant Officer at

least 60 days prior to the expiration of

the award. SBA reserves the right to

disapprove the extension if the

requirements set forth in OMB Circular

A–110, paragraph .25(e)(2) are not met

or if the extension is not in the best

interests of SBA.

§ 119.8 Are there matching requirements

for grantees?

Applicants and grantees must match

SBA funding as follows:

(a) Except as provided in paragraph

(c) of this section, applicants and

grantees must match Federal assistance

with funds from sources other than the

Federal Government in an amount not

less than 50 percent of the grant amount

awarded each year. Sources such as

fees, grants, gifts, income from loan

sources, and in-kind resources of a grant

recipient from non-Federal public or

private sources may be used to comply

with the matching funds requirement;

(b) Grantees receiving funds in option

years as described in § 119.7(b) through

(c) are subject to the matching

requirements of this section.

(c) Applicants or grantees with severe

constraints on available sources of

matching funds may request that the

Administrator or designee reduce or

eliminate the matching requirements.

Any reductions or eliminations must

not exceed 10 percent of the aggregate

of all PRIME grant funds made available

by SBA in any fiscal year. By requesting

a waiver, the applicant is implying that,

but for the waiver, the proposed

programming will not be possible at the

levels requested.

(d) An applicant may request a waiver

of the matching fund requirement by

submitting a written request with its

application for funding. The request

must justify, and evidence, the need for

a waiver. As evidence, the request must

include, but is not limited to:

(1) The cause and extent of the

constraints on the historical and

projected ability to raise matching funds

as demonstrated by financial statements

and letters of rejection from previous

funders and potential new funding

sources;

(2) Evidence of efforts to raise match

specific to the subject application,

including negative responses, and

(3) Based on those efforts, a list of any

matching funds expected for the PRIME

grant.

(e) Subject to § 119.12 (a) through (d),

applications will be evaluated on merit

before being matched with cost

proposals. Any organization requesting

a waiver of matching funds, therefore,

will not be rejected solely on the basis

of such a request.

(f) Applications will be ranked,

within their respective categories, from

the most to least qualified. The best

qualified applicants in each category

will be selected whether or not a waiver

is requested until the availability of

waivers is exhausted.

§ 119.9 How will a qualified organization

apply for PRIME grant awards?

(a) SBA will issue Program

Announcements specifying the terms,

conditions, and evaluation criteria for

each potential set of awards. Program

Announcements will summarize the

purpose of the available funds; will

advise potential applicants regarding

how to obtain an application packet;

and will provide summary information

regarding deadlines and other

requirements. Program Announcements

may specify any limitations, special

rules, procedures, and restrictions for

available funding.

(b) Applicants may submit

applications in response to the Program

Announcements. Each applicant shall

submit an application for a grant in

accordance with this part and the

applicable Program Announcement.

(c) SBA reserves the right to consider

at the same time multiple applications

from a single applicant when

appropriate.

§ 119.10 Will SBA give preferential

consideration to other SBA program

participants?

In making grants under this part, SBA

will not give preferential consideration

to an applicant that is a participant in

programs established under section 7(m)

of the Small Business Act.

§ 119.11 What information will be

requested in an application under the

PRIME program?

Each application must contain the

information and documentation

specified in the applicable Program

Announcement including, but not

limited to, the following items.

(a) For applications seeking Technical

Assistance Grants:

(1) Identifying information and core

documentation for the applicant

including such items as the applicant’s

articles of incorporation, by-laws, proof

of IRS tax-exempt status, financial

statements, and reference contacts.

(2) A description of past and present

activities and technical qualifications of

the applicant, including workshops,

programs and other technical assistance

services, with specific descriptions of

the extent to which such services have

reached low and very low-income

individuals, and the success rates of

clients.

(3) A list of applicant’s community

partnerships and collaborations with

state and local entities, and a

description of how such partnerships

and collaborations are serving

microentrepreneurs.

(4) A description of the proposed

activity for which the applicant will use

PRIME grant funds, including training

programming plans; a plan for outreach

and delivery; applicant’s capacity to

provide thorough and detailed reports;

and a description of the applicant’s

current data collection and management

system, such as computer hardware,

software and internet capabilities.

(5) In the event the applicant is a

collaborative, a plan for maintaining

internal controls, accountability, and

program quality control among the

participants of the collaborative.

(6) Resumes of the personnel that will

be administering and managing the

proposed activities under the PRIME

grant, showing knowledge in such areas

as business development, business

structures, financial management, and

business training and counseling.

(7) A list of grants received, and/or

contracts entered into, that are similar

in scope to the subject grant, including

name of Federal or other agency

providing funding, grant or contract

number, and a summary of services

provided.

29016 Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations

(b) For applicants seeking Capacity

Building Grants:

(1) See paragraphs (a)(1), (5), (6) and

(7) of this section.

(2) A description of past and present

activities and technical qualifications of

the applicant, including workshops,

programs, operational services, and

other technical assistance services, or

program development services with

specific descriptions of the extent to

which such services have improved the

operations of client MDOs, assisted

client MDOs with operational issues,

and assisted client MDOs in reaching

low and very low-income individuals.

(3) A description of the proposed

activity for which the applicant will use

PRIME grant funds, including training

programming plans, a plan for outreach

and delivery, applicant’s capacity to

provide thorough and detailed reports; a

description of the applicant’s current

data collection and management system,

such as computer hardware, software,

and internet capabilities and a

description of how these capabilities

will or will not be integrated into the

training of MDOs.

(c) For applicants seeking Research

and Development Grants:

(1) See paragraphs (a)(1), (6), and (7)

of this section.

(2) A research proposal indicating the

thesis, method(s), scope, duration, and

implementation plans (if any).

(3) A description of the expected

effect of the research on services to

disadvantaged microentrepreneurs.

(d) For applicants seeking

Discretionary Grants:

(1) See paragraph (a)(1) of this section.

(2) A description of the proposed

activity for which the applicant will use

PRIME grant funds, including

applicant’s capacity to provide thorough

and detailed reports, and a description

of the applicant’s current data collection

and management system, such as

computer hardware, software and

internet capabilities.

§ 119.12 What criteria will SBA use to

evaluate applications for funding under the

PRIME program?

During the first year for which

funding is available for the PRIME

program, SBA will give special

consideration to organizations located

in and serving areas of, or with a history

of successful outreach to, low-income

and very low-income persons, to enable

the PRIME program to assist those with

the greatest need first. SBA will evaluate

applications for funding in accordance

with the specific goals of the Act, and

as more fully described in the Program

Announcements. Evaluation criteria

include, but are not limited to, the

following:

(a) Applications for Technical

Assistance Grants:

(1) Applicants will compete based on

expertise and ability to fulfill the

purposes of the Act.

(2) SBA will evaluate organizational

structure, financial stability, financial

management systems, personnel

capacity, and electronic communication

capabilities (or potential for same). SBA

will also evaluate data collection

capabilities, reporting capacities, and

ability to account for performance and

outcome.

(3) SBA will evaluate the applicant’s

history of providing technical assistance

to low-income and very low-income

microentrepreneurs. This factor

includes patterns of program growth,

client success, outcomes of training,

success in establishing new businesses,

and success in arranging micro-level

financing when the client indicates

financing as a goal.

(4) SBA will evaluate the applicant’s

ability to use community partnerships

and collaborations with state and local

entities to better serve low-income and

very low-income microentrepreneurs.

(b) Applications for Capacity Building

Grants:

(1) SBA will evaluate the criteria set

forth in paragraph (a)(2) of this section.

(2) SBA will evaluate the applicant’s

history of providing capacity building

services to MDOs, as an indication of

the organization’s understanding of the

goals and purposes of capacity building,

its historical effectiveness with the

microenterprise development industry,

and its ability to provide quality

programming to the targeted market.

SBA will evaluate patterns of program

growth, outcomes of training, types of

services provided, delivery systems

used, the number and types of clients

served, and the successes realized

within the client’s organizational goals.

(3) SBA will evaluate expected impact

on client MDOs; expected impact on

services to low-and very-low income

microentrepreneurs; and a plan for

service and delivery.

(c) Applications for Research and

Development Grants:

(1) SBA will evaluate the criteria set

forth in paragraph (a)(2) of this section.

(2) SBA will evaluate how the

research potentially will enhance

microenterprise-oriented technical

assistance services to disadvantaged

entrepreneurs. Applicants must show

the method(s), scope, duration, and

implementation plans of the proposed

research.

(3) SBA will evaluate applicant’s plan

of action incorporating original and

secondary research. Applicants must

show impact on improved access to

microenterprise development services

for disadvantaged microentrepreneurs,

and the expected replicability/

transferability of the finished product to

the field.

(d) Applications for Discretionary

Grants will be evaluated based on the

goals and the viability of the project.

§ 119.13 How will an applicant make a

subgrant?

(a) An applicant that wants to make

subgrants using PRIME grant funds must

receive written approval from SBA prior

to making subgrants. The applicant

must identify the subgrantee(s) and

describe in detail what the subgrantee(s)

will do to help the grantee implement

its proposal. An applicant must submit

information to SBA demonstrating that,

through the subgrantee(s), the grantee’s

program will:

(1) Provide expanded services to the

community,

(2) Provide a method by which one or

more previously unserved communities

will gain access to the program, or

(3) Provide other specific benefits to

the clients, such as specialized training,

expanded schedules of operation, or

other benefits.

(b) If an applicant has identified

potential subgrantee(s) at the time it

submits an application for a PRIME

grant, the applicant must include the

information requested in paragraph (a)

of this section in the application.

Otherwise, the applicant or grantee may

submit the requested information at

such time that approvals for

subgrantee(s) are requested.

(c) A grantee may not use more than

7.5 percent of the assistance received

under its PRIME grant for administrative

expenses in connection with the making

of subgrants.

§ 119.14 Are there limitations regarding

the use of program income?

Program income, as defined in OMB

Circular A–110, may only be used to

further PRIME program objectives. As

such, fees collected from clients, and

other program income as defined, may

be used to help fund the matching

requirement. All program income, as

defined, shall be reported on financial

reports submitted to SBA and added to

funds committed to the project by SBA

and the recipient organization.

However, any interest earned in excess

of the maximum allowable amount as

specified in the OMB circular

incorporated into the grant must be

returned to the Federal Government by

the grantee.

Federal Register / Vol. 66, No. 103 / Tuesday, May 29, 2001 / Rules and Regulations 29017

§ 119.15 If a grantee is unable to spend the

entire amount allotted for a single fiscal

year, can the funds be carried over to the

next year?

(a) The grantee may request approval

to use unexpended funds in the next

budget period. This is permissible if

funds are to be used for a non-severable,

non-recurring project or activity within

the scope of the PRIME program. Nonseverable means a project in its entirety

that cannot be subdivided. The request

for using unexpended funds in the next

budget period must include the

following:

(1) SF 424, budget pages, and

justification;

(2) Explanation of why the funds were

not expended during the period in

which they were awarded; and

(3) Evidence of match. The match

requirement for funds carried over to

the next budget period can be met by

using any excess of matching funds

from the current budget period, new

matching funds, or a combination of

both.

(b) The request must be made no later

than 60 days before the end of the

budget/project period or the deobligation process will begin. Approved

requests will require the issuance of a

revised Notice of Award. Expenditures

for funds carried over to the next budget

period must be tracked separately.

§ 119.16 What are the reporting, record

keeping, and related requirements for

grantees?

A grantee must keep records and meet

the other requirements of section 115 of

the Riegle Community Development and

Regulatory Improvement Act of 1994

(Riegle Act), as if it were a community

development financial institution. (See

12 U.S.C. 4714). In addition to meeting

requirements of the Riegle Act, a grantee

must also maintain data allowing it to

measure the impact of services provided

by it and any subgrantees, and, if

specifically required by the terms of the

PRIME grant, measure the success rate

of individual clients whom the grantees

assist. SBA will detail such

requirements in its Program

Announcements.

§ 119.17 What types of oversight will SBA

provide to grantees?

(a) In addition to reports required

under the Riegle Act, SBA will require

reports in accordance with applicable

OMB circulars. Such reports will

include the following information:

(1) For recipients of Technical

Assistance and Capacity Building

Grants, for the first two years of

receiving grant funding, narrative

performance reports and financial status

reports will be required quarterly within

15 calendar days of the end of each

quarter. Thereafter, grantees may

request that SBA reduce the frequency

of reports from quarterly to semiannually. The frequency of reporting

then will be determined at the

discretion of SBA. In addition, details of

expenditures will be required with each

request for payment. Grantees will be

required to submit audited financial

statements on an annual basis, if

available, or annual financial statements

prepared by a licensed, independent

public accountant, within 120 calendar

days of the end of the grantee’s fiscal

year.

(2) For recipients of Research and

Development Grants, reports will be

required in accordance with agreed

upon milestones and as part of the

disbursement process.

(3) For recipients of Discretionary

Grants, reports will be required as

appropriate for the project, or on a

schedule as described in paragraph(a)(1)

of this section, whichever is more

frequent.

(b) In addition, SBA may, from time

to time, make site visits to the grantee,

and review all applicable books and

records.

§ 119.18 What are the restrictions against

lobbying?

No assistance made available under

the PRIME program may be expended

by a grantee or subgrantee to pay any

person to influence, or attempt to

influence, any agency, elected official,

officer, or employee of a Federal, State,

or local government in connection with

its participation in the program.

§ 119.19 Is fundraising an allowable

expense under the PRIME program?

Expenditures of grant funds for

fundraising activities are not allowable

costs under this program. Applicants

must be able to raise matching funds

without the assistance of grant funds.

Unless the full requirement for

matching funds is waived, the applicant

must demonstrate that it has adequate

fundraising resources to obtain the

required non-Federal matching funds to

perform the project.

§ 119.20 Should grantees and subgrantees

raise conflict of interest matters with SBA?

Each grantee or subgrantee must

provide SBA with a copy of its conflicts

of interest policies prior to receipt of

funding under the program. Such

policies must clearly describe the

grantee’s or subgrantee’s protections

from conflicts of interest or the

appearance thereof in the handling of

grant funding and program provision

under this program.

Dated: May 21, 2001.

John Whitmore,

Acting Administrator.

[FR Doc. 01–13230 Filed 5–25–01; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Airspace Docket No. 2001–ASW–05]

Revision of Class E Airspace, Bay City,

TX

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Direct final rule; confirmation of

effective date.

SUMMARY: This document confirms the

effective date of a direct final rule which

revises the Class E Airspace, Bay City,

TX.

EFFECTIVE DATE: The direct final rule

published at 66 FR 16118 is effective

0901 UTC, July 12, 2001.

FOR FURTHER INFORMATION CONTACT:

Donald J. Day, Airspace Branch, Air

Traffic Division, Southwest Region,

Federal Aviation Administration, Fort

Worth, TX 76193–0520, telephone: 817–

222–5593.

SUPPLEMENTARY INFORMATION: The FAA

published this direct final rule with a

request for comments in the Federal

Register on March 23, 2001, (66 FR

16118). The FAA uses the direct final

rulemaking procedure for a

noncontroversial rule where the FAA

believes that there will be no adverse

public comment. This direct final rule

advised the public that no adverse

comments were anticipated, and that

unless a written adverse comment, or a

written notice of intent to submit such

an adverse comment, were received

within the comment period, the

regulation would become effective on

July 12, 2001. No adverse comments

were received, and, thus, this action

confirms that this direct final rule will

be effective on that date.

Issued in Fort Worth, TX on May 17, 2001.

Robert N. Stevens,

Acting Manager, Air Traffic Division,

Southwest Region.

[FR Doc. 01–13308 Filed 5–25–01; 8:45 am]

BILLING CODE 4910–13–M