[Federal Register Volume 72, Number 120 (Friday, June 22, 2007)]
[Notices]
[Pages 34501-34502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12099]
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SMALL BUSINESS ADMINISTRATION
Patriot Express Pilot Loan Initiative
AGENCY: U.S. Small Business Administration (SBA).
[[Page 34502]]
ACTION: Notice of SBA's establishment of the Patriot Express Pilot Loan
Initiative.
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SUMMARY: To support the entrepreneurial sector of the Nation's military
community that are being significantly affected by what is expected to
be a protracted war on terror, SBA is introducing a 7(a) pilot loan
initiative to provide needed financial assistance to these
entrepreneurs. Under this initiative, which will operate as a pilot
through December 31, 2010, SBA will provide streamlined documentation
and expedited loan processing and its 75-85 percent guaranty for loans
up to $500,000 made to eligible members of the military community.
DATES: The Patriot Express Pilot Loan Initiative will operate through
December 31, 2010, after which the SBA will evaluate its performance
and make a decision whether to modify and/or continue the initiative.
FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial
Assistance, U.S. Small Business Administration, 409 Third Street, SW.,
Washington, DC 20416; Telephone (202) 205-6656; [email protected].
SUPPLEMENTARY INFORMATION: Under the Patriot Express Pilot Loan
Initiative, SBA is implementing a 7(a) loan product targeted to the
small business financing needs of the military community and is
incorporating that initiative into a comprehensive, new strategy that
integrates, markets and promotes SBA's available financial, procurement
and technical assistance programs to this community. The Patriot
Express Pilot Loan Initiative will adopt many of the streamlined
documentation and expedited processes and procedures of SBA's highly
successful SBAExpress loan program; however, there will be several
critical differences. SBA's guaranty of up to 85 percent will apply to
Patriot Express loans of $150,000 or less and its guaranty of up to 75
percent will apply to Patriot Express loans above $150,000, which
contrasts with the 50 percent SBA guaranty that is applicable to all
SBAExpress loans. Also, the maximum loan amount under the Patriot
Express Pilot Loan Initiative is $500,000, compared to the maximum loan
amount of $350,000 available under the SBAExpress loan program. Lenders
must use their existing prudent collateral practices for Patriot
Express loans. For loans above $350,000, lenders must obtain all
available collateral. Maximum interest rates for Patriot Express loans
are the same as those allowed under SBA regulations for the 7(a)
program, as opposed to the higher interest rates allowed under the
SBAExpress program.
In addition to the standard 7(a) loan eligibility requirements,
eligibility for Patriot Express loans will be limited to certain
members of the military community, and lenders will be required to
document each borrower's eligibility using approved Department of
Defense or Veterans' Administration documentation and that
documentation must be furnished to SBA with any purchase request. In an
effort to support a substantial segment of the military community
affected by military call-ups, SBA is making the following persons
eligible for Patriot Express: (1) Veterans (other than dishonorably
discharged); (2) Service-disabled veterans; (3) Active-duty military
participating in the military's Transition Assistance Program for
potential retirees within 24 months of separation and discharging
active duty members within 12 months of discharge; (4) Reservists and
National Guard members; and (5) The current spouse of the above and the
widowed spouse of a service member or veteran who died during service
or of a service-connected disability. However, SBA emphasizes that this
definition of eligibility for the Patriot Express Pilot Loan Initiative
will be limited to just Patriot Express 7(a) loans, and it will not
apply to other SBA loan programs, procurement programs, etc. Lender
participants in the Patriot Express Pilot Loan Initiative will be
limited to SBAExpress lenders and PLP lenders, which must meet certain
SBA prescribed proficiency and performance standards. Lenders that are
not either PLP or SBAExpress lenders may apply to participate in
SBAExpress and Patriot Express at the same time. Additionally, Patriot
Express lenders must maintain a satisfactory lending performance as
determined by SBA, in its sole discretion, to retain authority to make
Patriot Express loans.
Pursuant to the authority provided to SBA under 13 CFR 120.3 to
waive certain regulations in establishing and testing pilot loan
initiatives for some stated period of time, SBA will waive the
following regulations, which otherwise apply to 7(a) loans, for loans
made under the Patriot Express Pilot Loan Initiative only: (1) Sec.
120.130(c), which prohibits revolving lines of credit, is waived in
order to allow revolving lines of credit under the Patriot Express
Pilot Loan Initiative; (2) Sec. 120.150, which specifies certain
credit criteria, is waived in order for SBA to delegate the credit
decision to the lender, but lenders are still required to use their
existing, proven, and prudent loan practices used for similarly sized
non SBA guaranteed small business loans; (3) Sec. 120.160(b) and (c),
which require hazard insurance and appraisals is waived and SBA will
defer to the lender's existing, prudent policy used for its similarly
sized non-SBA guaranteed small business loans regarding hazard
insurance and appraisals; and (4) Sec. 120.191, which specifies the
information a 7(a) loan application must include is waived to allow
lenders to use mostly their own documents consistent with the
documentation requirements for SBAExpress loans.
Authority: 13 CFR 120.3
Grady B. Hedgespeth,
Director/Office of Financial Assistance.
[FR Doc. E7-12099 Filed 6-21-07; 8:45 am]
BILLING CODE 8025-01-P