82 FR 33197 - Notice of Changes to SBA Secondary Market Program

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 82, Issue 137 (July 19, 2017)

Page Range		33197-33198
FR Document		2017-15180

The purpose of this Notice is to provide the public with notification of program changes to SBA's Secondary Market Loan Pooling Program. The changes described in this Notice are being made to ensure that there are sufficient funds to cover the estimated cost of the timely payment guaranty for newly formed SBA 7(a) loan pools. The changes in this Notice will be incorporated, as needed, into the SBA Secondary Market Program Guide, and all other appropriate SBA Secondary Market documents.

Federal Register, Volume 82 Issue 137 (Wednesday, July 19, 2017)

[Federal Register Volume 82, Number 137 (Wednesday, July 19, 2017)]
[Notices]
[Pages 33197-33198]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-15180]


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SMALL BUSINESS ADMINISTRATION


Notice of Changes to SBA Secondary Market Program

AGENCY:  U.S. Small Business Administration (``SBA'').

SUMMARY:  The purpose of this Notice is to provide the public with 
notification of program changes to SBA's Secondary Market Loan Pooling 
Program. The changes described in this Notice are being made to ensure 
that there are sufficient funds to cover the estimated cost of the 
timely payment guaranty for newly formed SBA 7(a) loan pools. The 
changes in this Notice will be incorporated, as needed, into the SBA 
Secondary Market Program Guide, and all other appropriate SBA Secondary 
Market documents.

DATES:  The changes in this Notice will apply to SBA 7(a) loan pools 
with an issue date on or after October 1, 2017.

ADDRESSES:  Address comments concerning this Notice to John M. Wade, 
Chief Secondary Market Division, U.S. Small Business Administration, 
409 3rd Street SW., Washington, DC 20416, or [email protected].

FOR FURTHER INFORMATION CONTACT:  John M. Wade, Chief, Secondary Market 
Division, U.S. Small Business Administration, 409 3rd Street SW., 
Washington, DC 20416, or [email protected].

SUPPLEMENTARY INFORMATION:  The Secondary Market Improvements Act of 
1984 authorized SBA to guaranty the timely payment of principal and 
interest on Pool Certificates. A Pool Certificate represents a 
fractional undivided interest in a ``Pool,'' which is an aggregation of 
SBA guaranteed portions of loans made by SBA Lenders under section 7(a) 
of the Small Business Act, 15 U.S.C. 636(a). In order to support the 
timely payment guaranty requirement, SBA established the Master Reserve 
Fund (``MRF''), which serves as a mechanism to cover the cost of SBA's 
timely payment guaranty. Borrower payments on the guaranteed portions 
of pooled loans, as well as SBA guaranty payments on defaulted pooled 
loans, are deposited into the MRF. Funds are held in the MRF until 
distributions are made to investors (``Registered Holders'') of Pool 
Certificates. The interest earned on the borrower payments and the SBA 
guaranty payments deposited into the MRF supports the timely payments 
made to Registered Holders.
    To facilitate the formation of SBA loan Pools and to enhance the 
marketability of the SBA Secondary Market (as defined in 13 CFR 
120.601), SBA allows loans with different maturity dates to be placed 
in the same Pool. From time to time, SBA provides instruction to SBA 
Pool Assemblers on the required loan and pool characteristics necessary 
to form a Pool. These characteristics include, among other things, the 
minimum number of guaranteed portions of loans required to form a Pool, 
the allowable difference between the highest and lowest gross and net 
note rates of the guaranteed portions of loans in a Pool, and the 
minimum maturity ratio of the guaranteed portions of loans in a Pool. 
The minimum maturity ratio is equal to the ratio of the shortest and 
the longest remaining term to maturity of the guaranteed portions of 
loans in a Pool.
    In November of 2008, SBA published changes to the regulations 
governing SBA's Secondary Market to allow SBA Pool Assemblers to form 
and initiate the sale of Weighted Average Coupon (WAC) Pools. See 73 FR 
67099, November 13, 2008. A WAC Pool is a Pool where the interest rate 
payable to the Registered Holder is equal to the Dollar-Weighted 
Average Net Rate of the Pool (as defined in 13 CFR 120.600(l)). All 
other Pools formed by SBA Pool Assemblers are considered Standard 
Pools. The minimum maturity ratio for Standard Pools and WAC Pools is 
currently 80% and 76%, respectively. The minimum maturity ratio for 
Standard Pools was last adjusted by SBA in 2005. The minimum maturity 
ratio for WAC Pools was established by SBA in 2008 and has remained 
unchanged.

[[Page 33198]]

    Based on SBA's expectations as to future Pool performance, SBA has 
determined that, in order to lower the costs associated with SBA's 
Secondary Market Loan Pooling Program, it is necessary to increase the 
minimum maturity ratio--in other words, to reduce the difference 
between the shortest and the longest remaining term of the guaranteed 
portions of loans in a Pool. A higher minimum maturity ratio will 
decrease the difference between the amortization rates of the 
guaranteed portions of loans in a Pool. This will cause the cash flows 
from the guaranteed portions of loans in the Pool to be more 
homogenous, and will more closely match the amortization rate of the 
Pool Certificate. This is an important driver in reducing the cost of 
SBA's timely payment guaranty on Pool Certificates.
    Therefore, effective October 1, 2017, all guaranteed portions of 
loans in a Pool presented for settlement with SBA's Fiscal Transfer 
Agent will be required to have a minimum maturity ratio of at least 94% 
for Standard Pools and WAC Pools. SBA has monitored Pools formed over 
the last 6 months, and has observed that many existing Pools have a 
minimum maturity ratio of at least 94%.
    SBA will continue to monitor loan and pool characteristics and will 
provide notification of additional changes as necessary. It is 
important to note that there is no change to SBA's obligation to honor 
its guaranty of the amounts owed to Registered Holders of Pool 
Certificates and that such guaranty continues to be backed by the full 
faith and credit of the United States.
    This program change will be incorporated as necessary into SBA's 
Secondary Market documents. As indicated above, this change will be 
effective for Pools with an issue date on or after October 1, 2017, and 
will modify any previous description or guidance regarding the minimum 
maturity ratio for Standard Pools or WAC Pools. SBA is making this 
change pursuant to Section 5(g)(2) of the Small Business Act, 15 U.S.C. 
634 (g)(2).

    Authority:  15 U.S.C. 634 (g)(2).

William M. Manger
Associate Administrator Office of Capital Access.
[FR Doc. 2017-15180 Filed 7-18-17; 8:45 am]
 BILLING CODE 8025-01-P

Federal Register / Vol. 82, No. 137 / Wednesday, July 19, 2017 / Notices 33197

NYSEArca–2017–77, and should be Oneida, Orleans, Otsego, Rensselaer, on Pool Certificates. A Pool Certificate
submitted on or before August 9, 2017. Saratoga, Schenectady, Schoharie, represents a fractional undivided
For the Commission, by the Division of Suffolk, Sullivan, Tioga, Tompkins, interest in a ‘‘Pool,’’ which is an
Trading and Markets, pursuant to delegated Ulster. aggregation of SBA guaranteed portions
authority.18 The Interest Rates are: of loans made by SBA Lenders under
Jill M. Peterson, section 7(a) of the Small Business Act,
Assistant Secretary. Percent 15 U.S.C. 636(a). In order to support the
[FR Doc. 2017–15101 Filed 7–18–17; 8:45 am]
timely payment guaranty requirement,
For Physical Damage:
Non-Profit Organizations with Credit
SBA established the Master Reserve
BILLING CODE 8011–01–P
Available Elsewhere ......................... 2.500 Fund (‘‘MRF’’), which serves as a
Non-Profit Organizations without Cred- mechanism to cover the cost of SBA’s
it Available Elsewhere ...................... 2.500 timely payment guaranty. Borrower
SMALL BUSINESS ADMINISTRATION For Economic Injury:
payments on the guaranteed portions of
Non-Profit Organizations without Cred-
[Disaster Declaration #15207 and #15208; it Available Elsewhere ...................... 2.500 pooled loans, as well as SBA guaranty
NEW YORK Disaster # NY–00177] payments on defaulted pooled loans, are
The number assigned to this disaster deposited into the MRF. Funds are held
Presidential Declaration of a Major for physical damage is 15207B and for in the MRF until distributions are made
Disaster for Public Assistance Only for economic injury is 15208B. to investors (‘‘Registered Holders’’) of
the State of New York Pool Certificates. The interest earned on
(Catalog of Federal Domestic Assistance
AGENCY: U.S. Small Business Number 59008) the borrower payments and the SBA
Administration. guaranty payments deposited into the
Lisa Lopez-Suarez, MRF supports the timely payments
ACTION: Notice. Acting Associate Administrator for Disaster made to Registered Holders.
Assistance. To facilitate the formation of SBA
SUMMARY: This is a Notice of the
[FR Doc. 2017–15076 Filed 7–18–17; 8:45 am] loan Pools and to enhance the
Presidential declaration of a major
disaster for Public Assistance Only for BILLING CODE 8025–01–P marketability of the SBA Secondary
the State of New York (FEMA–4322– Market (as defined in 13 CFR 120.601),
DR), dated 07/12/2017. SBA allows loans with different
SMALL BUSINESS ADMINISTRATION maturity dates to be placed in the same
Incident: Severe Winter Storm and
Snowstorm. Notice of Changes to SBA Secondary Pool. From time to time, SBA provides
Incident Period: 03/14/2017 through Market Program instruction to SBA Pool Assemblers on
03/15/2017. the required loan and pool
DATES: Issued on July 12, 2017. AGENCY: U.S. Small Business characteristics necessary to form a Pool.
Physical Loan Application Deadline Administration (‘‘SBA’’). These characteristics include, among
Date: 09/11/2017. SUMMARY: The purpose of this Notice is other things, the minimum number of
Economic Injury (Eidl) Loan to provide the public with notification guaranteed portions of loans required to
Application Deadline Date: 04/12/2018. of program changes to SBA’s Secondary form a Pool, the allowable difference
Market Loan Pooling Program. The between the highest and lowest gross
ADDRESSES: Submit completed loan
changes described in this Notice are and net note rates of the guaranteed
applications to: U.S. Small Business portions of loans in a Pool, and the
Administration, Processing and being made to ensure that there are
sufficient funds to cover the estimated minimum maturity ratio of the
Disbursement Center, 14925 Kingsport guaranteed portions of loans in a Pool.
Road, Fort Worth, TX 76155. cost of the timely payment guaranty for
newly formed SBA 7(a) loan pools. The The minimum maturity ratio is equal to
FOR FURTHER INFORMATION CONTACT: the ratio of the shortest and the longest
changes in this Notice will be
A. Escobar, Office of Disaster incorporated, as needed, into the SBA remaining term to maturity of the
Assistance, U.S. Small Business Secondary Market Program Guide, and guaranteed portions of loans in a Pool.
Administration, 409 3rd Street SW., all other appropriate SBA Secondary In November of 2008, SBA published
Suite 6050, Washington, DC 20416, Market documents. changes to the regulations governing
(202) 205–6734. SBA’s Secondary Market to allow SBA
DATES: The changes in this Notice will
SUPPLEMENTARY INFORMATION: Notice is Pool Assemblers to form and initiate the
apply to SBA 7(a) loan pools with an
hereby given that as a result of the issue date on or after October 1, 2017. sale of Weighted Average Coupon
President’s major disaster declaration on (WAC) Pools. See 73 FR 67099,
ADDRESSES: Address comments
07/12/2017, Private Non-Profit November 13, 2008. A WAC Pool is a
organizations that provide essential concerning this Notice to John M. Wade,
Chief Secondary Market Division, U.S. Pool where the interest rate payable to
services of governmental nature may file the Registered Holder is equal to the
disaster loan applications at the address Small Business Administration, 409 3rd
Street SW., Washington, DC 20416, or Dollar-Weighted Average Net Rate of the
listed above or other locally announced Pool (as defined in 13 CFR 120.600(l)).
locations. john.wade@sba.gov.
All other Pools formed by SBA Pool
The following areas have been FOR FURTHER INFORMATION CONTACT: John
Assemblers are considered Standard
determined to be adversely affected by M. Wade, Chief, Secondary Market
asabaliauskas on DSKBBXCHB2PROD with NOTICES

Pools. The minimum maturity ratio for
the disaster: Division, U.S. Small Business Standard Pools and WAC Pools is
Administration, 409 3rd Street SW., currently 80% and 76%, respectively.
Primary Counties: Albany, Broome,
Washington, DC 20416, or john.wade@ The minimum maturity ratio for
Chenango, Clinton, Columbia,
sba.gov. Standard Pools was last adjusted by
Cortland, Delaware, Dutchess, Essex,
Franklin, Fulton, Greene, Hamilton, SUPPLEMENTARY INFORMATION: The SBA in 2005. The minimum maturity
Herkimer, Madison, Montgomery, Secondary Market Improvements Act of ratio for WAC Pools was established by
1984 authorized SBA to guaranty the SBA in 2008 and has remained
18 17 CFR 200.30–3(a)(12). timely payment of principal and interest unchanged.

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Document Created: 2017-07-19 06:17:49
Document Modified: 2017-07-19 06:17:49

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
Dates		The changes in this Notice will apply to SBA 7(a) loan pools with an issue date on or after October 1, 2017.
Contact		John M. Wade, Chief, Secondary Market Division, U.S. Small Business Administration, 409 3rd Street SW., Washington, DC 20416, or [email protected]
FR Citation		82 FR 33197