80 FR 38500 - Texas Disaster Number TX-00447

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 80, Issue 128 (July 6, 2015)

Page Range		38500-38500
FR Document		2015-16429

This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-4223-DR), dated 05/29/2015. Incident: Severe Storms, Tornadoes, Straight-Line Winds and Flooding. Incident Period: 05/04/2015 through 06/19/2015. Effective Date: 06/24/2015. Physical Loan Application Deadline Date: 07/28/2015. EIDL Loan Application Deadline Date: 02/29/2016.

Federal Register, Volume 80 Issue 128 (Monday, July 6, 2015)

[Federal Register Volume 80, Number 128 (Monday, July 6, 2015)]
[Notices]
[Page 38500]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-16429]


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 SMALL BUSINESS ADMINISTRATION

[Disaster Declaration #14334 and #14335]


Texas Disaster Number TX-00447

AGENCY: U.S. Small Business Administration.

ACTION: Amendment 4.

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SUMMARY: This is an amendment of the Presidential declaration of a 
major disaster for the State of Texas (FEMA-4223-DR), dated 05/29/2015.
    Incident: Severe Storms, Tornadoes, Straight-Line Winds and 
Flooding.
    Incident Period: 05/04/2015 through 06/19/2015.
    Effective Date: 06/24/2015.
    Physical Loan Application Deadline Date: 07/28/2015.
    EIDL Loan Application Deadline Date: 02/29/2016.

ADDRESSES: Submit completed loan applications to: U.S. Small Business 
Administration Processing and Disbursement Center, 14925 Kingsport 
Road, Fort Worth, TX 76155.

FOR FURTHER INFORMATION CONTACT: Alan Escobar, Office of Disaster 
Assistance, U.S. Small Business Administration, 409 3rd Street SW., 
Suite 6050, Washington, DC 20416.

SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster 
declaration for the State of TEXAS, dated 05/29/2015 is hereby amended 
to include the following areas as adversely affected by the disaster:
Primary Counties: (Physical Damage and Economic Injury Loans): Fayette.
Contiguous Counties: (Economic Injury Loans Only):
    Texas; Colorado; Lavaca; Washington.

    All other information in the original declaration remains 
unchanged.

(Catalog of Federal Domestic Assistance Numbers 59002 and 59008)

James E. Rivera,
Associate Administrator for Disaster Assistance.
[FR Doc. 2015-16429 Filed 7-2-15; 8:45 am]
 BILLING CODE 8025-01-P

38500 Federal Register / Vol. 80, No. 128 / Monday, July 6, 2015 / Notices

(d) What is the average balance and SBA has observed over the last few Authority: 15 U.S.C. 681.
settlement of credit lines extended to years that SBICs seeking to avoid
Javier Saade,
SBICs? Capital Impairment have converted non-
(e) Based on SBA’s view that short- ECI investments to ECI solely for the Associate Administrator for Investment and
term borrowings pose a lower credit Innovation.
purpose of attaining an increase in
risk, what restrictions, if any, should [FR Doc. 2015–16430 Filed 7–2–15; 8:45 am]
maximum allowable CIP. For example,
SBA consider placing on the length of an SBIC can convert a loan into equity, BILLING CODE 8025–01–P
time a balance may remain outstanding which would cause the investment to
on an unsecured line? then qualify as ECI. Depending on the
(f) Should SBA permit such facilities circumstances of the SBIC, the SMALL BUSINESS ADMINISTRATION
only during time periods of an SBIC’s converted security could cause the
lifecycle when the risk to SBA is lower, SBIC’s maximum allowable CIP to [Disaster Declaration #14334 and #14335]
for example during the early years of the increase and artificially forestall the
SBIC’s life or before additional leverage SBIC from having a condition of Capital Texas Disaster Number TX–00447
is drawn? If so, what considerations Impairment, which creates risk to
should SBA take into account in taxpayers. AGENCY:U.S. Small Business
determining the timing and duration of SBA has also observed the Administration.
these periods? deteriorating performance of portfolio
(g) Are there certain provisions in ACTION: Amendment 4.
companies held in a particular SBIC can
unsecured loan agreements that SBA likewise result in an SBIC’s maximum
should be especially concerned about SUMMARY: This is an amendment of the
allowable CIP increasing. Using the Presidential declaration of a major
with respect to credit risk (e.g., remedies
example in the prior paragraph, the loan disaster for the State of Texas (FEMA–
available to a lender such as specific
could have been converted to equity as 4223–DR), dated 05/29/2015.
performance or injunctive relief) and
a result of a distressed restructuring of
how should SBA deal with those Incident: Severe Storms, Tornadoes,
the company. In either case, the
provisions? Straight-Line Winds and Flooding.
(h) What type of credit risk policies increased ECI was not the result of the
would be most effective in managing SBIC making an ECI investment from Incident Period: 05/04/2015 through
SBA’s credit risk with respect to the outset, but instead converting non- 06/19/2015.
unsecured lines of credit? ECI based on the impairment status of Effective Date: 06/24/2015.
2. Determination of Equity Capital the SBIC or the deteriorated status of a
small concern. Physical Loan Application Deadline
Investments (ECI) in the calculation of Date: 07/28/2015.
an SBIC’s maximum allowable Capital SBA aims to prevent conversions
Impairment Percentage (CIP). 13 CFR specifically and solely intended to EIDL Loan Application Deadline Date:
107.1830(c) defines the maximum artificially increase maximum allowable 02/29/2016.
allowable CIP for a leveraged SBIC that CIP, because such conversions result in ADDRESSES: Submit completed loan
is not an Early Stage SBIC. If an SBIC the SBIC having a reduced collateral applications to: U.S. Small Business
exceeds its maximum allowable CIP, it position in the portfolio company at a Administration Processing and
constitutes a condition of Capital time when that collateral may be critical Disbursement Center, 14925 Kingsport
Impairment, which is an event of for SBA to obtain a recovery from the Road, Fort Worth, TX 76155.
default under the terms of its leverage. SBIC. However, in considering any
13 CFR 107.1810(f)(5). An SBIC’s policy changes to managing its credit FOR FURTHER INFORMATION CONTACT:
maximum allowable CIP depends on risk with respect to ECI, SBA does not Alan Escobar, Office of Disaster
two variables: (1) the percentage at cost seek to create unnecessary burdens for Assistance, U.S. Small Business
of ECI in the SBIC’s portfolio, and (2) SBICs who may convert an investment Administration, 409 3rd Street SW.,
the ratio of outstanding leverage to to ECI for business reasons unrelated to Suite 6050, Washington, DC 20416.
Leverageable Capital. solely avoiding Capital Impairment (e.g., SUPPLEMENTARY INFORMATION: The notice
Under 13 CFR 107.50, ECI generally the exercise of conversion rights prior to of the Presidential disaster declaration
means investments in a small business a planned IPO). Accordingly, the for the State of TEXAS, dated 05/29/
in the form of common or preferred Agency welcomes comments from the 2015 is hereby amended to include the
stock, limited partnership interests, public on how to achieve this objective. following areas as adversely affected by
options, warrants, or similar equity Comments may be general in nature the disaster:
instruments, including subordinated and/or answer the following questions:
debt with equity features if such debt (a) Other than the examples provided Primary Counties: (Physical Damage
provides only for interest payments in this notice, what transactions or and Economic Injury Loans): Fayette.
contingent upon and limited to the circumstances can result in an original Contiguous Counties: (Economic Injury
extent of earnings. Further, Leverageable non-ECI becoming qualified as an ECI? Loans Only):
Capital means, as more fully described (b) What specific factors should SBA Texas; Colorado; Lavaca; Washington.
in 13 CFR 107.50, paid-in capital of an consider in determining that
SBIC. investments are disqualified as ECI for All other information in the original
SBA’s regulations permit a higher the purposes of calculating an SBIC’s declaration remains unchanged.
maximum allowable CIP when the maximum allowable CIP? (Catalog of Federal Domestic Assistance
Lhorne on DSK7TPTVN1PROD with NOTICES

percentage of ECI in an SBIC’s portfolio (c) Without creating an undue Numbers 59002 and 59008)
is higher in recognition that equity-type reporting burden on SBICs, how can
investment strategies are inherently SBA differentiate between investments James E. Rivera,
riskier and frequently require a longer converted for legitimate business Associate Administrator for Disaster
holding period relative to debt reasons and those converted for other Assistance.
investments before a successful exit can reasons, including solely to inflate total [FR Doc. 2015–16429 Filed 7–2–15; 8:45 am]
be achieved. ECI in the SBIC’s portfolio? BILLING CODE 8025–01–P

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Document Created: 2015-12-15 13:17:12
Document Modified: 2015-12-15 13:17:12

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Amendment 4.
Dates		06/24/2015.
Contact		Alan Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
FR Citation		80 FR 38500