Immediate Disaster Assistance Program, 60588-60602 [2010-24189]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 75, Number 190 (Friday, October 1, 2010)]
[Rules and Regulations]
[Pages 60588-60602]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24189]


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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.

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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'

[[Page 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: https://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 https://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 https://
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.

[[Page 60590]]

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 (Sec.  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

[[Page 60591]]

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 IDAP-
Eligible 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.

[[Page 60592]]

    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 in-depth 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

[[Page 60593]]

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

[[Page 60594]]

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 Sec.  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

[[Page 60595]]

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 risk-based 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

[[Page 60596]]

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 Sec. Sec.  
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.

[[Page 60597]]

    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 collectio