60588 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

cattle herds in the State. The elevation 

of an area from modified accredited 

advanced to accredited free status 

eliminates all remaining interstate 

movement restrictions for cattle and 

bison originating from this zone. 

The reclassified modified accredited 

advanced zone will include 267 cattle 

herds, 17 of which are dairy herds. The 

elevation to modified accredited 

advanced status from modified 

accredited status removes both 

individual animal and whole herd 

testing requirements for producers 

within this zone. Tuberculosis testing, 

including veterinary fees, costs about 

$10 to $15 per head. Based on statewide estimates of interstate movement, 

annual cost savings associated with 

reduced testing of feeder cattle moving 

out of State from this zone could total 

between $10,000 and $15,000. Annual 

cost savings associated with the removal 

of whole herd testing for non-accredited 

beef herds engaged in interstate 

movement of breeding cattle and for all 

dairy herds in this zone could be 

between about $120,000 and $180,000. 

Under these circumstances, the 

Administrator of the Animal and Plant 

Health Inspection Service has 

determined that this action will not 

have a significant economic impact on 

a substantial number of small entities. 

Executive Order 12372 

This program/activity is listed in the 

Catalog of Federal Domestic Assistance 

under No. 10.025 and is subject to 

Executive Order 12372, which requires 

intergovernmental consultation with 

State and local officials. (See 7 CFR part 

3015, subpart V.) 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. This rule: (1) Preempts all State 

and local laws and regulations that are 

in conflict with this rule; (2) has no 

retroactive effect; and (3) does not 

require administrative proceedings 

before parties may file suit in court 

challenging this rule. 

Paperwork Reduction Act 

This rule contains no new 

information collection or recordkeeping 

requirements under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501 

et seq.). 

List of Subjects in 9 CFR Part 77 

Animal diseases, Bison, Cattle, 

Reporting and recordkeeping 

requirements, Transportation, 

Tuberculosis. 

■ Accordingly, we are amending 9 CFR 

part 77 as follows: 

PART 77—TUBERCULOSIS 

■ 1. The authority citation for part 77 

continues to read as follows: 

Authority: 7 U.S.C. 8301–8317; 7 CFR 2.22, 

2.80, and 371.4. 

■ 2. In § 77.7, a new paragraph (b)(3) is 

added to read as follows: 

§ 77.7 Accredited-free States or zones. 

* * * * * 

(b) * * * 

(3) All of the State of Minnesota 

except for the zones that comprise those 

counties or portions of counties in 

Minnesota described in § 77.9(b)(2). 

* * * * * 

■ 3. In § 77.9, paragraph (b)(2) is revised 

to read as follows: 

§ 77.9 Modified accredited advanced 

States or zones. 

* * * * * 

(b) * * * 

(2) Those portions of the Minnesota 

counties of Lake of the Woods, Roseau, 

Marshall, and Beltrami bounded by a 

line as follows: Beginning in Lake of the 

Woods County at the intersection of the 

U.S./Canadian border and the western 

shoreline of Lake of the Woods; then 

west along the U.S./Canadian border 

(crossing into Roseau County) to Roseau 

County Road 115; then south along 

Roseau County Road 115 to State 

Highway 11; then southwest along State 

Highway 11 to State Highway 32; then 

south along State Highway 32 (crossing 

into Marshall County) to Marshall 

County Road 47/124; then east along 

Marshall County Road 47/124 to 210th 

Avenue Northeast; then south along 

210th Avenue Northeast and southwest 

to where the name changes to 200th 

Avenue Northeast; then south along 

200th Avenue Northeast to County Road 

121; then south along the western 

boundary of Agassiz National Wildlife 

Reserve and along the western boundary 

of the Elm Lake State Wildlife 

Management Area to the southwest 

corner of sec. 21 in T. 155 N., R. 42 W. 

of the Fifth Prime Meridian; then east 

along the southern boundary of secs. 21, 

22, 23, and 24 in T. 155 N., R. 42 W. 

and secs. 19 and 20 in T. 155 N., R. 41 

W.; then south along the western 

boundary of secs. 28 and 33 in T. 155 

N., R. 41 W.; then continuing south 

along Marshall County Road 52 to the 

southern boundary of Marshall County; 

then east along the southern boundary 

of Marshall County to the western 

boundary of Beltrami County (also the 

boundary of the Red Lake Indian 

Reservation); then north along the 

Beltrami County boundary (also the 

boundary of the Red Lake Indian 

Reservation) to the northern boundary 

of the Red Lake Indian Reservation; then 

east along the northern boundary of the 

Red Lake Indian Reservation to the 

southeast corner of sec. 36 in T. 155 N., 

R. 34 W.; then north along the eastern 

boundary of Townships 155, 156, 157 

(crossing into Lake of the Woods 

County), 158, 159, 160, and 161 N., R. 

34 W., to State Highway 11; then 

northwest and north along State 

Highway 11 to County Road 74; then 

east along County Road 74 to Main 

Avenue Northeast; then north along 

Main Avenue Northeast to the northern 

city limits of Warroad; then east along 

the Warroad city limits to the shore of 

Lake of the Woods; then along the shore 

of Lake of the Woods to the point of 

beginning. 

* * * * * 

§ 77.11 [Amended] 

■ 4. Section 77.11 is amended by 

removing and reserving paragraph 

(b)(2). 

Done in Washington, DC, this 27th day of 

September 2010. 

Kevin Shea, 

Acting Administrator, Animal and Plant 

Health Inspection Service. 

[FR Doc. 2010–24667 Filed 9–30–10; 8:45 am] 

BILLING CODE 3410–34–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 123 

[SBA–2010–0010] 

RIN 3245–AG00 

Immediate Disaster Assistance 

Program 

AGENCY: Small Business Administration 

(SBA). 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: This interim final rule 

implements the provision in the Food, 

Conservation and Energy Act of 2008 

(the Farm Act) which requires SBA to 

establish a guaranteed disaster loan 

program to provide interim loans to 

businesses affected by a disaster. Under 

that authority, this rule establishes the 

Immediate Disaster Assistance Program 

(IDAP), including the requirements for 

carrying out the program. SBA will 

provide an 85 percent guarantee on 

IDAP loans made by participating 

lenders for up to $25,000. These loans 

are intended to provide immediate relief 

to a small business that meets the basic 

eligibility standards for a disaster loan 

authorized under section 7(b) of the 

Small Business Act while the business’ 

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Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 60589 

application for a direct disaster loan is 

pending with SBA. 

DATES: Effective Date: October 1, 2010. 

Applicability Date: This rule is 

applicable for disasters declared on or 

after October 1, 2010. 

Comment Date: Comments must be 

received on or before November 30, 

2010. 

ADDRESSES: You may submit comments, 

identified by docket number [SBA– 

2010–0010] by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Grady Hedgespeth, Director of 

Financial Assistance, U.S. Small 

Business Administration, 409 3rd Street, 

SW., 8th floor, Washington, DC 20416. 

• Hand Delivery/Courier: Grady 

Hedgespeth, Director of Financial 

Assistance, U.S. Small Business 

Administration, 409 3rd Street, SW., 8th 

floor, Washington, DC 20416. 

All comments will be posted on 

http://www.Regulations.gov. If you wish 

to include within your comment, 

confidential business information (CBI) 

as defined in the Privacy and Use 

Notice/User Notice at http:// 

www.Regulations.gov and you do not 

want that information disclosed, you 

must submit the comment by either 

Mail or Hand Delivery and you must 

address the comment to the attention of 

Grady Hedgespeth, Director of Financial 

Assistance, U.S. Small Business 

Administration, 409 3rd Street, SW., 8th 

Floor, Washington, DC 20416. In the 

submission, you must highlight the 

information that you consider is CBI 

and explain why you believe this 

information should be held confidential. 

SBA will make a final determination, in 

its sole discretion, of whether the 

information is CBI and, therefore, will 

be published or not. 

FOR FURTHER INFORMATION CONTACT: 

Grady Hedgespeth, Director of Financial 

Assistance, at (202) 205–7562 or 

Grady.Hedgespeth@sba.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

The Farm Act, Public Law 110–246, 

enacted June 18, 2008, amended the 

Small Business Act (the Act) and 

authorized changes to make SBA’s 

disaster assistance program more 

accessible to disaster victims. One 

provision included in the Farm Act 

requires SBA to implement an 

Immediate Disaster Assistance Program 

(IDAP) to provide interim loans to 

businesses affected by a disaster that 

meet the basic eligibility standards for a 

disaster loan authorized under section 

7(b) of the Act. The provision authorizes 

SBA to provide an 85 percent guarantee 

on loans made by participating lenders 

for up to $25,000. The intent of the 

IDAP loan program is to provide bridge 

financing as quickly and as prudently as 

possible following a declared disaster 

while the business is awaiting approval 

for permanent financing through a 

direct disaster loan from SBA. 

The IDAP loan program is a 

guaranteed loan program. Prior to 

implementation of the IDAP loan 

program, SBA disaster assistance 

consisted of direct loans to disaster 

victims. Although SBA has experience 

in making guaranteed small business 

loans, called 7(a) loans because they are 

authorized under section 7(a) of the Act, 

SBA’s disaster loan programs have 

always been direct lending programs. 

Therefore, SBA decided to implement 

the IDAP loan program first on a smaller 

scale in order to test the program. Using 

a modest amount of appropriated funds, 

SBA plans to fund approximately 934 

IDAP loans. In this introductory phase 

of the program, IDAP loans will only be 

made available for specific disasters. 

SBA plans to focus this introductory 

phase of the IDAP loan program in the 

Gulf Coast region and is actively 

recruiting lenders in that region to 

participate in the program so that IDAP 

loans will be available as quickly as 

possible following an IDAP-Eligible 

Disaster Declaration. SBA will notify the 

public when a disaster declaration is an 

IDAP-Eligible Disaster Declaration. 

SBA anticipates that it may revise this 

Interim Final Rule based on its 

experience in administering the 

introductory phase of the program. In 

addition, SBA welcomes comments 

from all interested parties regarding the 

parameters of the IDAP loan program as 

outlined in this rule, as well as 

suggested changes applicable to further 

expansion of the program beyond 

specific identified disasters. 

In order to implement the 

introductory phase of this new loan 

program, SBA is revising certain 

existing disaster assistance regulations 

in subpart A of 13 CFR part 123 and 

adding a new subpart H to describe the 

requirements of the new IDAP loan 

program. 

II. Section by Section Analysis 

Section 123.1—What do these rules 

cover? 

SBA is updating the citations to the 

Act to reflect the most current authority 

for the disaster assistance programs. 

Section 123.2—What are disaster loans 

and disaster declarations? 

SBA is revising section 123.2 to add 

a sentence that describes IDAP loans. 

Section 123.4—What is a disaster area 

and why is it important? 

Section 123.4 describes disaster areas 

and the different types of disaster 

assistance available depending on the 

type of disaster declaration and the 

location of the disaster victim. SBA is 

revising section 123.4 to add references 

to IDAP loans. In major disasters, IDAP 

loans may be made for victims in 

contiguous counties or other political 

subdivisions, but for major disasters 

which authorize public assistance only, 

IDAP loans are not available in counties 

contiguous to the disaster area. IDAP 

loans may also be available in 

contiguous counties for disaster 

declarations issued by the 

Administrator of SBA. Additional 

information regarding the types of 

disaster declarations for which IDAP 

loans are available is set forth in new 

Subpart H. 

Section 123.5—What kinds of loans are 

available? 

SBA is revising section 123.5 to 

distinguish between the disaster loans 

authorized under Section 7(b) of the Act 

and IDAP loans, which are authorized 

under Section 42 of the Act. As 

described in paragraph (a), loans 

authorized under Section 7(b) include 

physical disaster home loans, physical 

disaster business loans, economic injury 

disaster business loans, and Military 

Reservist EIDL loans. SBA also has 

authority under Section 7(b) to make 

disaster loans in participation with 

financial institutions, although SBA 

does not currently have funding for this 

purpose. In such cases, the existing 

language of section 123.5 provides that 

SBA’s share in the disaster loan may not 

exceed 90 percent. For clarity, SBA 

added paragraph (b) to describe IDAP 

loans. Section 123.5(b) states that IDAP 

loans are authorized by Section 42 of 

the Act, made only in participation with 

financial institutions, and that SBA’s 

share in an IDAP loan is equal to 85 

percent. 

Section 123.8—Does SBA charge any 

fees for obtaining a disaster loan? 

SBA is revising section 123.8 to 

clarify which provisions are applicable 

only to disaster loans authorized under 

Section 7(b). SBA also added a sentence 

to provide that SBA will not charge 

lenders a guarantee fee for IDAP loans. 

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60590 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

Section 123.9—What happens if I don’t 

use loan proceeds for the intended 

purpose? 

SBA is revising section 123.9 to 

clarify that the statutory penalty equal 

to one and one-half times the disbursed 

amount for any wrongful misapplication 

of loan proceeds contained in this 

provision is applicable only to loans 

made under Section 7(b) of the Act. This 

statutory penalty does not apply to 

IDAP loans which are made under 

Section 42 of the Act. SBA is also 

adding paragraph (c) to clarify that 

borrowers who misapply loan proceeds 

of any disaster loan under Part 123, 

including loans made under Section 

7(b) of the Act and IDAP loans, may face 

criminal prosecution or other civil or 

administrative action. 

Section 123.11—Does SBA require 

collateral for any of its disaster loans? 

SBA is adding paragraph (c) to this 

section, which states that the collateral 

policies for IDAP loans will be set forth 

in the new Subpart H. 

Section 123.13—What happens if my 

loan application is denied? 

This provision outlines the 

notification, reconsideration, and appeal 

procedures for applicants whose request 

for a disaster loan is declined. SBA is 

adding a new paragraph (g) at the end 

of the provision to clarify that it does 

not apply to IDAP loans. Notification 

procedures for applicants whose request 

for an IDAP loan is declined are located 

in section 123.701. SBA has decided not 

to provide reconsideration or appeal 

procedures for the IDAP loan program 

due to the delay this would add to the 

IDAP loan approval process. Applicants 

whose request for an IDAP loan is 

declined are still eligible to apply 

directly to SBA for a disaster loan 

authorized under Section 7(b). 

Section 123.14—How does the Federal 

Debt Collection Procedures Act of 1990 

apply? 

Section 123.14 provides that debtors 

who own property which is subject to 

outstanding judgment liens for debts 

owed to the United States are generally 

not eligible to receive disaster loans. 

The regulation provides that in certain 

circumstances, however, SBA may 

waive this restriction. SBA has revised 

this waiver provision to state that it 

does not apply to IDAP loans due to the 

delay this would add to the IDAP loan 

approval process. A business that is 

ineligible for an IDAP loan under 

section 123.14 may still apply directly 

to SBA for a disaster loan authorized 

under Section 7(b). 

Section 123.15—What if I change my 

mind? 

Because the IDAP loan program is 

only available for businesses, SBA is 

adding a sentence at the end of this 

provision to clarify that it does not 

apply to IDAP loans. 

Section 123.16—How are loans 

administered and serviced? 

SBA is revising the last sentence to 

paragraph (a) to add that the rules on 

servicing are found in new Subpart H as 

well as part 120 of this chapter. 

Section 123.700—What is the 

Immediate Disaster Assistance 

Program? 

Sections 123.700(a) and (b) set forth 

the purpose of the Immediate Disaster 

Assistance Program (IDAP) and define 

the terms used in the regulation 

applicable to IDAP loans. IDAP loans 

are intended to provide immediate relief 

to small businesses that have suffered 

physical damage or economic injury due 

to a disaster, provided that those small 

businesses meet the basic eligibility 

standards for disaster loans authorized 

by Section 7(b). IDAP loans are interim 

loans of no more than $25,000 made by 

participating lenders and guaranteed by 

SBA. Paragraph (b) provides definitions 

of terms used in the new Subpart H. 

These terms include: Contiguous 

Counties, Credit Elsewhere, Declared 

Disaster, Declared Disaster Area, 

Disaster Loan, IDAP Borrower, IDAP 

Lender, IDAP Loan Program 

Requirements, IDAP-Eligible Disaster 

Declaration, Initial Period, Major 

Disaster Declaration, Other Recoveries, 

Primary Counties, SBA Administrative 

Disaster Declaration, SBA EIDL-Only 

Disaster Declaration, Substantial 

Economic Injury, and Term Period. 

There is significant overlap between the 

requirements of the IDAP loan program 

and those of SBA’s existing direct 

disaster loan programs; therefore some 

of the terms defined in this section may 

be found in other provisions outside of 

Subpart H. SBA has included these 

definitions in section 123.700(b) so that 

IDAP loan program participants can 

easily access both those terms that are 

specific to the IDAP loan program and 

common terms as they apply to the 

IDAP loan program. 

Section 123.701—What is the 

application procedure for an IDAP loan? 

Section 123.701 provides that a 

prospective IDAP Borrower must apply 

to an IDAP Lender for an IDAP loan 

within the application period 

established by SBA in the IDAP-Eligible 

Disaster Declaration. As described in 

section 123.3, SBA publishes a notice of 

disaster declaration in the Federal 

Register for every disaster for which 

SBA disaster assistance is available. 

SBA has decided to limit the availability 

of IDAP loans to three types of disaster 

declarations: Major Disaster 

Declarations under section 123.3(a)(1), 

SBA Administrative Disaster 

Declarations under section 123.3(a)(3), 

and SBA EIDL-Only Disaster 

Declarations under section 123.3(a)(5). 

Thus, an IDAP-Eligible Disaster 

Declaration is defined as one of these 

three types of disaster declarations. 

Additionally, in the introductory phase 

of the IDAP loan program, SBA is 

limiting the availability of IDAP loans to 

disasters occurring in the specific 

geographic regions. Thus, SBA has also 

limited the definition of IDAP-Eligible 

Disaster Declaration to those in which 

SBA has stated that IDAP loans are 

available. 

IDAP loans are not available for the 

following types of disaster declarations: 

Major disasters limited to public 

assistance (section 123.3(a)(2)); 

economic injury disaster declarations 

made in response to a disaster 

declaration by the Secretary of 

Agriculture (section 123.3(a)(4)); fishery 

resource disasters under section 308(b) 

of the Interjurisdictional Fisheries Act 

of 1986 (‘‘Fisheries Act’’); and Military 

Reservist economic injury disasters 

(§ 123.500 et seq.). Disaster declarations 

under section 123.3(a)(2) make SBA 

disaster assistance available only to 

private nonprofit organizations (PNPs). 

By statute, PNPs are not eligible for 

IDAP loans; therefore IDAP loans cannot 

be made pursuant to such declarations. 

Historically, SBA has received relatively 

few disaster loan applications in 

response to disaster declarations under 

section 123.3(a)(4) and disaster 

declarations under the Fisheries Act. 

Making IDAP loans available for these 

types of disaster declarations would 

further complicate the IDAP loan 

program while providing relief to a very 

small number of disaster victims. 

Therefore, SBA has decided not to 

include disaster declarations under 

section 123.3(a)(4) and the Fisheries Act 

as IDAP-Eligible Disaster Declarations. 

The Military Reservist economic injury 

disaster loan (MREIDL) program is a 

specialized disaster loan program for 

businesses that employ military 

reservists who are called-up to active 

military duty. SBA has decided not to 

allow IDAP loans for Military Reservist 

economic injury disasters declarations 

due to the additional eligibility 

requirements and specialized nature of 

the MREIDL program. 

The IDAP-Eligible Disaster 

Declaration will include the deadline by 

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which a prospective IDAP Borrower 

must submit an application to an IDAP 

Lender. SBA will publish a list of IDAP 

Lenders on SBA’s Web site. If the IDAP 

Lender declines the application, the 

IDAP Lender will provide the applicant 

with the reasons for the decline. If the 

IDAP Lender approves the application, 

it will submit a request for IDAP loan 

approval to SBA. The IDAP-Eligible 

Disaster Declaration will also include 

the deadline by which the IDAP Lender 

must submit the IDAP loan approval 

request to SBA. As required by statute, 

SBA will issue an approval or decline 

of the IDAP Lender’s request within 36 

hours of receipt by SBA. The IDAP 

Lender will then notify the prospective 

IDAP Borrower whether the application 

was approved. If SBA declines the IDAP 

loan approval request, the IDAP Lender 

will provide the applicant with the 

reasons given by SBA for decline. If the 

application is approved, the IDAP 

Lender will issue a loan authorization. 

Section 123.702—What are the 

eligibility requirements for an IDAP 

loan? 

Section 123.702(a) provides the 

requirements an IDAP Borrower must 

meet to be eligible for an IDAP loan; 

section 123.702(b) lists types of 

businesses that are ineligible for IDAP 

loans; and section 123.702(c) describes 

the character requirements for IDAP 

Borrowers. By statute, an IDAP 

Borrower must meet the basic eligibility 

standards for a Disaster Loan in order to 

be eligible for an IDAP loan. SBA has 

incorporated the basic Disaster Loan 

eligibility standards into this section. In 

certain instances, where basic Disaster 

Loan eligibility standards require an 

analysis with a level of complexity that 

would delay processing of an interim 

loan, SBA has determined that such 

loans should be processed as direct 

Disaster Loans and are ineligible for 

IDAP loan processing. 

Sections 123.702(a)(1) and (2) provide 

that IDAP Borrowers must be located 

within a Declared Disaster Area and 

have sustained eligible disaster losses. 

The regulation further details the type of 

disaster losses required depending on 

the specific disaster declaration. As 

described above, IDAP loans will be 

available for victims of a disaster event 

for which an IDAP-Eligible Disaster 

Declaration is issued. The eligible 

disaster losses described in section 

123.702(a)(2) are derived from the 

existing statutory and regulatory 

provisions governing each IDAP-Eligible 

Disaster Declaration. 

Sections 123.702(a)(3) and (4) provide 

that IDAP Borrowers must be small 

businesses that do not have Credit 

Elsewhere. In order to carry out the 

statutory intent of the IDAP loan 

program and to encourage lender 

participation, SBA has confined the 

eligibility for IDAP loans to small 

businesses that do not have Credit 

Elsewhere. An IDAP–Eligible Disaster 

Declaration authorizes SBA to make the 

following types of Disaster Loans to 

businesses harmed in the disaster event: 

Physical disaster business loans under 

section 123.200, economic injury 

disaster loans under section 123.300, or 

a combination of both types of loans. 

Under the physical disaster business 

loan program, SBA makes loans to both 

small and large businesses and to 

businesses that have Credit Elsewhere. 

In contrast, the Act limits the economic 

injury disaster loan program to small 

businesses that do not have Credit 

Elsewhere. In order to simplify the IDAP 

loan program for lenders, SBA is 

limiting the IDAP loan program to small 

businesses that do not have Credit 

Elsewhere (as defined in section 

123.700(b)(2)). Since IDAP Lenders are 

7(a) Lenders (see section 123.706(a)), 

they are familiar with these concepts 

because these are the basic eligibility 

requirements for the 7(a) loan program. 

Although large businesses and 

businesses that have Credit Elsewhere 

are not eligible for interim financing 

under the IDAP loan program, they may 

still apply directly to SBA for a physical 

disaster business loan. SBA believes 

that limiting the IDAP loan program to 

small businesses that do not have Credit 

Elsewhere will simplify the IDAP loan 

program and encourage lender 

participation, thereby increasing the 

availability of IDAP loans to disaster 

victims. 

Since IDAP loans are interim loans, 

section 123.702(a)(5) provides that an 

IDAP Borrower also must apply to SBA 

for a Disaster Loan for permanent 

financing within the applicable 

deadline and before disbursement of the 

IDAP loan. As described above, IDAP 

Borrowers must apply to SBA for an 

economic injury disaster loan, a 

physical disaster business loan, or a 

combination of both types of loans. SBA 

will publish the application deadlines 

for each type of loan in the IDAPEligible Disaster Declaration. 

Section 123.702(a)(6) provides that an 

IDAP Borrower must be creditworthy 

and demonstrate reasonable assurance 

of repayment of the IDAP loan. This 

requirement is consistent with the 

prudent lending standards SBA requires 

for all of its loan programs. SBA will 

provide further guidance on 

creditworthiness and what is required to 

demonstrate repayment ability in the 

procedural guidance developed to 

administer the introductory phase of the 

IDAP loan program. 

Section 123.702(b) lists the types of 

businesses that are not eligible for IDAP 

loans. SBA has restricted these types of 

businesses from participating in the 

IDAP loan program because such 

businesses would not be eligible for a 

Disaster Loan from SBA or because an 

application for these types of businesses 

involves a complex analysis which is 

not appropriate for an interim 

delegated-authority guaranteed loan 

program. The types of businesses 

ineligible for IDAP loans listed in 

sections 123.702(b)(1) through (14) and 

in section 123.702(b)(20) are also 

ineligible for 7(a) loans. Therefore, SBA 

anticipates that most IDAP Lenders will 

be familiar with these restrictions 

through their experiences with the 7(a) 

loan program. 

Sections 123.702(b)(15) and (16) 

describe restrictions on businesses 

eligible for IDAP loans that are similar 

to restrictions in the 7(a) program. 

Section 123.702(b)(15) provides that a 

business engaged in lending, multi-level 

sales distribution, speculation, or 

investment is ineligible for an IDAP 

loan; however, businesses engaged in 

real estate investment that hold rental 

property, i.e., landlords, are eligible for 

IDAP loans. Although the general 

prohibition on loans to businesses 

engaged in lending, multi-level sales 

distribution, speculation, or investment 

applies to both the IDAP and 7(a) loan 

programs, the exception for businesses 

that hold rental property does not exist 

in the 7(a) loan program. Owners of 

commercial or residential rental 

property are eligible for SBA Disaster 

Loans; therefore they are eligible for 

interim financing under the IDAP loan 

program. 

Section 123.702(b)(16) provides that a 

business that is delinquent on any 

Federal obligation, including Federal 

loans, contracts, grants, student loans or 

taxes, or has a judgment lien for a 

Federal debt against its property is not 

eligible for an IDAP loan. A similar but 

slightly less restrictive provision in the 

7(a) program provides that businesses 

that have previously defaulted on a 

Federal obligation and caused the 

Federal government to sustain a loss are 

not eligible for SBA assistance. Because 

SBA will generally not approve a 

Disaster Loan to applicants who are 

delinquent on any Federal debt or have 

a judgment lien against their property, 

except under certain specific 

circumstances, the complex analysis of 

whether such an applicant is eligible is 

not appropriate for expedited IDAP loan 

processing. These applicants may 

instead apply for a direct Disaster Loan. 

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60592 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

The majority of the remaining 

ineligible types of businesses described 

in sections 123.702(b)(17) through (25) 

are restrictions that do not exist in the 

7(a) loan program, and instead are 

restrictions specific to the Disaster Loan 

program. Sections 123.702(b)(17) and 

(18) provide that a business located in 

a Special Flood Hazard Area (SFHA) 

that has not maintained required flood 

insurance on its business property or a 

business located in a SFHA within a 

non-participating community or a 

community under sanction is not 

eligible for an IDAP loan. SBA is 

prohibited by statute from providing 

disaster assistance, including SBA 

guaranteed IDAP loans, to these types of 

businesses. Similarly, SBA is prohibited 

from providing disaster assistance to a 

business located in a building that was 

newly constructed or substantially 

improved on or after February 9, 1989, 

and is currently located seaward of 

mean high tide or entirely in or over 

water, as described in section 

123.702(b)(19). 

Sections 123.702(b)(21) and (22) 

provide that a business that had a 

substantial change of ownership after 

the Declared Disaster or a business that 

was established after the Declared 

Disaster is not eligible for a an IDAP 

loan. In addition, section 123.702(b)(23) 

provides that a business relocating out 

of the Declared Disaster Area is not 

eligible for an IDAP loan. SBA’s disaster 

assistance programs are intended to 

help a business harmed in a disaster 

event return to the same physical and 

economic state it was in prior to the 

disaster event. Therefore, SBA only 

allows an IDAP loan to be made to a 

business that existed prior to the 

Declared Disaster and will continue to 

operate in the same location and under 

the same ownership, unless a contract of 

sale existed prior to the Declared 

Disaster. Under special circumstances, a 

business that must relocate due to 

uncontrollable or compelling reasons 

may be eligible for a Disaster Loan from 

SBA. In order to simplify the IDAP loan 

program for IDAP Lenders, SBA has 

decided not to allow IDAP Lenders to 

make an IDAP loan to a business that 

relocates out of the Declared Disaster 

Area. However, such businesses may 

still apply directly to SBA for a Disaster 

Loan. 

SBA is prohibited by statute from 

providing disaster assistance, including 

SBA guaranteed IDAP loans, to the 

types of businesses described in 

sections 123.702(b)(24) and (25). Section 

123.702(b)(24) describes the prohibition 

on IDAP loans to agricultural entities, 

which includes businesses primarily 

engaged in the production of food and 

fiber, ranching and raising of livestock, 

aquaculture and all other farming and 

agriculture-related industries. The 

regulation provides exceptions for a 

nursery that derives less than 50 percent 

of annual receipts from the production 

and sale of nursery products and for a 

small agricultural or producer 

cooperative. This exception is 

consistent with existing SBA Disaster 

Loan policy. Section 123.702(b)(25) 

describes the statutory prohibition 

under 18 U.S.C. 431 on certain types of 

disaster assistance, including IDAP 

loans, to certain types of businesses in 

which a Member of Congress has an 

ownership interest. These ineligible 

businesses include sole proprietorships, 

unincorporated associations, 

partnerships and limited liability 

companies in which a Member of 

Congress (or a household member) has 

an ownership interest. 

The Associates (as defined in section 

120.10) of a prospective IDAP Borrower 

must also meet the character 

requirements provided in section 

123.702(c). These requirements track the 

basic eligibility standards for Disaster 

Loan. Under sections 123.702(c)(1) and 

(2), an applicant business is not eligible 

for an IDAP loan if any Associate is 

presently under indictment, on parole 

or probation, or has ever been charged 

with, arrested for, convicted, placed on 

pretrial diversion, and/or placed on any 

form of probation (including 

adjudication withheld pending 

probation) for any criminal offense other 

than a minor motor vehicle violation 

(including offenses which have been 

dismissed, discharged, or not 

prosecuted). It is not in the public 

interest for SBA to extend financial 

assistance to individuals who are not of 

good character. In certain 

circumstances, however, some such 

applicants may be eligible for a Disaster 

Loan directly from SBA following the 

submission of additional information 

and a character evaluation by SBA. SBA 

has decided not to provide a similar indepth character evaluation for IDAP 

loan applicants due to the delay this 

would add to the IDAP loan approval 

process. The IDAP loan program is 

intended to provide emergency 

financing to businesses as quickly and 

as prudently as possible following a 

Declared Disaster; therefore SBA is 

attempting to streamline the IDAP loan 

application process as much as possible. 

A business that is ineligible for an IDAP 

loan under section 123.702(c)(1) or (2) 

may still apply directly to SBA for a 

Disaster Loan. 

Section 123.702(c)(3) provides that an 

applicant business is not eligible for an 

IDAP loan if any Associate owning 50 

percent or more of the applicant 

business is more than 60 days 

delinquent on any obligation to pay 

child support arising under an 

administrative order, court order, 

repayment agreement between the 

holder and a custodial parent, or 

repayment agreement between the 

holder and a state agency providing 

child support enforcement services. 

SBA is prohibited by statute from 

providing any financial assistance, 

including IDAP loans, to such 

applicants. 

Section 123.702(c)(4) provides that an 

applicant business is not eligible for an 

IDAP loan if any of its Associates is an 

undocumented (illegal) alien. SBA is 

prohibited by statute from providing 

any financial assistance, including IDAP 

loans, to such applicants. 

Section 123.702(c)(5) provides that an 

applicant business is not eligible for an 

IDAP loan if any Associate of the 

applicant business is delinquent on any 

Federal obligation, including Federal 

loans, contracts, grants, student loans or 

taxes, or has a judgment lien for a 

Federal debt against its property. This 

restriction on the Associates of a 

business applying for an IDAP loan is 

identical to the restriction in section 

123.702(b)(16), which applies to an 

applicant business itself. In certain 

circumstances, however, some such 

applicants may be eligible for a Disaster 

Loan directly from SBA following the 

submission of additional information 

and further evaluation by SBA. SBA has 

decided not to provide a similar waiver 

provision for IDAP loan applicants due 

to the delay this would add to the IDAP 

loan approval process. Instead, the 

business is ineligible for an IDAP loan. 

A business that is ineligible for an IDAP 

loan under section 123.702(b)(16) or 

section 123.703(c)(5) may still apply 

directly to SBA for a Disaster Loan and 

go through the waiver process. 

Section 123.703—What are the terms of 

an IDAP loan? 

Section 123.703 establishes basic loan 

terms for IDAP loans. Paragraph (a) 

provides that SBA will guarantee 85 

percent of each IDAP loan. Paragraph (b) 

establishes the maximum size of an 

IDAP loan. If the amount of an IDAP 

Borrower’s disaster losses is $25,000 or 

less, the principal amount of an IDAP 

loan must not exceed the amount of 

disaster losses minus Other Recoveries 

received by the IDAP Borrower. If the 

amount of an IDAP Borrower’s disaster 

losses is more than $25,000, the 

principal amount of an IDAP loan must 

not exceed $25,000 minus Other 

Recoveries received by the IDAP 

Borrower. SBA cannot provide disaster 

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assistance, including SBA guaranteed 

loans under the IDAP loan program, for 

disaster losses that have already been 

compensated. Thus, if an IDAP 

Borrower’s disaster losses have been 

compensated by Other Recoveries, the 

amount of the IDAP loan must be 

reduced. 

Section 123.703(c) provides that the 

disbursement period for an IDAP loan is 

up to 30 days from the date of SBA 

approval of the IDAP loan. SBA 

determined that a disbursement period 

longer than 30 days would be 

inconsistent with the statutory intent to 

provide immediate disaster relief. If the 

IDAP Lender is notified before 

disbursement of the IDAP loan that the 

IDAP Borrower has received Other 

Recoveries, the IDAP Lender must 

decrease the approved amount of the 

IDAP loan by the amount of the Other 

Recoveries. Because there is a 

possibility that the IDAP Borrower’s 

direct Disaster Loan could be approved 

and disbursed before full disbursement 

of the interim IDAP loan, this 

subsection provides that SBA will 

contact the IDAP Lender when SBA is 

ready to disburse the IDAP Borrower’s 

approved Disaster Loan. Upon receipt of 

such notification by SBA, the IDAP 

Lender must cancel any remaining 

undisbursed amount of the IDAP loan. 

The IDAP Borrower’s uncompensated 

disaster losses will instead be covered 

by the permanent financing provided by 

the Disaster Loan. 

Section 123.703(d) describes the 

repayment of an IDAP loan. During the 

Initial Period, an IDAP Borrower will 

pay interest only on the disbursed 

principal balance of the IDAP loan. 

Additionally, during the Initial Period, 

in accordance with section 123.703(h), 

the IDAP Borrower must remit the 

proceeds of Other Recoveries to the 

IDAP Lender and the IDAP Lender must 

then apply the Other Recoveries to the 

IDAP loan balance. The Initial Period 

ends upon (i) full repayment of the 

IDAP loan from the proceeds of the 

IDAP Borrower’s Disaster Loan; (ii) SBA 

notice to the IDAP Lender of decline of 

the IDAP Borrower’s Disaster Loan 

Application; or (iii) receipt by the IDAP 

Lender of partial repayment of the IDAP 

loan from the proceeds of the Disaster 

Loan; provided that if the IDAP loan has 

not been fully disbursed at such time, 

the Initial Period shall not end until the 

IDAP loan is fully disbursed. If SBA 

approves an IDAP Borrower’s Disaster 

Loan application, SBA will require, in 

accordance with the statute, that the 

Disaster Loan proceeds be applied first 

to repay the IDAP loan. An IDAP loan 

is intended to be an interim loan and 

the statute requires the IDAP Borrower 

to apply for a Disaster Loan from SBA 

and to repay the IDAP loan with 

Disaster Loan proceeds. Thus, if an 

IDAP Borrower withdraws an 

application for a Disaster Loan, fails to 

close on an approved Disaster Loan, or 

if the approved Disaster Loan is 

cancelled, the IDAP loan is immediately 

due and payable by the IDAP Borrower. 

Although SBA anticipates that most 

IDAP loans will be repaid with the 

proceeds of Disaster Loans, it is likely 

that some IDAP Borrowers will not be 

approved for a Disaster Loan or that the 

amount of the Disaster Loan will be 

insufficient to repay the entire IDAP 

loan. In those cases, the IDAP loan 

enters the Term Period. During the Term 

Period, the IDAP Borrower must pay 

principal and interest on the IDAP loan, 

with the IDAP loan balance to be fully 

amortized over a period that is at least 

10 years from the date of final 

disbursement of the IDAP loan, but no 

more than 25 years from the date of final 

disbursement. The Term Period begins 

in the first month following SBA notice 

to the IDAP Lender of decline of the 

IDAP Borrower’s Disaster Loan 

application, receipt by the IDAP Lender 

of partial repayment of the IDAP loan 

from the proceeds of the Disaster Loan, 

or final disbursement of the IDAP loan, 

whichever is later. Balloon payments 

are not permitted, and the IDAP 

Borrower may prepay any portion of the 

principal without penalty. Additionally, 

during the Term Period, in accordance 

with section 123.703(h), the IDAP 

Borrower must remit the proceeds of 

Other Recoveries to the IDAP Lender 

and the IDAP Lender must then apply 

the Other Recoveries to the IDAP loan 

balance. 

Section 123.703(e) describes the 

interest rate on IDAP loans. During the 

Initial Period, the maximum interest 

rate will be a fixed rate. If an IDAP loan 

enters the Term Period, the IDAP 

Lender may charge either a fixed or a 

variable interest rate on the balance of 

the IDAP loan after all proceeds from 

any approved Disaster Loan have been 

applied. SBA will publish the maximum 

allowable interest rates for the Initial 

and Term Periods in the Federal 

Register from time to time. 

Section 123.703(f) provides that no 

small business, including affiliates, may 

obtain more than one IDAP loan per 

Declared Disaster. This provision is 

intended to prevent IDAP Borrowers 

from receiving more than $25,000 in 

interim loan assistance under the IDAP 

loan program per Declared Disaster. The 

regulation also clarifies that the 

provisions of section 120.151 of this 

chapter, which provide the maximum 

aggregate amount of 7(a) loans allowed 

per borrower, do not apply to the IDAP 

loan program. The IDAP loan program is 

authorized under section 42 of the Act; 

therefore it is not subject to the same 

lending limits applicable to programs 

authorized under section 7(a). 

Section 123.703(g) provides that 

holders of at least a 20 percent 

ownership interest in the IDAP 

Borrower must guarantee the IDAP loan. 

This requirement is consistent with 

SBA’s personal guaranty requirements 

in its existing lending programs. 

Finally, section 123.703(h) establishes 

what an IDAP Lender should do if an 

IDAP Borrower receives Other 

Recoveries. As provided in section 

123.700(b), Other Recoveries are other 

compensation for disaster losses, 

including proceeds of policies of 

insurance or other indemnifications; 

grants or other reimbursement 

(including loans) from government 

agencies or private organizations; claims 

for civil liability against other 

individuals organizations or 

governmental entities; gifts; 

condemnation awards; and salvage 

(including any sale or re-use) of items of 

disaster-damaged property. 

Additionally, if an IDAP Borrower has 

voluntarily repaid insurance recoveries 

to a recorded lienholder, the amount 

paid is considered to be Other 

Recoveries. Because an IDAP Borrower’s 

eligibility for a Disaster Loan will be 

reduced to the extent that the IDAP 

Borrower is compensated for the 

disaster losses by Other Recoveries, the 

IDAP Borrower must promptly notify 

the IDAP Lender of any receipt of Other 

Recoveries and must remit the proceeds 

of Other Recoveries to the IDAP Lender. 

The IDAP Lender must then apply the 

Other Recoveries to the IDAP loan 

balance. No additional collateral is 

required for IDAP loans. 

Section 123.704—Are there restrictions 

on how IDAP loan funds may be used? 

Section 123.704 describes the 

purposes for which an IDAP Borrower 

may use IDAP loan proceeds. As 

provided in section 123.704(a), the 

allowable uses of IDAP loan proceeds 

vary depending upon the type of 

Declared Disaster (Major Disaster 

Declaration, SBA Administrative 

Disaster Declaration, or SBA EIDL-Only 

Disaster Declaration) and the IDAP 

Borrower’s location (Primary County or 

Contiguous County). In general, IDAP 

loan proceeds may only be used to 

restore or replace the IDAP Borrower’s 

real or business personal property to its 

condition before the Declared Disaster 

occurred, and/or for working capital 

necessary to carry the IDAP Borrower 

until resumption of normal operations 

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and for expenditures necessary to 

alleviate the specific economic injury, 

but not to exceed that which the IDAP 

Borrower could have provided had the 

injury not occurred. Section 123.704(b) 

details specific ineligible uses of IDAP 

loan proceeds. These restrictions on 

uses of IDAP loan proceeds are 

consistent with the use of proceeds 

requirements for Disaster Loans or are 

prohibited because they involve an 

additional level of complexity that 

would delay processing of the IDAP 

loan. For example, section 123.704(b)(6) 

prohibits the use of IDAP loan proceeds 

for making repairs to a condominium 

unit owned by the IDAP Borrower. 

Although Disaster Loan proceeds may 

be used to repair condominium units, 

SBA requires additional analysis due to 

the potential overlap of the individual 

unit owner’s damage with that of the 

association owned portions of the 

property. SBA has determined that such 

complex analysis will delay processing 

of an IDAP loan and should be reserved 

for direct Disaster Loan processing. 

Section 123.705—Are there any fees 

associated with IDAP loans? 

Section 123.705(a) provides that an 

IDAP Lender may not charge an IDAP 

Borrower any fees or direct costs except 

for the reasonable direct costs of 

liquidation, a late payment fee not to 

exceed 5 percent of the scheduled IDAP 

loan payment, and an application fee 

not to exceed $250. SBA decided to 

allow an optional application fee of no 

more than $250 so that an IDAP Lender 

may recoup some of its loan processing 

costs. The application fee is optional; 

therefore an IDAP Lender may choose 

not to collect an application fee from an 

IDAP Borrower. The provisions on late 

payment fees and reasonable direct 

costs of liquidation are consistent with 

permissible fees in SBA’s 7(a) 

guaranteed loan program. If an 

undisbursed IDAP loan is cancelled 

pursuant to § 123.703(c), the IDAP 

Lender may retain the application fee. 

An IDAP Lender is not required to 

execute a compensation agreement for 

collecting an application fee. Under 13 

CFR 103.5, SBA typically requires 

lenders, Agents, and loan packagers to 

execute and submit to SBA a 

compensation agreement that governs 

the compensation charged for services 

rendered or to be rendered to an 

applicant or lender in any matter 

involving SBA assistance. This 

requirement is intended to prevent 

lenders, Agents, and loan packagers 

from charging inappropriate or 

unreasonable fees to applicants or 

lenders. This type of risk does not apply 

to the IDAP loan program, because the 

only allowable fee is an application fee 

with a defined maximum amount. 

Therefore, SBA has decided not to 

require a compensation agreement for 

the IDAP loan program. However, 

consistent with the requirements of 

Section 13 of the Act, both the IDAP 

Borrower and the IDAP Lender must 

disclose in the IDAP loan application 

materials whether an application fee 

was paid and the amount of the 

application fee. 

Section 123.705(b) provides that SBA 

will not impose any guarantee fees on 

an IDAP Lender making an IDAP loan. 

Section 123.705(c) prohibits the use of 

paid loan packagers, referral agents or 

brokers in the IDAP loan program. Other 

than the application fee set forth in 

Section 123.705(a)(3), no IDAP Lender 

or third party may charge an IDAP 

Borrower a fee to assist in the 

preparation of an IDAP loan application 

or application materials, nor may a third 

party charge an IDAP Borrower or an 

IDAP Lender a referral fee or broker’s 

fee in connection with an IDAP loan. 

SBA believes that the costs of the 

program should be kept as low as 

possible to aid the disaster victim. 

Section 123.706—What are the 

requirements for IDAP lenders? 

Section 123.706 details the 

requirements for lenders participating in 

the IDAP loan program. Section 

123.706(a) provides that an IDAP 

Lender must be a 7(a) Lender (as 

defined in section 120.10 of this 

chapter). Section 120.10 defines a 7(a) 

Lender as an institution that has 

executed a participation agreement with 

SBA under the guaranteed loan 

program. Notwithstanding the 

provisions of section 120.470(a), a Small 

Business Lending Company (SBLC) that 

is a 7(a) Lender may make IDAP loans. 

The regulation also provides that 

IDAP Lenders are subject to IDAP Loan 

Program Requirements, which include 

requirements imposed upon IDAP 

Lenders by statute, SBA regulations, any 

agreement the IDAP Lender has 

executed with SBA, SBA Standard 

Operating Procedures, SBA procedural 

guidance, official SBA notices and 

forms applicable to the IDAP loan 

program, and loan authorizations, as 

such requirements are issued and 

revised by SBA from time to time. 

In addition, IDAP Lenders are subject 

to certain provisions in Part 120 that are 

applicable to all lenders that participate 

in SBA guaranteed loan programs. 

Section 120.140, What ethical 

requirements apply to participants?, 

describes the ethical requirements of 

lenders participating in SBA programs 

and any associates of such lenders. 

Section 120.197, Notifying SBA’s Office 

of Inspector General of suspected fraud, 

requires lenders to notify the SBA Office 

of Inspector General of any information 

which indicates that fraud may have 

occurred in connection with an IDAP 

loan. Sections 120.400, 120.410, 

120.411, 120.412, and 120.413 provide 

the participation criteria for lenders 

participating in SBA programs. Section 

120.400, Loan Guarantee Agreements, 

provides that the existence of a loan 

guarantee agreement does not obligate 

SBA to participate in any specific 

proposed loan that a lender may submit, 

and does not limit SBA’s rights to deny 

a specific loan or establish general 

policies. Section 120.410, Requirements 

for all participating Lenders, includes 

requirements relating to a lender’s 

continuing ability to make, service, and 

liquidate SBA guaranteed loans. Section 

120.411, Preferences, provides that a 

participation agreement between SBA 

and a lender does not establish any 

preferences in favor of the lender, for 

example, a preferred position compared 

to SBA relating to the making, servicing, 

or liquidation of a loan. Section 

120.412, Other services Lenders may 

provide Borrowers, provides that lenders 

and associates of lenders may provide 

services to and contract for goods with 

a borrower only after full disbursement 

of the SBA-guaranteed loan. Section 

120.413, Advertisement of relationship 

with SBA, describes how a lender may 

refer to SBA in its advertising. 

Section 123.706(b) provides that the 

IDAP loan program is an entirely 

delegated loan program. SBA 

determined that a fully delegated 

program is the most effective way to 

provide immediate interim financing to 

disaster damaged businesses. The 

regulation requires an IDAP Lender to 

process, service and liquidate its IDAP 

loans under its delegated authority 

provided by the supplemental Loan 

Guarantee Agreement for the IDAP loan 

program, and states that the IDAP 

Lender is responsible for confirming 

that all loan decisions are in accordance 

with IDAP Loan Program Requirements. 

The regulation also requires that an 

IDAP Lender use its existing practices 

and procedures for its non-SBA 

guaranteed commercial loans of a 

similar size in determining 

creditworthiness for IDAP loans. These 

practices must be appropriate, generally 

accepted, proven and prudent credit 

evaluation processes and procedures 

and may include credit scoring. In 

disbursing the IDAP loan, the IDAP 

Lender must use the same disbursement 

procedures and documentation as it 

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uses for its similarly sized non-SBA 

guaranteed commercial loans. 

Section 123.706(c) provides that an 

IDAP Lender must report on its IDAP 

loans in accordance with requirements 

established by SBA from time to time. 

SBA will provide further guidance on 

IDAP loan reporting in the procedural 

guidance developed to administer the 

introductory phase of the IDAP loan 

program. 

Sections 123.706(d) and (e) provide 

that an IDAP Lender must service and 

liquidate its IDAP loans in accordance 

with the practices and procedures that 

the IDAP Lender uses for its non-SBA 

guaranteed commercial loans. The 

practices must be commercially 

reasonable and consistent with prudent 

lending standards and in accordance 

with IDAP Loan Program Requirements. 

SBA will provide additional guidance 

on how IDAP Lenders must service and 

liquidate IDAP loans in the procedural 

guidance developed to administer the 

introductory phase of the IDAP loan 

program. 

Section 123.706(f) provides that an 

IDAP Lender may request SBA to 

purchase the guaranteed portion of an 

IDAP loan when there has been an 

uncured payment default exceeding 60 

days or when the IDAP Borrower has 

declared bankruptcy. The regulation 

also provides that IDAP loans are 

subject to the 7(a) loan program 

requirements of sections 120.520 

through 120.524 and sections 120.542 

and 120.546. SBA will provide further 

guidance on how IDAP Lenders must 

request purchase of an IDAP loan in the 

procedural guidance developed to 

administer the introductory phase of the 

IDAP loan program. 

Section 123.706(g) provides that an 

IDAP Lender may not sell the 

guaranteed portion of an IDAP loan in 

the secondary market, securitize the 

unguaranteed portion of an IDAP loan, 

participate any portion of an IDAP loan 

with another lender, or sell all of its 

interest in an IDAP loan. SBA is 

imposing these restrictions because it is 

implementing the IDAP loan program 

on an introductory basis. 

Section 123.706(h) provides that an 

IDAP Lender may pledge an IDAP loan 

subject to the 7(a) loan program 

requirements of sections 120.434 and 

120.435 of this chapter. 

Section 123.706(i) provides that an 

IDAP Lender is subject to the 

supervision and enforcement provisions 

in Sections 120.1000 through 120.1600. 

These provisions detail SBA’s riskbased lender oversight program, 

including off-site reviews and 

monitoring, on-site reviews, and 

potential enforcement actions. The 

subsection also provides that an IDAP 

Lender that is an SBA Supervised 

Lender (as defined in section 120.10) is 

subject to the requirements of section 

120.460 through 120.490, as applicable. 

SBA will provide further guidance on 

its oversight of IDAP Lenders in the 

procedural guidance developed to 

administer the introductory phase of the 

IDAP loan program. 

III. Justification for Interim Final Rule 

In general, SBA publishes a rule for 

public comment before issuing a final 

rule, in accordance with the 

Administrative Procedure Act, 5 U.S.C. 

553 and SBA regulations at 13 CFR 

101.108. The Administrative Procedure 

Act provides an exception to this 

standard rulemaking process, however, 

where an agency finds good cause to 

adopt a rule without prior public 

participation. 5 U.S.C. 553(b)(3)(B). The 

good cause requirement is satisfied 

when prior public participation is 

impracticable, unnecessary, or contrary 

to the public interest. Under such 

circumstances, an agency may publish 

an interim final rule without soliciting 

public comment. 

In enacting the good cause exception 

to standard rulemaking procedures, 

Congress recognized that emergency 

situations arise where an agency must 

issue a rule without public 

participation. As detailed above, SBA 

plans to limit the introductory phase of 

the IDAP loan program to disasters 

occurring in the Gulf Coast region. 

According to the Climate Prediction 

Center at the National Oceanic and 

Atmospheric Administration (NOAA), 

an active to extremely active hurricane 

season is expected for the Atlantic Basin 

this year, which includes the Gulf Coast 

region. Furthermore, many areas of the 

Gulf Coast region are still recovering 

from the devastating effects of 

hurricanes Katrina, Rita, and Wilma 

and, most recently, the Deepwater BP 

Oil Spill. SBA finds that good cause 

exists to publish this rule as an interim 

final rule due to the potential for an 

increased number of disasters this 

hurricane season that would cause harm 

to businesses in areas that are still 

economically fragile. Advance 

solicitation of comments for this 

rulemaking would be impracticable and 

contrary to the public interest, as it 

would delay the delivery of the IDAP 

loan program until after the 2010 

hurricane season. Any such delay could 

be extremely prejudicial to businesses 

and their communities as they struggle 

to recover from a disaster. 

SBA invites comments from all 

interested members of the public. These 

comments must be received on or before 

the close of the comment period noted 

in the DATES section of this interim 

final rule. SBA may then consider these 

comments in making any necessary 

revisions to these regulations. 

IV. Justification for Immediate Effective 

Date 

The APA requires that ‘‘publication or 

service of a substantive rule shall be 

made not less than 30 days before its 

effective date, except as * * * 

otherwise provided by the agency for 

good cause found and published with 

the rule.’’ 5 U.S.C. 553(d)(3). The 

purpose of this provision is to provide 

interested and affected members of the 

public sufficient time to adjust their 

behavior before the rule takes effect. 

The IDAP loan program is designed to 

provide immediate relief to small 

businesses that meet the basic eligibility 

requirements for a disaster loan 

authorized under section 7(b) of the Act 

while the businesses are awaiting 

approval of a direct disaster loan by 

SBA. During the introductory phase, 

SBA intends to limit the IDAP loan 

program to disasters occurring in the 

Gulf Coast region. The Gulf Coast is 

expected to experience a particularly 

active hurricane season this year, and as 

we enter the peak of the hurricane 

season, the need increases to have the 

IDAP loan program in place in the event 

of a disaster. This is especially 

important for a region that is still 

recovering from the devastating effects 

of hurricanes Katrina, Rita and Wilma 

and the Deepwater BP Oil Spill. Lenders 

making IDAP loans might need time to 

make system adjustments; however, 

delaying implementation would 

necessarily have an adverse impact on 

small business disaster victims in the 

Gulf Coast since they would not have 

access to the immediacy of the IDAP 

loans. 

In light of the urgent need to assist 

small business disaster victims in the 

Gulf Coast, SBA finds that there is good 

cause for making this rule effective 

immediately instead of observing the 

30-day period between publication and 

effective date. While this rule is 

effective immediately upon publication, 

the SBA is inviting public comment on 

the rule during a 60-day period and will 

consider comments in developing a 

final rule. 

Compliance with Executive Orders 

12866, 12988, and 13132, the 

Regulatory Flexibility Act (5 U.S.C. 601– 

612), and the Paperwork Reduction Act 

(44 USC, Ch. 35) Executive Order 12866: 

The Office of Management and Budget 

has determined that this rule constitutes 

a ‘‘significant regulatory action’’ under 

Executive Order 12866, thus requiring a 

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60596 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

Regulatory Impact Analysis, as set forth 

below. 

A. Regulatory Objective of the Proposal 

Under the Immediate Disaster 

Assistance Program (IDAP), SBA will 

provide an 85 percent guarantee on 

loans made by participating lenders for 

up to $25,000. An IDAP loan is intended 

to provide immediate relief to a 

business that meets the basic eligibility 

standards for a disaster loan authorized 

under section 7(b) of the Act while the 

application for a disaster loan is 

pending with SBA. 

B. Benefits and Costs of the Rule 

The direct benefits of the Immediate 

Disaster Assistance Program will accrue 

to the small business borrowers that 

receive these interim loans. In monetary 

terms, these direct benefits total 

$18,687,469, based on the current 

subsidy appropriations available. 

However, these small firms also gain 

certain indirect benefits from being 

better equipped to continue their 

ongoing operations, thus avoiding 

revenue disruptions. These continued 

(or prevented disruption in) revenue 

streams will indirectly benefit the local 

economy. Recipient firms will be better 

able to maintain their pre-disaster 

employment level and payments. 

Hence, employees, lenders and 

suppliers of these small businesses will 

benefit from their continued operation. 

Local governments will also benefit 

from continued taxation of these firms. 

The bulk of the costs accrue to the 

U.S. taxpayers primarily due to the 

$352,357 in current subsidy 

appropriations. The SBA, and indirectly 

U.S. taxpayers, will incur certain costs 

associated with launching and operating 

the introductory phase of the program. 

Congress has currently appropriated 

$1.31 million in administrative 

expenses for disaster guaranteed loan 

programs, a portion of which will be 

used to fund the system development 

and lender support aspects of the 

introductory phase of the IDAP loan 

program and to lay the groundwork for 

expansion of the program. 

In monetary terms, the immediate 

costs of the introductory phase of the 

program are $352,357, plus the IDAP 

program’s share of the $1.31 million in 

administrative expenses. The immediate 

benefit is the value to the IDAP loan 

recipients of receiving $18,687,469 in 

disaster loans earlier than would be the 

case under the traditional disaster loan 

program. While SBA cannot quantify 

the exact value to IDAP recipients of 

getting their loans sooner, it believes 

that, given the economic uncertainties 

and shocks that generally accompany a 

disaster, the additional benefits to the 

recipient (and its community) of quickly 

receiving assistance are greater than the 

costs of the program. Also, the program 

does incur certain indirect costs and 

produces certain indirect benefits not 

quantified in this analysis. 

C. Alternatives 

Given that the program is the result of 

a Congressional mandate, the Agency 

had little leeway in providing 

alternatives to the mandates. However, 

the SBA did consider methods for 

delivering these mandates to the 

American public. SBA considered 

allowing non-delegated processing of 

IDAP loans, but determined that such 

processing would be more expensive 

and result in unnecessary delays. SBA 

considered allowing large businesses 

and businesses with Credit Elsewhere to 

be eligible for the program, but 

determined that simpler eligibility 

requirements would increase lender 

participation and IDAP loan availability. 

SBA considered specific processing, 

closing, servicing and liquidation 

requirements, but determined that, to 

the extent possible, lenders should use 

their own forms and procedures in order 

to simplify the program requirements, 

lower the cost and encourage lender 

participation. Having considered these 

options, the Agency concluded that the 

program as set forth in this rule is the 

SBA’s best available means of meeting 

the above-mentioned Congressional 

mandate. SBA will test this program as 

it is rolled out and will continue to 

consider alternatives which will make 

this program more effective in 

delivering financial assistance to 

disaster victims. 

Executive Order 12988 

For the purposes of Executive Order 

12988, Civil Justice Reform, SBA has 

determined that this rule is crafted, to 

the extent practicable, in accordance 

with the standards set forth in §§ 3(a) 

and 3(b)(2), to minimize litigation, 

eliminate ambiguity, and reduce 

burden. This rule does not have 

retroactive or pre-emptive effect. 

Executive Order 13132 

For the purposes of Executive Order 

13132, the SBA determined that this 

rule has no federalism implications 

warranting preparation of a federalism 

assessment. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601–612) (RFA) requires 

administrative agencies to consider the 

economic impact of their actions on 

small entities, which includes small 

businesses, small non-profit businesses, 

and small local governments. The RFA 

requires agencies to prepare a regulatory 

flexibility analysis, which describes the 

economic impact that the rule will have 

on small entities, or certify that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. However, the RFA requires 

such analysis only where notice and 

comment rulemaking are required. 

Rules are exempt from the APA notice 

and comment requirements when the 

agency for good cause finds that notice 

and public procedure thereon is 

impracticable, unnecessary, or contrary 

to the public interest. As detailed above, 

SBA has determined that there is good 

cause to adopt this rule without prior 

public participation; therefore, the rule 

is also exempt from the RFA 

requirements. SBA invites comments on 

this determination. 

Paperwork Reduction Act 

SBA has determined that this rule 

imposes new reporting and 

recordkeeping requirements on certain 

disaster victims under the Paperwork 

Reduction Act, 44 U.S.C. chapter 35. 

This new information collection 

requires IDAP applicants and lender to 

submit three forms described below, 

which are necessary to process 

applications for assistance under the 

IDAP loan program. In addition to the 

application information, IDAP lenders 

will be required to report loan status 

information to SBA on a monthly basis. 

SBA is submitting these two sets of 

information collections as described 

below to OMB for review together with 

the interim final rule. As stated above, 

IDAP applicants must also submit an 

application for an SBA direct disaster 

business loan. The burden associated 

with the direct loan application is 

currently part of the reported burden for 

that application. However, we are also 

including that burden here to fully 

inform the IDAP applicants. Therefore, 

in addition to the burden listed below 

specifically for the IDAP loan 

application, applicants for such loans 

will also be required to spend an 

additional 3.5 hours to complete the 

SBA Form 5, Disaster Business Loan 

Application (OMB Control #3245–0017) 

and SBA Form 413 (OMB Control 

#3245–0188). There will be no 

additional burden on IDAP lenders 

because they are not part of the direct 

loan process. 

A. Title and Description of Information 

Collection 

SBA Form 2410: Immediate Disaster 

Assistance Program (IDAP) Borrower 

Information Form. 

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Purpose: The information collected on 

this form is modeled on two currently 

approved information collections: OMB 

Control number 3245–0016, SBA’s 7(a) 

loan application, and OMB Control 

number 3245–0178, Statement of 

Personal History, which is used to 

collect personal information on the 

individuals associated with the small 

business loan applicant. Those two 

collections of information will not be 

discontinued; they will continue to be 

used for their approved purposes. The 

information requested includes 

identifying information regarding the 

applicant and its Associates, including 

indebtedness; current or previous 

government financing; suspension or 

debarment history; and certain other 

disclosures regarding Associates’ 

criminal history. 

OMB Control Number: New 

collection. 

Description of, and Estimated Number 

of Respondents: This information will 

be collected from the small business 

concerns that are applying for financial 

assistance under the IDAP loan 

program. SBA estimates 934 small 

businesses will submit applications over 

the course of a year. 

Estimated Number of Responses: Each 

small business concern can submit only 

one application under the IDAP loan 

program per disaster; therefore the 

estimated number of responses is 934. 

Estimated Response Time: 10 

minutes. 

Total Estimated Annual Hour Burden: 

155 hours. 

B. Title and Description 

SBA Form 2411: Immediate Disaster 

Assistance Program (IDAP) Lender’s 

Application (Part I). 

Purpose: This information collection 

is submitted by delegated lenders 

seeking SBA’s guarantee on an IDAP 

loan. 

OMB Control Number: New 

collection. 

Description of, and Estimated Number 

of Respondents: 50 delegated lenders 

submitting this information 

electronically through e-tran (SBA’s 

electronic loan application submission 

system). 

Estimated Number of Responses: 934. 

Estimated Response Time: 15 minutes 

per response. 

Estimated Annual Hour Burden: 233 

hours. 

C. Title and Description 

SBA Form 2412: Immediate Disaster 

Assistance Program (IDAP) Lender’s 

Application (Part II)—Eligibility 

Information. 

Purpose: The information will be used 

to determine whether the loan 

application meets the eligibility criteria 

for an IDAP loan, as stated in this 

regulation. 

OMB Control Number: New 

collection. 

Description of, and Estimated Number 

of Respondents: This form is to be 

completed by all lenders participating 

in the SBA’s IDAP loan program. We 

estimate that a total of 50 lenders will 

submit this information collection. 

Estimated Number of Responses: 934. 

Estimated Response Time: 10 

minutes. 

Total Estimated Annual Hour Burden: 

155 hours. 

D. Title and Description 

Immediate Disaster Assistance Program 

(IDAP) Payment Reporting 

Purpose: The information collected 

will allow SBA to monitor loan payment 

information on IDAP loan portfolios. 

SBA requires its lender participants to 

provide monthly updates on the 

payment status of disbursed loans. This 

monthly reporting process mirrors the 

payment cycle of the underlying loans, 

allowing SBA to readily determine the 

financial risk borne by the Agency from 

its participants. 

OMB Control Number: New 

collection. 

Description of, and Estimated Number 

of Respondents: We expect that 

approximately 467 of the 934 projected 

loans will be subject to monthly 

reporting at any one time. Annually, we 

estimate IDAP Lenders will file 12 

reports. 

Estimated Number of Responses: 

5604. 

Estimated Response Time: 5 minutes. 

Total Estimated Annual Hour Burden: 

467 hours. 

SBA invites comments on the IDAP 

information collections, particularly on: 

(1) Whether the proposed collection of 

information is necessary for the proper 

performance of the program, including 

whether the information will have a 

practical utility; (2) the accuracy of 

SBA’s estimate of the burden of the 

proposed collections of information; (3) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (4) ways to minimize the 

burden of the collection of information 

on respondents, including through the 

use of automated collection techniques, 

when appropriate, and other forms of 

information technology. 

Please send comments by the closing 

date for comment for this interim final 

rule to SBA Desk Officer, Office of 

Management and Budget, Office of 

Information and Regulatory Affairs, 725 

17th Street, NW., Washington, DC 20503 

and to Grady B. Hedgespeth, Office of 

Financial Assistance, Small Business 

Administration, 409 Third Street, SW., 

Washington, DC 20416. 

■ For the reasons stated in the preamble, 

SBA amends 13 CFR part 123 as 

follows: 

PART 123—DISASTER LOAN 

PROGRAM 

■ 1. The authority citation for part 123 

is revised to read as follows: 

Authority: 15 U.S.C. 634(b)(6), 636(b), 

636(d), 657n; Pub. L. 102–395, 106 Stat. 

1828, 1864; and Pub. L. 103–75, 107 Stat. 

739; and Pub. L. 106–50, 113 Stat. 245. 

■ 2. In § 123.1, revise the first sentence 

to read as follows: 

§ 123.1 What do these rules cover? 

This part covers the disaster loan 

programs authorized under the Small 

Business Act, 15 U.S.C. 636(b), (d), and 

(f); and 15 U.S.C. 657n. * * * 

■ 3. Amend § 123.2 by adding a new 

third sentence to read as follows: 

§ 123.2 What are disaster loans and 

disaster declarations? 

* * * SBA also offers interim 

guaranteed disaster loans, in 

participation with financial institutions, 

to affected small businesses (‘‘IDAP 

loans’’).* * * 

■ 4. Revise the fourth and fifth 

sentences of § 123.4 to read as follows: 

§ 123.4 What is a disaster area and why is 

it important? 

* * * In major disasters, economic 

injury disaster loans and IDAP loans 

may be made for victims in contiguous 

counties or other political subdivisions, 

provided, however that with respect to 

major disasters which authorize public 

assistance only, SBA shall not make 

economic injury disaster or IDAP loans 

in counties contiguous to the disaster 

area. Disaster declarations issued by the 

Administrator of SBA include 

contiguous counties for both physical, 

economic injury and, in some cases, 

IDAP assistance. * * * 

■ 5. Revise § 123.5 to read as follows: 

§ 123.5 What kinds of loans are available? 

(a) Disaster loans authorized under 

Section 7(b). SBA offers four kinds of 

disaster loans as authorized by Section 

7(b) of the Small Business Act: Physical 

disaster home loans, physical disaster 

business loans, economic injury disaster 

business loans, and Military Reservist 

EIDL loans. SBA makes these loans 

directly or in participation with a 

financial institution. If a disaster loan 

authorized under Section 7(b) is made 

in participation with a financial 

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institution, SBA’s share in that loan may 

not exceed 90 percent. 

(b) IDAP loans. SBA also offers IDAP 

loans as authorized by Section 42 of the 

Small Business Act. SBA makes these 

interim guaranteed disaster loans to 

small businesses only in participation 

with a financial institution. SBA’s share 

in an IDAP loan is equal to 85 percent. 

■ 6. Revise § 123.8 to read as follows: 

§ 123.8 Does SBA charge any fees for 

obtaining a disaster loan? 

SBA does not charge points, closing, 

or servicing fees on any disaster loan 

authorized under Section 7(b). You will 

be responsible for payment of any 

closing costs owed to third parties on 

these loans, such as recording fees and 

title insurance premiums. If your loan is 

made under Section 7(b) in 

participation with a financial 

institution, SBA will charge a guarantee 

fee to the financial institution, which 

then may recover the guarantee fee from 

you. SBA does not charge a guarantee 

fee for an IDAP loan made under 

Section 42. 

■ 7. In § 123.9, revise the first and 

second sentences of paragraph (a), 

paragraph (b), and adding paragraph (c) 

to read as follows: 

§ 123.9 What happens if I don’t use loan 

proceeds for the intended purpose? 

(a) For disaster loans authorized 

under Section 7(b), when SBA approves 

each application, it issues a loan 

authorization which specifies the 

amount of the loan, repayment terms, 

any collateral requirements, and the 

permitted use of loan proceeds. If you 

wrongfully misapply the proceeds of a 

disaster loan authorized under Section 

7(b), you will be liable to SBA for one 

and one-half times the proceeds 

disbursed to you as of the date SBA 

learns of your wrongful misapplication. 

* * * 

(b) If SBA learns that you may have 

misapplied your loan proceeds from a 

disaster loan authorized under Section 

7(b), SBA will notify you at your last 

known address, by certified mail, return 

receipt requested. You will be given at 

least 30 days to submit to SBA evidence 

that you have not misapplied the loan 

proceeds or that you have corrected any 

such misapplication. Any failure to 

respond in time will be considered an 

admission that you misapplied the 

proceeds. If SBA finds a wrongful 

misapplication, it will cancel any 

undisbursed loan proceeds, call the 

loan, and begin collection measures to 

collect your outstanding loan balance 

and the civil penalty. 

(c) If you misapply loan proceeds of 

any disaster loan under this Part, 

including an IDAP loan, you may face 

criminal prosecution or civil or 

administrative action. 

■ 8. Amend § 123.11 by adding a new 

paragraph (c) to read as follows: 

§ 123.11 Does SBA require collateral for 

any of its disaster loans? 

* * * * * 

(c) Collateral requirements for IDAP 

loans are set forth in Subpart H of this 

part. 

■ 9. Amend § 123.13 by adding a new 

paragraph (g) to read as follows: 

§ 123.13 What happens if my loan 

application is denied? 

* * * * * 

(g) This section does not apply to 

IDAP loans. 

■ 10. Amend § 123.14 by revising the 

first and second sentences of paragraph 

(a) introductory text to read as follows: 

§ 123.14 How does the Federal Debt 

Collection Procedures Act of 1990 apply? 

(a) Under the Federal Debt Collection 

Procedures Act of 1990 (28 U.S.C. 

3201(e)), a debtor who owns property 

which is subject to an outstanding 

judgment lien for a debt owed to the 

United States generally is not eligible to 

receive a disaster loan. The SBA 

Associate Administrator for Disaster 

Assistance, or designee, may waive this 

restriction as to disaster loans (except 

IDAP loans) upon a demonstration of 

good cause. * * * 

* * * * * 

■ 11. In § 123.15, add a sentence at the 

end of the paragraph to read as follows: 

§ 123.15 What if I change my mind? 

* * * This provision does not apply 

to IDAP loans. 

■ 12. Amend § 123.16 by revising the 

last sentence of paragraph (a) to read as 

follows: 

§ 123.16 How are loans administered and 

serviced? 

(a) * * * The SBA rules on servicing 

are found in Subpart H of this part and 

part 120 of this chapter. 

* * * * * 

■ 13. Add subpart H to part 123 to read 

as follows: 

Subpart H—Immediate Disaster Assistance 

Program 

Sec. 

123.700 What is the Immediate Disaster 

Assistance Program? 

123.701 What is the application procedure 

for an IDAP loan? 

123.702 What are the eligibility 

requirements for an IDAP loan? 

123.703 What are the terms of an IDAP 

loan? 

123.704 Are there restrictions on how IDAP 

loan funds may be used? 

123.705 Are there any fees associated with 

IDAP loans? 

123.706 What are the requirements for 

IDAP lenders? 

Subpart H—Immediate Disaster 

Assistance Program 

§ 123.700 What is the Immediate Disaster 

Assistance Program? 

(a) The Immediate Disaster Assistance 

Program (IDAP) is a guaranteed disaster 

loan program for small businesses that 

have suffered physical damage or 

economic injury due to a Declared 

Disaster. An IDAP loan is an interim 

loan in an amount not to exceed $25,000 

made by an IDAP Lender to meet the 

immediate business needs of an IDAP 

Borrower while approval of long-term 

financing from a Disaster Loan is 

pending with SBA. 

(b) Definitions. As used in this 

subpart, the terms below are defined as 

follows: 

Contiguous Counties means the 

counties or other political subdivisions 

identified in the IDAP-Eligible Disaster 

Declaration as abutting the Primary 

Counties. 

Credit Elsewhere means that the IDAP 

Borrower is able to address disaster 

losses using available personal or 

business resources or access to 

nonfederal lending sources at 

reasonable rates and terms. 

Declared Disaster is a disaster event 

for which an IDAP-Eligible Disaster 

Declaration has been issued. 

Declared Disaster Area means the 

Primary Counties and the Contiguous 

Counties identified for a particular 

Declared Disaster. 

Disaster Loan means a disaster loan 

authorized by Section 7(b) of the Small 

Business Act. 

IDAP Borrower is the obligor of an 

IDAP loan. 

IDAP Lender is a financial institution 

participating in the IDAP loan program, 

subject to the requirements of this 

subpart. 

IDAP Loan Program Requirements are 

requirements imposed upon an IDAP 

Lender by statute, SBA regulations, any 

agreement the IDAP Lender has 

executed with SBA, SBA SOPs, SBA 

procedural guidance, official SBA 

notices and forms applicable to the 

IDAP loan program, and loan 

authorizations, as such requirements are 

issued and revised by SBA from time to 

time. 

IDAP-Eligible Disaster Declaration 

means a Major Disaster Declaration, 

SBA Administrative Disaster 

Declaration or SBA EIDL-Only Disaster 

Declaration in which SBA has indicated 

that IDAP loans are available. 

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Initial Period is the IDAP loan 

repayment period that begins upon the 

initial disbursement of an IDAP loan 

and ends upon (i) full repayment of the 

IDAP loan from the proceeds of the 

IDAP Borrower’s Disaster Loan; (ii) SBA 

notice to the IDAP Lender of decline of 

the IDAP Borrower’s Disaster Loan 

Application; or (iii) receipt by the IDAP 

Lender of partial repayment of the IDAP 

loan from the proceeds of the Disaster 

Loan; provided that if the IDAP loan has 

not been fully disbursed at such time, 

the Initial Period shall not end until the 

IDAP loan is fully disbursed. 

Major Disaster Declaration means a 

disaster declaration issued under 

§ 123.3(a)(1) of this part. 

Other Recoveries are other 

compensation for disaster losses and 

include, but are not limited to: Proceeds 

of policies of insurance or other 

indemnifications; grants or other 

reimbursement (including loans) from 

government agencies or private 

organizations; claims for civil liability 

against other individuals, organizations 

or governmental entities; gifts; 

condemnation awards; and salvage 

(including any sale or re-use) of items of 

disaster-damaged property. If an IDAP 

Borrower has voluntarily paid insurance 

recoveries to a recorded lienholder, the 

amount paid is considered to be Other 

Recoveries. 

Primary Counties means the counties 

or other political subdivisions identified 

in the IDAP-Eligible Disaster 

Declaration as having been adversely 

affected by the disaster. 

SBA Administrative Disaster 

Declaration means a disaster declaration 

issued under § 123.3(a)(3) of this part. 

SBA EIDL-Only Disaster Declaration 

means a disaster declaration issued 

under § 123.3(a)(5) of this part. 

Substantial Economic Injury exists 

when a business concern is unable to 

meet its obligations as they mature or to 

pay its ordinary and necessary operating 

expenses. Loss of anticipated profits or 

a drop in sales is not considered 

substantial economic injury. 

Term Period is the repayment period 

that begins following: 

(i) SBA notice to the IDAP Lender of 

decline of the IDAP Borrower’s Disaster 

Loan application; 

(ii) Receipt by the IDAP Lender of 

partial repayment of the IDAP loan from 

the proceeds of the Disaster Loan; or 

(iii) Final disbursement of the IDAP 

loan, whichever is later, and ends when 

the IDAP loan is repaid in full. 

§ 123.701 What is the application 

procedure for an IDAP loan? 

A prospective IDAP Borrower must 

apply to an IDAP Lender for an IDAP 

loan by the application deadline for 

prospective IDAP Borrowers established 

by SBA in the IDAP-Eligible Disaster 

Declaration. If the IDAP Lender 

approves the application, it must submit 

a request for IDAP loan approval to SBA 

by the application deadline for IDAP 

Lenders established by SBA in the 

IDAP-Eligible Disaster Declaration. SBA 

will issue an approval or a decline of 

the IDAP Lender’s request within 36 

hours of receipt by SBA. A prospective 

IDAP Borrower will receive notice of 

approval or decline of its loan 

application from the IDAP Lender. 

Notice of decline will include the 

reasons. If an IDAP loan is approved, a 

loan authorization will be issued. 

§ 123.702 What are the eligibility 

requirements for an IDAP loan? 

(a) Eligible IDAP applicants. To be 

eligible for an IDAP loan, an applicant 

business must meet all of the 

requirements set forth below. The 

applicant business must: 

(1) Be located within a Declared 

Disaster Area; 

(2) Have eligible disaster losses as 

follows: 

(i) For a Major Disaster Declaration, if 

located in a Primary County, have 

sustained damage to real or business 

personal property in the Declared 

Disaster or, if located in a Primary or 

Contiguous County, have sustained 

Substantial Economic Injury as a direct 

result of the Declared Disaster; or 

(ii) For an SBA Administrative 

Disaster Declaration, have sustained 

damage to real or business personal 

property in the Declared Disaster or 

sustained Substantial Economic Injury 

as a direct result of the Declared 

Disaster; or 

(iii) For an SBA EIDL-Only Disaster 

Declaration, have sustained Substantial 

Economic Injury as a direct result of the 

Declared Disaster; 

(3) Have been a small business 

concern under the size requirements 

applicable to disaster loan assistance 

under part 121 of this chapter 

(including affiliates) when the Declared 

Disaster commenced; 

(4) Together with affiliates and 

principal owners, not have Credit 

Elsewhere; 

(5) Apply to SBA for a Disaster Loan 

within the applicable deadline and 

before any disbursement of the IDAP 

loan; and 

(6) Be creditworthy and demonstrate 

reasonable assurance of repayment of 

the IDAP loan. 

(b) Ineligible IDAP applicants. An 

applicant business is not eligible for an 

IDAP loan if it is: 

(1) A non-profit or charitable concern; 

(2) A business that was not a small 

business concern under the size 

requirements of part 121 of this chapter 

(including affiliates) when the Declared 

Disaster commenced; 

(3) A consumer or marketing 

cooperative; 

(4) Deriving more than one-third of 

gross annual revenue from legal 

gambling activities or a business whose 

purpose for being is gambling regardless 

of its ability to meet the one-third 

criteria established for otherwise 

eligible concerns; 

(5) A loan packager which earns more 

than one-third of its gross annual 

revenue from packaging SBA loans; 

(6) Principally engaged in teaching, 

instructing, counseling, or 

indoctrinating religion or religious 

beliefs, whether in a religious or secular 

setting; 

(7) Primarily engaged in political or 

lobbying activities; 

(8) A private club or business that 

limits the number of memberships for 

reasons other than capacity; 

(9) Presents live performances of a 

prurient sexual nature or derives 

directly or indirectly more than de 

minimis gross revenue through the sale 

of products or services, or the 

presentation of any depictions or 

displays, of a prurient sexual nature; 

(10) Engaged in the production or 

distribution of any product or service 

that has been determined to be obscene 

by a court; 

(11) Engaged in any illegal activity; 

(12) A government owned entity 

(except for a business owned or 

controlled by a Native American tribe); 

(13) A business in which the IDAP 

Lender or any of its Associates (as 

defined in § 120.10) owns an equity 

interest; 

(14) Primarily engaged in subdividing 

real property into lots and developing it 

for resale on its own account; 

(15) Engaged in lending, multi-level 

sales distribution, speculation, or 

investment (except for real estate 

investment with property held for rental 

when the Declared Disaster occurred); 

(16) Delinquent on any Federal 

obligation, including but not limited to 

any Federal loans, contracts, grants, 

student loans or taxes, or has a 

judgment lien for a Federal debt against 

its property; 

(17) Located in a Special Flood 

Hazard Area (SFHA), as designated by 

the Federal Emergency Management 

Agency, and has not maintained 

required flood insurance on its business 

property (regardless of the type of 

disaster); 

(18) Located in a SFHA within a nonparticipating community or a 

community under sanction; 

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60600 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

(19) Located in a building that was 

newly constructed or substantially 

improved on or after February 9, 1989, 

and is currently located seaward of 

mean high tide or entirely in or over 

water; 

(20) Located in a Coastal Barrier 

Resource Area (COBRA); 

(21) A business that had a substantial 

change of ownership (more than 50 

percent) after the Declared Disaster and 

no contract of sale existed prior to that 

time; 

(22) A business that was established 

after the Declared Disaster; 

(23) Relocating out of the Declared 

Disaster Area; 

(24) Primarily engaged in the 

production of food and fiber, ranching 

and raising of livestock, aquaculture and 

all other farming and agriculture-related 

industries (except for a nursery deriving 

less than 50 percent of annual receipts 

from the production and sale of 

ornamental plants and other nursery 

products, a small agricultural 

cooperative or a small producer 

cooperative); or 

(25) A sole proprietorship, 

unincorporated association, partnership 

or limited liability company in which a 

Member of Congress (or a household 

member) has an ownership interest. 

(c) Character requirements. An 

applicant business is not eligible for an 

IDAP loan if any Associate (as defined 

in § 120.10) of the applicant business: 

(1) Is presently under indictment, on 

parole or probation; 

(2) Has ever been charged with, 

arrested for, convicted, placed on 

pretrial diversion, and/or placed on any 

form of probation (including 

adjudication withheld pending 

probation) for any criminal offense other 

than a minor motor vehicle violation 

(including offenses which have been 

dismissed, discharged, or not 

prosecuted); 

(3) Is at least a 50 percent or more 

owner of applicant business, and is 

more than 60 days delinquent on any 

obligation to pay child support arising 

under an administrative order, court 

order, repayment agreement between 

the holder and a custodial parent, or 

repayment agreement between the 

holder and a state agency providing 

child support enforcement services; 

(4) Is an undocumented (illegal) alien; 

or 

(5) Is delinquent on any Federal 

obligation, including but not limited to 

any Federal loans, contracts, grants, 

student loans or taxes. 

§ 123.703 What are the terms of an IDAP 

loan? 

(a) Guaranty percentage. The SBA 

guaranteed share of an IDAP loan is 

85%. 

(b) Maximum loan size. 

(1) If the amount of an IDAP 

Borrower’s disaster losses is $25,000 or 

less, the principal amount of an IDAP 

loan must not exceed the amount of 

disaster losses minus Other Recoveries. 

(2) If the amount of an IDAP 

Borrower’s disaster losses is more than 

$25,000, the principal amount of an 

IDAP loan must not exceed $25,000 

minus Other Recoveries. 

(c) Disbursement. The disbursement 

period for an IDAP loan is generally up 

to 30 days from the date of SBA 

approval of the IDAP loan. If the IDAP 

Lender is notified before disbursement 

of the IDAP loan that the IDAP Borrower 

has received Other Recoveries, the IDAP 

Lender must decrease the approved 

amount of the IDAP loan by the amount 

of the Other Recoveries. If the IDAP 

Borrower’s Disaster Loan is approved, 

SBA will contact the IDAP Lender when 

SBA is ready to disburse the Disaster 

Loan. Upon receipt of such notification 

by SBA, the IDAP Lender must cancel 

any remaining undisbursed amount of 

the IDAP loan. 

(d) Repayment. 

(1) Initial Period. During the Initial 

Period, an IDAP Borrower will pay 

interest only on the disbursed principal 

balance of the IDAP loan. If SBA 

approves the IDAP Borrower’s Disaster 

Loan application, SBA will require that 

the IDAP loan be repaid first from the 

proceeds of the Disaster Loan. If the 

IDAP Borrower receives Other 

Recoveries during the Initial Period, the 

IDAP Borrower must, in accordance 

with § 123.703(h), remit the Other 

Recoveries to the IDAP Lender, and the 

IDAP Lender will apply the Other 

Recoveries to the IDAP loan. If the IDAP 

Borrower’s Disaster Loan application is 

declined or if the amount of the 

approved Disaster Loan is insufficient to 

repay the IDAP loan in full, the 

remaining balance of the IDAP loan will 

be repaid during the Term Period as 

described in paragraph (2). The Initial 

Period ends upon (i) full repayment of 

the IDAP loan from the proceeds of the 

IDAP Borrower’s Disaster Loan; (ii) SBA 

notice to the IDAP Lender of decline of 

the IDAP Borrower’s Disaster Loan 

Application; or (iii) receipt by the IDAP 

Lender of partial repayment of the IDAP 

loan from the proceeds of the Disaster 

Loan; provided that if the IDAP loan has 

not been fully disbursed at such time, 

the Initial Period shall not end until the 

IDAP loan is fully disbursed. If an IDAP 

Borrower withdraws an application for 

a Disaster Loan, fails to close on an 

approved Disaster Loan or if the 

approved Disaster Loan is cancelled, the 

IDAP loan is immediately due and 

payable by the IDAP Borrower. 

(2) Term Period. If SBA declines the 

IDAP Borrower’s Disaster Loan 

application or the approved amount of 

the Disaster Loan is insufficient to repay 

the IDAP loan in full, the IDAP 

Borrower must pay principal and 

interest on the IDAP loan, with the 

IDAP loan balance to be fully amortized 

over a period that is at least 10 years 

from the date of final disbursement of 

the IDAP loan, but no more than 25 

years from the date of final 

disbursement. The Term Period begins 

in the first month following SBA notice 

to the IDAP Lender of decline of the 

IDAP Borrower’s Disaster Loan 

application, receipt by the IDAP Lender 

of partial repayment of the IDAP loan 

from the proceeds of the Disaster Loan, 

or final disbursement of the IDAP loan, 

whichever is later. Balloon payments 

are not permitted. The IDAP Borrower 

may prepay all or a portion of the 

principal during the life of the loan 

without penalty. If the IDAP Borrower 

receives Other Recoveries during the 

Term Period, the IDAP Borrower must, 

in accordance with § 123.703(h), remit 

the Other Recoveries to the IDAP 

Lender, and the IDAP Lender will apply 

the Other Recoveries to the IDAP loan. 

(e) Interest rate. 

(1) Initial Period. The maximum 

interest rate an IDAP Lender may charge 

an IDAP Borrower during the Initial 

Period will be published by SBA in the 

Federal Register from time to time. This 

rate must be a fixed rate. 

(2) Term Period. The maximum 

interest rate an IDAP Lender may charge 

an IDAP Borrower during the Term 

Period will be published in the Federal 

Register from time to time. The IDAP 

Lender may charge either a fixed or a 

variable rate during the Term Period. 

(f) Number of IDAP loans per small 

business. No small business (including 

affiliates) may obtain more than one 

IDAP loan per Declared Disaster. The 

provisions of § 120.151 do not apply to 

IDAP loans. 

(g) Personal guarantees. Holders of at 

least a 20 percent ownership interest in 

the IDAP Borrower must guarantee the 

IDAP loan. 

(h) Agreement to remit Other 

Recoveries. IDAP Borrowers must 

promptly notify the IDAP Lender of the 

receipt of Other Recoveries, and must 

promptly remit the proceeds of Other 

Recoveries to the IDAP Lender. The 

IDAP Lender must apply the Other 

Recoveries to the IDAP loan balance. 

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Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 60601 

SBA does not require any additional 

collateral for IDAP loans. 

§ 123.704 Are there restrictions on how 

IDAP loan funds may be used? 

(a) IDAP loan proceeds may only be 

used for the following purposes: 

(1) For a Major Disaster Declaration: 

(i) If the IDAP Borrower is located in 

a Primary County, to restore or replace 

the IDAP Borrower’s real or business 

personal property to its condition before 

the Declared Disaster occurred and/or 

for working capital necessary to carry 

the IDAP Borrower until resumption of 

normal operations and for expenditures 

necessary to alleviate the specific 

economic injury, but not to exceed that 

which the IDAP Borrower could have 

provided had the injury not occurred; or 

(ii) If the IDAP Borrower is located in 

a Contiguous County, for working 

capital necessary to carry the IDAP 

Borrower until resumption of normal 

operations and for expenditures 

necessary to alleviate the specific 

economic injury, but not to exceed that 

which the IDAP Borrower could have 

provided had the injury not occurred. 

(2) For an SBA Administrative 

Disaster Declaration, if the IDAP 

Borrower is located in either a Primary 

County or a Contiguous County, to 

restore or replace the IDAP Borrower’s 

real or business personal property to its 

condition before the Declared Disaster 

occurred and/or for working capital 

necessary to carry the IDAP Borrower 

until resumption of normal operations 

and for expenditures necessary to 

alleviate the specific economic injury, 

but not to exceed that which the IDAP 

Borrower could have provided had the 

injury not occurred. 

(3) For an SBA EIDL-Only Disaster 

Declaration, if the IDAP Borrower is 

located in either a Primary County or a 

Contiguous County, for working capital 

necessary to carry the IDAP Borrower 

until resumption of normal operations 

and for expenditures necessary to 

alleviate the specific economic injury, 

but not to exceed that which the IDAP 

Borrower could have provided had the 

injury not occurred. 

(b) IDAP loan proceeds may not be 

used to: 

(1) Refinance or repay indebtedness 

incurred prior to the Declared Disaster 

(other than regularly due installments); 

(2) Make payments on loans owned by 

another federal agency (including SBA) 

or a Small Business Investment 

Company licensed under the Small 

Business Investment Act; 

(3) Pay, directly or indirectly, any 

obligations resulting from a federal, 

state or local tax penalty as a result of 

negligence or fraud, or any non-tax 

criminal fine, civil fine, or penalty for 

non-compliance with a law, regulation, 

or order of a federal, state, regional, or 

local agency or similar matter; 

(4) Pay dividends, bonuses or other 

disbursements to owners, partners, 

officers or stockholders, except for 

reasonable remuneration directly related 

to their performance of services for the 

business; 

(5) Make repairs on a building rented 

by the IDAP Borrower if the IDAP 

Borrower’s lease does not require the 

IDAP Borrower to make such repairs; 

(6) Make repairs to a condominium 

unit owned by the IDAP Borrower; 

(7) Replace landscaping in excess of 

$5,000 unless the disaster damaged 

landscaping fulfilled a functional need 

or contributed toward the generation of 

business; 

(8) Repair or replace property not 

located within the Declared Disaster 

Area at the time of the Declared 

Disaster; 

(9) Repay stockholder/Associate 

loans, except where the funds were 

injected on an interim basis as a result 

of the Declared Disaster and nonrepayment would cause undue hardship 

to the stockholder/Associate; 

(10) Expand facilities or acquire fixed 

assets, except for replacement of 

disaster-damaged fixed assets; 

(11) Pay for contractor malfeasance; 

(12) Replace damaged property that 

consists of cash or securities; 

(13) Replace damaged property if the 

replacement value is extraordinarily 

high and not easily verified, such as the 

value of antiques, artworks or hobby 

collections; or 

(14) Repair or replace damaged 

property where the IDAP Borrower’s 

only interest is in the form of a security 

interest, mortgage or deed of trust. 

§ 123.705 Are there any fees associated 

with IDAP loans? 

(a) IDAP Lender Fees. An IDAP 

Lender must not impose any fees or 

direct costs on an IDAP Borrower, 

except for the following allowed fees or 

direct costs: 

(1) The reasonable direct costs of 

liquidation; 

(2) A late payment fee not to exceed 

5 percent of the scheduled IDAP loan 

payment; and 

(3) An application fee not to exceed 

$250. Notwithstanding the provisions of 

13 CFR 103.5, no compensation 

agreement is required for the 

application fee. If an undisbursed IDAP 

loan is cancelled pursuant to 

§ 123.703(c), the IDAP Lender may 

retain the application fee. 

(b) SBA Fees. SBA will not impose 

any guarantee fees on an IDAP Lender 

making an IDAP loan. 

(c) Prohibition on paid loan 

packagers, referral agents or brokers. 

Other than the application fee set forth 

in (a)(3) of this section, no IDAP Lender 

or third party may charge an IDAP 

Borrower a fee to assist in the 

preparation of an IDAP loan application 

or application materials. No third party 

may charge an IDAP Borrower or an 

IDAP Lender a referral fee or broker’s 

fee in connection with an IDAP loan. 

§ 123.706 What are the requirements for 

IDAP Lenders? 

(a) IDAP Lenders. An IDAP Lender 

must be a 7(a) Lender (as defined in 

§ 120.10). Notwithstanding the 

provisions of § 120.470(a), a Small 

Business Lending Company (SBLC) that 

is a 7(a) Lender may make IDAP loans. 

An IDAP Lender must sign a 

supplemental Loan Guarantee 

Agreement for the IDAP loan program. 

An IDAP Lender must comply and 

maintain familiarity with the IDAP Loan 

Program Requirements, as such 

requirements are revised from time to 

time. IDAP Loan Program Requirements 

in effect at the time that an IDAP Lender 

takes an action in connection with a 

particular IDAP loan govern that 

specific action. With respect to their 

activities in the IDAP loan program, 

IDAP Lenders are subject to the 

requirements of §§ 120.140 (What 

ethical requirements apply to 

participants?), 120.197 (Notifying SBA’s 

Office of Inspector General of suspected 

fraud), 120.400 (Loan Guarantee 

Agreements), 120.410 (Requirements for 

all participating Lenders), 120.411 

(Preferences), 120.412 (Other services 

Lenders may provide Borrowers), and 

120.413 (Advertisement of relationship 

with SBA) of this chapter. An IDAP 

Lender and its contractor(s) are 

independent contractors that are 

responsible for their own actions with 

respect to an IDAP loan. SBA has no 

responsibility or liability for any claim 

by an IDAP Borrower, guarantor or other 

party alleging injury as a result of any 

allegedly wrongful action taken by an 

IDAP Lender or an employee, agent or 

contractor of an IDAP Lender. 

(b) Delegated authority. An IDAP loan 

must be processed, serviced and 

liquidated under an IDAP Lender’s 

delegated authority provided by the 

supplemental Loan Guarantee 

Agreement for the IDAP loan program. 

Non-delegated processing is not 

available for the IDAP loan program. An 

IDAP Lender is responsible for all IDAP 

loan decisions regarding eligibility 

(including size) and creditworthiness. In 

determining creditworthiness, an IDAP 

Lender must use the existing practices 

and procedures that the IDAP Lender 

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60602 Federal Register / Vol. 75, No. 190 / Friday, October 1, 2010 / Rules and Regulations 

uses for its non-SBA guaranteed 

commercial loans of a similar size. The 

IDAP Lender’s existing practices and 

procedures must be appropriate and 

generally accepted, proven and prudent 

credit evaluation processes and 

procedures, which may include credit 

scoring, and must ensure that there is 

reasonable assurance of repayment. In 

disbursing the IDAP loan, the IDAP 

Lender must use the same disbursement 

procedures and documentation as it 

uses for its similarly sized non-SBA 

guaranteed commercial loans. An IDAP 

Lender is also responsible for 

confirming that all IDAP loan 

processing, closing, servicing and 

liquidation decisions are correct and 

that all IDAP Loan Program 

Requirements have been followed. 

(c) IDAP Lender reporting. An IDAP 

Lender must report on its IDAP loans in 

accordance with requirements 

established by SBA from time to time. 

(d) Servicing. Each IDAP Lender must 

service all of its IDAP loans in 

accordance with the existing practices 

and procedures that the IDAP Lender 

uses for its non-SBA guaranteed 

commercial loans. In all circumstances, 

such practices and procedures must be 

commercially reasonable and consistent 

with prudent lending standards and in 

accordance with IDAP Loan Program 

Requirements. SBA’s prior written 

consent is required for servicing actions 

that may have significant exposure 

implications for SBA. SBA may require 

written notice of other servicing actions 

it considers necessary for portfolio 

management purposes. 

(e) Liquidations. Each IDAP Lender 

must be responsible for liquidating its 

defaulted IDAP loans. IDAP loans will 

be liquidated in accordance with the 

existing practices and procedures that 

the IDAP Lender uses for its non-SBA 

guaranteed commercial loans. In all 

circumstances, such practices and 

procedures must be commercially 

reasonable and consistent with prudent 

lending standards and in accordance 

with IDAP Loan Program Requirements. 

IDAP loans with de minimis value may, 

at the IDAP Lender’s request and with 

SBA’s approval, be liquidated by SBA or 

its agent(s). Significant liquidation 

actions taken on IDAP loans must be 

documented. The reimbursement of 

IDAP Lender liquidation expenses is 

limited to the amount of the recovery on 

the IDAP loan. 

(f) Purchase requests. An IDAP 

Lender may request SBA to purchase 

the guaranteed portion of an IDAP loan 

when there has been an uncured 

payment default exceeding 60 days or 

when the IDAP Borrower has declared 

bankruptcy. IDAP loans are subject to 

the 7(a) loan program requirements of 

§§ 120.520 (Purchase of 7(a) loan 

guarantees), 120.521 (What interest rate 

applies after SBA purchases its 

guaranteed portion?), 120.522 (Payment 

of accrued interest to the Lender or 

Registered Holder when SBA purchases 

the guaranteed portion), 120.523 (What 

is the ‘‘earliest uncured payment 

default’’?), 120.524 (When is SBA 

released from liability on its 

guarantee?), 120.542 (Payment by SBA 

of legal fees and other expenses) and 

120.546 (Loan asset sales) of this 

chapter. 

(g) Prohibition on secondary market 

sales, securitizations, loan 

participations and loan sales. An IDAP 

Lender may not sell the guaranteed 

portion of an IDAP loan in the 

secondary market, securitize the 

unguaranteed portion of an IDAP loan, 

participate any portion of an IDAP loan 

with another lender, or sell all of its 

interest in an IDAP loan. 

(h) Loan pledges. An IDAP Lender 

may pledge an IDAP loan subject to the 

7(a) loan program requirements of 

§§ 120.434 and 120.435 of this chapter. 

(i) Oversight. All IDAP Lenders are 

subject to the supervision and 

enforcement provisions applicable to 

7(a) Lenders in part 120, subpart I of 

this chapter (§§ 120.1000 through 

120.1600). In addition, an IDAP Lender 

that is an SBA Supervised Lender (as 

defined in § 120.10) is subject to the 

requirements of §§ 120.460 through 

120.490, as applicable. 

Dated: September 15, 2010. 

Karen G. Mills, 

Administrator. 

[FR Doc. 2010–24189 Filed 9–29–10; 11:15 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2010–0384; Directorate 

Identifier 2010–NM–003–AD; Amendment 

39–16449; AD 2010–20–14] 

RIN 2120–AA64 

Airworthiness Directives; McDonnell 

Douglas Corporation Model DC–10–10, 

DC–10–10F, DC–10–15, DC–10–30, DC– 

10–30F (KC–10A and KDC–10), DC–10– 

40, DC–10–40F, MD–10–10F, MD–10– 

30F, MD–11, and MD–11F Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: We are adopting a new 

airworthiness directive (AD) for certain 

Model DC–10–10, DC–10–10F, DC–10– 

15, DC–10–30, DC–10–30F (KC–10A 

and KDC–10), DC–10–40, DC–10–40F, 

MD–10–10F, MD–10–30F, MD–11, and 

MD–11F airplanes. This AD requires 

installing an in-line fuse in certain float 

level switches and sleeving the wires 

between the fuel tank and the in-line 

fuse. For certain airplanes, this AD also 

requires installing an in-line fuse in 

certain fuel pump pressure switches. 

This AD results from fuel system 

reviews conducted by the manufacturer. 

We are issuing this AD to prevent fuel 

tank explosions and consequent loss of 

the airplane. 

DATES: This AD is effective November 5, 

2010. 

The Director of the Federal Register 

approved the incorporation by reference 

of certain publications listed in the AD 

as of November 5, 2010. 

ADDRESSES: For service information 

identified in this AD, contact Boeing 

Commercial Airplanes, Attention: Data 

& Services Management, 3855 

Lakewood Boulevard, MC D800–0019, 

Long Beach, California 90846–0001; 

telephone 206–544–5000, extension 2; 

fax 206–766–5683; e-mail 

dse.boecom@boeing.com; Internet 

https://www.myboeingfleet.com. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this AD, the regulatory 

evaluation, any comments received, and 

other information. The address for the 

Docket Office (telephone 800–647–5527) 

is the Document Management Facility, 

U.S. Department of Transportation, 

Docket Operations, M–30, West 

Building Ground Floor, Room W12–140, 

1200 New Jersey Avenue, SE., 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: 

Philip Kush, Aerospace Engineer, 

Propulsion Branch, ANM–140L, FAA, 

Los Angeles Aircraft Certification 

Office, 3960 Paramount Boulevard, 

Lakewood, California 90712–4137; 

telephone (562) 627–5263; fax (562) 

627–5210. 

SUPPLEMENTARY INFORMATION: 

Discussion 

We issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 to include an airworthiness 

directive (AD) that would apply to 

certain Model DC–10–10, DC–10–10F, 

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