Regulatory Reform Initiative: Intermediary Lending Pilot Program, 12875-12876 [2020-04465]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 85, Number 44 (Thursday, March 5, 2020)]
[Proposed Rules]
[Pages 12875-12876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04465]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 85, No. 44 / Thursday, March 5, 2020 / 
Proposed Rules

[[Page 12875]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 109

RIN 3245-AH15


Regulatory Reform Initiative: Intermediary Lending Pilot Program

AGENCY: U.S. Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is proposing to 
remove three regulations governing the application and selection 
process for Intermediary Lending Pilot (ILP) program Intermediaries. 
These regulations are no longer necessary because SBA is no longer 
authorized to select new ILP Intermediaries. The removal of these 
regulations will assist the public by simplifying SBA's regulations. 
SBA is also proposing to make two conforming amendments to avoid 
confusion.

DATES: Comments must be received on or before May 4, 2020.

ADDRESSES: You may submit comments, identified by RIN: 3245-AH15, by 
any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery/Courier: Daniel Upham, Chief, 
Microenterprise Development Division, Office of Financial Assistance, 
U.S. Small Business Administration, 409 Third Street SW, Washington, DC 
20416.
    SBA will post all comments on https://www.regulations.gov. If you 
wish to submit confidential business information (CBI), as defined in 
the User Notice at https://www.regulations.gov, please submit the 
information to Daniel Upham, Chief, Microenterprise Development 
Division, Office of Financial Assistance, U.S. Small Business 
Administration, 409 Third Street SW, Washington, DC 20416, or send an 
email to [email protected]. Highlight the information that you 
consider to be CBI and explain why you believe SBA should hold this 
information as confidential. SBA will review the information and make 
the final determination on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Daniel Upham, Chief, Microenterprise 
Development Division, Office of Financial Assistance, (202) 205-7001 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background Information

A. Part 109, Intermediary Lending Pilot Program

    The Intermediary Lending Pilot (ILP) program was authorized by 
Congress as a 3-year pilot program in the Small Business Jobs Act of 
2010, Public Law 111-240, enacted September 27, 2010. Under the ILP 
program, SBA provided loans to selected nonprofit intermediaries (ILP 
Intermediaries) for the purpose of providing loans to small businesses. 
Currently, there are 33 lenders participating in the ILP program. SBA 
was authorized to make loans to ILP Intermediaries in fiscal years 
2011, 2012, and 2013. This rule proposes to remove three regulations 
from the Code of Federal Regulations (CFR) that are no longer necessary 
because SBA is no longer authorized to select new ILP Intermediaries.

B. Executive Order 13771

    On January 30, 2017, President Trump signed Executive Order 13771, 
Reducing Regulation and Controlling Regulatory Costs, which, among 
other objectives, is intended to ensure that an agency's regulatory 
costs are prudently managed and controlled so as to minimize the 
compliance burden imposed on the public. For every new regulation an 
agency proposes to implement, unless prohibited by law, this Executive 
Order requires the agency to (i) identify at least two existing 
regulations that the agency can cancel; and (ii) use the cost savings 
from the cancelled regulations to offset the cost of the new 
regulation.

C. Executive Order 13777

    On February 24, 2017, the President issued Executive Order 13777, 
Enforcing the Regulatory Reform Agenda, which further emphasized the 
goal of the Administration to alleviate the regulatory burdens placed 
on the public. Under Executive Order 13777, agencies must evaluate 
their existing regulations to determine which ones should be repealed, 
replaced, or modified. In doing so, agencies should focus on 
identifying regulations that, among other things: Eliminate jobs or 
inhibit job creation; are outdated, unnecessary, or ineffective; impose 
costs that exceed benefits; create a serious inconsistency or otherwise 
interfere with regulatory reform initiatives and policies; or are 
associated with Executive Orders or other Presidential directives that 
have been rescinded or substantially modified. SBA has engaged in this 
process and has identified the regulations in this rulemaking as 
appropriate for removal in accordance with Executive Order 13777.

II. Section by Section Analysis

A. Section 109.200, Application To Become an ILP Intermediary.

    This section describes the application process to become an ILP 
Intermediary, including publication of a Notice of Funds Availability 
(NOFA) in the Federal Register to announce the availability of funds 
for the program and specify any special rules, procedures, and 
restrictions for a particular funding round. This section also includes 
the requirements for an ILP Intermediary application.

B. Section 109.210, Evaluation and Selection of ILP Intermediaries.

    This section describes the process by which SBA evaluates ILP 
Intermediary applications. The rule specifies that SBA will make loans 
to not more than 20 selected ILP Intermediaries in each fiscal year for 
which funding was available, and that applications will be evaluated 
and scored based on the criteria specified in the NOFA.

C. Section 109.220, Loan Limits--Loans to ILP Intermediaries.

    Section 109.220 states that no ILP Intermediary may receive more 
than $1 million in ILP Loans.
    SBA's authority to make loans to ILP Intermediaries has expired; 
therefore, SBA is not accepting any new ILP Intermediary applications. 
Since the program no longer allows for new ILP Intermediaries, the 
removal of these three regulations will reduce confusion and regulatory 
burden. Requirements for current ILP Intermediaries are found in the 
remaining provisions of part 109.

[[Page 12876]]

D. Conforming Amendments

    In addition to removing the three regulations described above, SBA 
also proposes to make two conforming amendments. First, SBA proposes to 
revise the definition of ILP Intermediary in Section 109.20 to remove 
reference to the competitive application process. Because the 
regulations describing the application process (Sections 109.200 and 
109.210) are proposed for removal, this revision is necessary to avoid 
confusion. Second, SBA proposes to remove the cross-reference to 
section 120.173, Lead-based paint, in Section 109.440. Section 109.440 
states that loans made by an ILP Intermediary must comply with all 
applicable laws, including SBA's Lead-based paint regulation in Section 
120.173. In a separate rulemaking, SBA is proposing to remove Section 
120.173 because it is no longer necessary--16 CFR part 1303 already 
bans paint containing a concentration of lead in excess of 0.009% (90 
parts per million) for use in residences, schools, hospitals, parks, 
playgrounds, and public buildings or other areas where consumers will 
have direct access to the painted surface. Therefore, SBA proposes to 
remove the cross-reference in part 109 as well.

III. Compliance With Executive Orders 12866, 13771, 12988, and 13132, 
the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

A. Executive Order 12866

    The Office of Management and Budget has determined that this 
proposed rule does not constitute a significant regulatory action for 
purposes of Executive Order 12866 and is not a major rule under the 
Congressional Review Act, 5 U.S.C. 801, et seq.

B. Executive Order 13771

    This proposed rule is expected to be an Executive Order 13771 
deregulatory action with an annualized net savings of $7,677 and a net 
present value of $109,667 in savings, both in 2016 dollars. This rule 
would remove information about applying to the ILP program which would 
save potential applicants time in reading and researching/inquiring 
about this obsolete program and reduce confusion around whether 
applications are being accepted.
    SBA is aware of approximately 500 nonprofit lenders that could 
potentially research the ILP program application process. Assuming 
that, each year, 20 percent of these nonprofit lenders would review 
SBA's ILP program regulations and that each would save 1 hour of review 
time due to removal of the regulations discussed in this rule, these 
non-profits would be relieved of 100 burden hours. Valuing this time at 
$79.99 per hour--the wage of a financial manager based on 2018 U.S. 
Bureau of Labor Statistics (BLS) data and adding 30 percent more for 
benefits--this produces total savings per year of $7,999 in current 
dollars.

C. Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

D. Executive Order 13132

    This rule does not have federalism implications as defined in 
Executive Order 13132. It will not have substantial direct effects on 
the States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, as specified in the Executive Order. As 
such it does not warrant the preparation of a Federalism Assessment.

E. Paperwork Reduction Act

    The SBA has determined that this proposed rule does not affect any 
existing collection of information.

F. Regulatory Flexibility Act

    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA) requires the agency to ``prepare and make 
available for public comment an initial regulatory flexibility 
analysis'' which will ``describe the impact of the proposed rule on 
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an analysis, if the 
proposed rulemaking is not expected to have a significant economic 
impact on a substantial number of small entities.
    SBA is aware of approximately 500 nonprofit lenders that could 
potentially search for and read about applying to the ILP program. The 
removal of obsolete regulations related to the ILP program would reduce 
confusion for these lenders and the time required to read and/or 
inquire about obsolete regulations. The total annual savings to these 
nonprofit lenders is estimated at $7,999 in current dollars, or about 
$16 per nonprofit lender. More information on this estimate can be 
found in the Executive Order 13771 discussion above.
    Therefore, SBA hereby certifies that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities. The SBA invites comments from the public on this 
certification.

List of Subjects in 13 CFR Part 109

    Community development, Loan program--business, Reporting and 
recordkeeping requirements, Small businesses.

    Accordingly, for the reasons stated in the preamble, SBA proposes 
to amend 13 CFR part 109 as follows:

PART 109--INTERMEDIARY LENDING PILOT PROGRAM

0
1. The authority citation for part 109 continues to read as follows:

    Authority:  15 U.S.C. 634(b)(6), (b)(7), and 636(l).


Sec.  109.20   [Amended]

0
2. Amend Sec.  109.20 by revising the definition of ``ILP 
Intermediary'' as follows:
* * * * *
    ILP Intermediary means a private, nonprofit entity that has 
received an ILP Loan.
* * * * *


Sec. Sec.  109.200, 109.210, and 109.220   [Removed and Reserved]

0
3. Remove and reserve Sec. Sec.  109.200, 109.210, and 109.220.


Sec.  109.440   [Amended]

0
4. Amend Sec.  109.440 by removing the words ``120.173 (Lead-based 
paint),''.

    Dated: February 18, 2020.
Jovita Carranza,
Administrator.
[FR Doc. 2020-04465 Filed 3-4-20; 8:45 am]
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