81 FR 63366 - Disaster Assistance Loan Program; Disaster Loan Credit and Collateral Requirements

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 81, Issue 179 (September 15, 2016)

On April 25, 2014, the Small Business Administration (SBA) published in the Federal Register an interim final rule amending its disaster loan program regulations in response to Hurricane Sandy Rebuilding Task Force recommendations. The first change allowed SBA to rely on the disaster loan applicant's credit, including credit score, rather than personal or business cash flow in order to assess repayment ability for those applicants with strong credit. The second change increased the amount of disaster assistance funds that can be immediately disbursed to borrowers by raising the unsecured threshold for economic injury loans for all disasters and for physical damage loans for major disasters. SBA received no comments on its interim final rule; therefore, SBA adopts the interim final rule without change.

[Federal Register Volume 81, Number 179 (Thursday, September 15, 2016)]
[Rules and Regulations]
[Pages 63366-63367]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21512]


=======================================================================
-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

13 CFR Part 123

RIN 3245-AG61


Disaster Assistance Loan Program; Disaster Loan Credit and 
Collateral Requirements

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: On April 25, 2014, the Small Business Administration (SBA) 
published in the Federal Register an interim final rule amending its 
disaster loan program regulations in response to Hurricane Sandy 
Rebuilding Task Force recommendations. The first change allowed SBA to 
rely on the disaster loan applicant's credit, including credit score, 
rather than personal or business cash flow in order to assess repayment 
ability for those applicants with strong credit. The second change 
increased the amount of disaster assistance funds that can be 
immediately disbursed to borrowers by raising the unsecured threshold 
for economic injury loans for all disasters and for physical damage 
loans for major disasters. SBA received no comments on its interim 
final rule; therefore, SBA adopts the interim final rule without 
change.

DATES: This final rule is effective September 15, 2016.

FOR FURTHER INFORMATION CONTACT: Eric Wall, Office of Disaster 
Assistance, 409 3rd St. SW., Washington, DC 20416, (202) 205-6739.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Hurricane Sandy Rebuilding Task Force was established pursuant 
to an Executive Order issued on December 7, 2012, E.O. 13632, 
Establishing the Hurricane Sandy Task Force (December 7, 2012). This 
Task Force was established to ensure the recovery effort benefitted 
from cabinet-level focus and coordination, and was charged with 
establishing guidelines for the investment of Federal funds made 
available for the recovery. As a member of this task force, SBA 
collaborated with these executive agencies and offices to identify and 
work to remove obstacles to resilient rebuilding while taking into 
account existing and future risks and promoting the long-term 
sustainability of communities and ecosystems in the Sandy-affected 
region.
    As a result of Task Force recommendations, SBA published an interim 
final rule on April 25, 2014 (79 FR 22859). The rule amended 13 CFR 
123.6 of SBA regulations to allow SBA to rely on a disaster applicant's 
credit, including score, as evidence of repayment ability. This change 
allowed SBA to expedite processing of applications from disaster 
victims with strong credit by removing the requirement to analyze cash 
flow for all loans. The interim final rule also revised 13 CFR 123.11 
to increase SBA's unsecured disaster loan limit to $25,000 for economic 
injury loans for all disasters and for physical damage loans for major 
disasters. The comment period for the interim final rule ended on June 
23, 2014, and SBA received no comments.

Compliance with Executive Orders 12866, 12988, 13132, and 13563 and the 
Paperwork Reduction Act (44 U.S.C., Ch. 35) and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is not a significant regulatory action for the purposes of 
Executive Order 12866. This is not a major rule under the Congressional 
Review Act, 5 U.S.C. 800.

Executive Order 12988

    This action meets applicable standards set forth in sections 3(a) 
and

[[Page 63367]]

3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. This action does 
not have preemptive or retroactive effect.

Executive Order 13132

    For the purposes of Executive Order 13132, this final rule will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or the distribution of 
power and responsibilities among the various levels of government. 
Therefore, SBA determined that this final rule has no federalism 
implications warranting preparation of a federalism assessment.

Executive 13563

    Executive Order 13563 reaffirms the principles of E.O. 12866 while 
calling for improvements in the nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
The executive order directs agencies to consider regulatory approaches 
that reduce burdens and maintain flexibility and freedom of choice for 
the public where these approaches are relevant, feasible, and 
consistent with regulatory objectives. E.O. 13563 also requires that 
regulations be based on the open exchange of information and 
perspectives among state and local officials, affected stakeholders in 
the private sector, and the public as a whole.
    In developing the interim final rule, SBA collaborated with 
multiple agencies through its participation on Hurricane Sandy 
Rebuilding Task Force. The Task Force was led by the Secretary of 
Housing and Urban Development, and included twenty-three executive 
department agencies and offices. The Task Force worked with these 
Federal agency members as well as state and local officials to identify 
areas where immediate steps could be taken to help communities 
recovering from Hurricane Sandy. Executive Order 13563 also recognizes 
the importance of maintaining a consistent culture of retrospective 
review and analysis throughout the executive branch. SBA had identified 
revisions to Sec.  123.6 to expedite approval of disaster loans based 
on credit score as a part of its retrospective review. As stated in 
that report, an analysis of the performance of disaster loans to 
borrowers with strong credit indicated limited risk. Changing the 
current process of requiring a cash flow analysis for all loan 
applications has allowed SBA more flexibility to utilize a loan 
approval process that is in line with current private sector practices 
and reduce the processing cost for disaster loans.

Paperwork Reduction Act (44 U.S.C. Ch. 35)

    For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, 
SBA has determined that this final rule does not impose any new 
reporting or recordkeeping requirements.

Regulatory Flexibility Act (5 U.S.C. 601-612)

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 requires 
administrative agencies to consider the effect of their actions on 
small entities, including small businesses. According to the RFA, when 
an agency issues a rule, the agency must prepare an analysis to 
determine whether the impact of the rule will have a significant 
economic impact on a substantial number of small entities. However, the 
RFA allows an agency to certify a rule in lieu of preparing an analysis 
if the rulemaking is not expected to have a significant economic impact 
on a substantial number of small entities.
    While this rule will affect all future applicants for disaster 
assistance, some of which would be small entities, it does not impose 
any requirements on small entities. It streamlines SBA's processes in 
order to enable the Agency to provide disaster assistance more quickly 
and efficiently to small entities. SBA is not a small entity. As such, 
SBA certifies that this rule does not have a significant economic 
impact on a substantial number of small entities.

List of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs--business, Reporting and 
recordkeeping requirements, Small businesses, Terrorism.

Authority and Issuance

0
Accordingly, for the reasons set forth above, the interim final rule 
published at 79 FR 22859 (April 25, 2014) is adopted as a final rule 
without change.

    Dated: August 26, 2016.
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016-21512 Filed 9-14-16; 8:45 am]
 BILLING CODE 8025-01-P