[Federal Register Volume 75, Number 71 (Wednesday, April 14, 2010)]
[Rules and Regulations]
[Pages 19285-19295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7622]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
49 CFR Part 22
[Docket No OST-2008-0236]
RIN 2105-AD50
Short-Term Lending Program (STLP)
AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).
ACTION: Final rule.
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SUMMARY: This final rule governs the Short Term Lending Program (STLP),
which provides financial assistance in the form of guarantees of short-
term revolving lines of credit from Participating Lenders (PLs) to
disadvantaged Business Enterprises (DBEs) and other certified small and
disadvantaged business (SDBs) in connection with transportation-related
contracts at the local, state and federal levels. The program is
administered through cooperative agreements between DOT's Office of
Small and Disadvantaged Business Enterprise (OSDBU) and Participating
Lenders and under the STLP's governing policies and procedures.
DATES: This rule is effective May 14, 2010.
FOR FURTHER INFORMATION CONTACT: Nancy Strine, Financial Assistance
Division Manager, U.S Department of Transportation, OSDBU, 1200 New
Jersey Ave, SE., Room W56-497, Washington, DC 20590. Telephone: (800)
532-1169 or e-mail: [email protected].
SUPPLEMENTARY INFORMATION:
Background
On August 21, 2008, the Office of Small and Disadvantaged Business
Utilization (OSDBU) of the Office of the Secretary (OST) of the
Department of Transportation (DOT) issued a Notice of Proposed
Rulemaking (NPRM) in Docket OST-2008-0236 proposing to adopt
regulations governing its Short Term Lending Program (STLP) and
published the NPRM in the Federal Register. See ``Department of
Transportation, Office of the Secretary, 49 CFR part 22 [Docket NO:
OST-2008-0236], RIN 2105-AD50, 73 FR 49386 et seq. (August 21, 2008).''
In the NPRM, we announced that we were considering regulations to
replace the internal policies and guidelines that had for years been
used to manage the STLP.
As noted in the NPRM, the Secretary of Transportation has delegated
the authority to carry out the functions in
[[Page 19286]]
section 906 of the Railroad Revitalization and Regulatory Reform Act of
1976 (Pub. L. 940-210, as amended) known as the Minority Business
Resource Center Program, which includes a guaranteed loan program, to
the Director of DOT's OSDBU. 49 U.S.C. 332 authorizes DOT's OSDBU to
establish, under the Minority Business Resource Center, programs that
would assist disadvantaged business enterprises (DBEs) and small
disadvantaged businesses (SDBs) in acquiring access to working capital
and to debt financing, in order to obtain transportation-related
contracts wholly or partially funded by DOT. To implement this
authority, OSDBU developed its Short Term Lending Program (STLP) which
offers DBE's and other certified small and disadvantaged businesses
short term working capital loans at variable interest rates to perform
on these transportation-related contracts.
Initially developed in 1989 as a direct loan program, the STLP was
converted in 2001 to a loan guarantee program under which private
sector Participating Lenders offer loans with a government guarantee of
up to 75 percent for qualified applicants.
These loans are revolving lines of credit that provide working
capital funds to assist the borrower in financing the direct labor and
material costs of completing transportation contracts. The contracts
that are funded are assigned to the loan as collateral, and the
Participating Lender advances monies up to 85% of eligible and approved
Accounts Receivable that arise from the Assigned Contract(s). The
contracts must be transportation-related and receive at least one
dollar of DOT funding. Repayment comes in the form of a two-party check
to the borrower and to the PL directly from the contract proceeds. The
total length of time that an eligible borrower may remain in the
program cannot exceed a total of five years.
DOT monitors these loans, which require contract assignments and
direct joint payee check remittances for principal repayment, through
its relationship with the transportation agencies and recipients that
receive DOT funds and the Participating Lenders. In recent years the
total funds available for full principal amount of loans under the STLP
has been limited to $18,367,000 per fiscal year.
We pointed out in the NPRM that the STLP has undergone an extensive
program review to improve its business processes and achieve
operational and financial efficiencies and that, as part of this
effort, we were asking for comments on proposed regulations to replace
the internal policies and guidelines that were being used to manage the
program. We received no comments in response to the NPRM.
We have determined to adopt the rule as proposed, with one minor
exception. In the NPRM, we proposed to include as part of the rule
copies of the actual forms to be used by DBEs and Participating Lenders
for various aspects of the STLP, such as Loan Activation, Loan
Extension, Loan Close-out, and various certifications required for loan
applications. Because those forms may be amended and in order to make
up-to-date forms more easily accessible to DBEs and Participating
Lenders, we have determined that it would be in the public interest to
make those forms available through the OSDBU Web site instead of
including them with the rule itself. Accordingly, changes to the final
rule have been made to accomplish this objective, including providing
the appropriate Web site address for each form.
Section-by-Section Analysis
The proposed regulations utilize objective, plain language in an
attempt to make the regulations more understandable to Participating
Lenders, DBEs and other small and disadvantaged businesses.
Sec. 22.1 Purpose: The purpose of the DOT OSDBU STLP is to provide
financial assistance, in the form of a short-term loan from
Participating Lenders that is guaranteed by DOT OSDBU, to DBE's and
other certified small businesses for the execution of DOT funded and
supported transportation-related contracts.
Sec. 22.3 Definitions: This section contains definitions of common
banking and lending terminology included in STLP documents and the STLP
Policy and Procedure Manual.
Sec. 22.11 Eligibility Criteria: Paragraph (a) defines those
requirements needed in order to qualify for a STLP loan. Paragraph (b)
clarifies what instrument qualifies as a ``transportation-related
contract,'' and paragraph (c) explains the maximum length of time in
which a qualified business may remain as an STLP borrower, as well as
what circumstances and documentation are required on an annual basis in
order to remain eligible.
Sec. 22.13 Loan Terms and Conditions: Section 22.13 describes the
parameters of the Short Term Lending Program, including: maximum loan
amount, interest rates, the term and structure of the loan, source of
funds for loan repayment, allowable uses of the loan proceeds, how loan
disbursements are made, as well as any personal guarantees, collateral
or insurance.
Sec. 22.15 Delinquency on Federal, State, or Municipality Debt:
This section provides that the borrower must be current on all federal,
state, and local taxes to be able to participate in the program.
Sec. 22.17 Compliance with Child Support Obligations: STLP
applicants must submit a certification that he or she is not more than
60 days delinquent in child support payments. The Office of Management
and Budget (OMB) Circular No. A-129, Revised (Policies for Federal
Credit Programs and Non-Tax Receivables) prohibits individuals that are
delinquent in child support obligations from eligibility for Federal
financial assistance.
Sec. 22.19 Credit Criteria: Section 22.19 describes the required
creditworthiness of an STLP applicant, and lists those aspects of
creditworthiness that OSDBU will consider in its evaluation of an STLP
application.
Sec. 22.21 Participation Criteria: Section 22.21 describes the
criteria for banks in order to qualify as STLP Participating Lenders,
including certifications, documentation, history of community
involvement, loan experience, and the ability to implement, monitor and
manage this loan program.
Sec. 22.23 Agreement: Section 22.23 describes the Cooperative
Agreement that is executed between DOT and the Participating Lender
that defines the relationship between the two, as well as the
responsibilities and obligations of each party with regard to the STLP.
Sec. 22.25 Lender Deliverables and Delivery Schedule: This section
describes the obligation of the Participating Lenders to adhere to
established deadlines for actions, such as the submission of periodic
reports and site visits.
Sec. 22.27 Eligible Reimbursements to Participating Lenders:
Section 22.27 describes the fees and expenses for which Participating
Lenders are eligible to be reimbursed.
Sec. 22.29 DOT Access to Participating Lenders' Files: Section
22.29 describes the policy that governs DOT access to Participating
Lenders' records and files.
Sec. 22.31 Suspension or Revocation of Eligibility to Participate:
This section describes the circumstances under which the STLP
eligibility of a Participating Lender may be suspended or revoked, and
the notification procedure for such an action.
Sec. 22.33 Termination of Participation in STLP: Section 22.33
explains the situations under which the cooperative agreement between
DOT OSDBU and
[[Page 19287]]
the Participating Lender may be terminated, by either party, and the
notification procedure for such action.
Sec. 22.41 Application Procedures: Describes the complete STLP
application process, the supporting documentation that must accompany
the STLP application, and the submission process of the application to
the Participating Lender.
Sec. 22.43 Approval or Denial: Section 22.43 describes what will
occur when an application is approved or denied, and the method of
notification.
Sec. 22.45 Allowable Fees to Borrowers: This section describes
those fees that a Participating Lender may collect from the borrower.
Sec. 22.51 Loan Closing: Section 22.51 discusses the process that
the Participating Lender must follow to close and execute an STLP loan
to a recipient.
Sec. 22.53 Loan Monitoring and Servicing Requirements: Section
22.53 describes what is required of the Participating Lender insofar as
the monitoring and servicing of an STLP loan.
Sec. 22.57 Loan Reporting Requirements: Section 22.57 clarifies
that the STLP loan is subject to the Federal Credit Reform Act of 1990,
and describes those reporting requirements that a Participating Lender
must undertake to keep DOT OSDBU informed of the borrower's compliance
with the terms of the STLP loan.
Sec. 22.59 Loan Modifications: Describes the procedure that the
Participating Lender must follow for any proposed modifications of the
terms of the guarantee agreement between DOT OSDBU and the
Participating Lender.
Sec. 22.61 Loan Guarantee Extensions: Section 22.61 describes the
process under which an extension of the loan guarantee may be requested
and granted.
Sec. 22.63 Loan Close Outs: Section 22.63 describes the process
for closing out an STLP loan in DOT's records that has been fully
repaid.
Sec. 22.65 Subordination: Section 22.65 describes the parameters
of a subordination of the line of credit in which the debt guarantee of
DOT OSDBU has priority over any other debt of the borrower.
Sec. 22.67 Delinquent Loans and Loan Defaults: This section
describes the notification procedure that a Participating Lender must
undertake whenever an STLP loan is delinquent. This section also
indicates the possible collection or litigation processes that are
available in the event of loan delinquency or default.
Sec. 22.69 Claim Process: Section 22.69 describes the action that
the Participating Lender may take once all means for the collection of
a delinquent debt have been exhausted.
Regulatory Analyses and Notices
A. Executive Order 12866 (Regulatory Planning and Review)
This proposed rule is not a ``significant regulatory action'' under
section 3(f) of Executive Order 12866, Regulatory Planning and Review,
and does not require an assessment of potential costs and benefits
under section 6(a)(3) of the Order, as it does not have an annual
effect on the economy of $100 million or more, nor affect the economy
adversely; does not interfere or cause a serious inconsistency with any
action or plan of another agency; does not materially alter the impact
of entitlements, grants, user fees or loan programs; and does raise
novel legal or policy issues. The rule is essentially a streamlining of
the provisions for implementing an existing program, and it will not
create additional burdens on program participants.
B. Executive Order 12372 (Intergovernmental Review)
The STLP is not subject to the provisions of Executive Order 12372,
which requires intergovernmental consultation with state and local
officials that would provide the non-Federal funds for, or that would
be directly affected by, proposed Federal financial assistance or
direct Federal development, as the STLP program facilitates the
participation of small and disadvantaged businesses in fully or
partially federally funded local and state transportation projects.
C. Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), I certify that this rule will not have a significant economic
impact on a substantial number of small entities. The rule will not
place burdens on small entities. Rather, the rule is intended to
provide benefits to small entities by providing a loan guarantee for
DBEs and SDBs who require financial assistance to perform on
transportation-related contracts.
D. Executive Order 13132 (Federalism)
A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on State or local
governments and would either preempt State law or impose a substantial
direct cost of compliance on them. We have analyzed this proposed rule
under the Order and have determined that it does not have implications
for federalism, as the loan program creates relationships and
obligations between a borrower (usually a sub-contractor), a prime
contractor, a Participating Lender and DOT/OSDBU only.
E. Paperwork Reduction Act
As required by the Paperwork Reduction Act of 1995, DOT has
submitted the Information Collection Requests (ICRs) below to the
Office of Management and Budget (OMB). Before OMB decides whether to
approve these proposed collections of information and issue a control
number, the public must be provided 30 days to comment. Organizations
and individuals desiring to submit comments on the collection of
information should direct them to the Office of Management and Budget,
Attention: Desk Officer for the Office of the Secretary of
Transportation, Office of Information and Regulatory Affairs,
Washington, DC 20503, and should also send a copy of their comments to
Department of Transportation, OSDBU, 1200 New Jersey Ave, SE.,
Washington, DC 20590. OMB is required to make a decision concerning the
collection of information requirements contained in this rule between
30 and 60 days after publication of this document in the Federal
Register. Therefore, a comment is best assured of having its full
effect if OMB receives it within 30 days of publication.
We will respond to any OMB or public comments on the information
collection requirements contained in this rule. OST OSDBU may not
impose a penalty on persons for violating information collection
requirements which do not display a current OMB control number, if
required. OST OSDBU intends to obtain current OMB control numbers for
the new information collection requirements resulting from this
rulemaking action. The OMB control number, when assigned, will be
announced by separate notice in the Federal Register.
The ICRs were previously published in the Federal Register as part
of NPRM [73 FR 49386] and the Department invited interested persons to
submit comments on any aspect of these ICRs, including: (1) Whether the
proposed collection is necessary for the OSDBU's performance; (2) the
accuracy of the estimated burdens; (3) ways for OSDBU to enhance the
quality, usefulness, and clarity of the collected information; and (4)
ways that the burden could be minimized without reducing the quality of
the collected information.
[[Page 19288]]
For each of these information collections, the title, a description
of the entity to which it applies, and an estimate of the annual
recordkeeping and periodic reporting burden are set forth below.
It is estimated that the total burden hours for 100 Participating
Lenders to qualify as such, monitor loans, comply with monthly
reporting and retain loan records to be approximately 8,000 hours per
year. It is estimated that the total burden hours for 100 borrowers to
complete the STLP application, with supporting documentation, loan
renewals and the submission of the same, to be approximately 2,700
hours.
Title: Short Term Lending Program--Participating Lenders--
Qualifying Criteria.
Background: OSDBU's Short Term Lending Program (STLP) offers
certified Disadvantaged Business Enterprises (DBEs) and other Certified
Small Businesses (8a, women-owned, small disadvantaged, HubZone,
veteran-owned, and service-disabled veteran-owned) the opportunity to
obtain short-term working capital at prime interest rates for
transportation-related projects. The STLP provides up to a 75%
guaranteed revolving line of credit for a maximum of $750,000 to
finance accounts receivable arising from transportation-related
contracts. The primary collateral consists of the proceeds of the
transportation-related contracts. These loans are provided through
banks that serve as STLP Participating Lenders (PL).
Participating Lender Qualifying Criteria
As a requirement for approval as a Participating Lender, banks must
submit documentation that demonstrates:
(A) Their philosophy and history of lending to small and
disadvantaged businesses in their communities. As part of their
submission, the bank must show these efforts in relationship to its
overall lending portfolio.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 3 hours.
Estimated Total Annual Burden Hours: 300 hours.
(B) Their experience in administering monitored lines of credit,
such as construction loans, accounts receivable financing, and/or
contract financing for at least two years. Such experience should be
held by any Participating Lender representative managing, reviewing or
authorizing STLP loan portfolios.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
(C) At least two (2) years experience with other federal government
lending programs such as U.S. Small Business Administration (SBA),
Agriculture Rural Development, Bureau of Indian Affairs (BIA), Economic
Development Administration (EDA), Department of Housing and Urban
Development (HUD), Export Import Bank of the United States and/or state
loan programs.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
(D) At least a satisfactory or better Community Reinvestment Act
(CRA) rating.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 25 hours.
(E) The ability to implement, monitor and manage a two-party payee
check system, in which the Participating Lender and borrower are joint
payees of any checks paid to the borrower for performance under the
assigned contract(s).
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 25 hours.
(F) That it is not currently debarred or suspended from
participation in a government contract or delinquent on a government
debt by submitting a current form DOT F 2309-1 Certification Regarding
Debarment, Suspension. The certification form is available at http://www.osdbu.dot.gov/financial/docs/Cert_Debarment_DOT_F_2309-1.pdf.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 25 hours.
(G) That it is a drug-free workplace by executing a current form
DOT F 2307-1 Drug-Free Workplace Act Certification for a Grantee Other
Than an Individual. The certification form is available at http://www.osdbu.dot.gov/financial/docs/Cert_Drug-Free_DOT_F_2307-1.pdf.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 25 hours.
(H) That no Federal funds will be utilized for lobbying by
executing a current form DOT F 2308-1 Certificate Regarding Lobbying
For Contracts, Grants, Loans, and Cooperative Agreements in compliance
with Section 1352, Title 21, of the U.S. Code. The certification form
is available at http://www.osdbu.dot.gov/financial/docs/Cert_Lobbying_DOT_F_2308-1.pdf.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 25 hours.
Participating Lender Record Retention
A Participating Lender must allow the authorized representatives of
OSDBU, as well as representatives of the Office of Inspector General
(OIG) and General Accountability Office (GAO), access to its STLP loan
files to review, inspect, and copy all records and documents pertaining
to OSDBU guaranteed loans. The PL shall retain all documents, files,
books, and records relevant to the execution and implementation of the
terms of its Cooperative Agreement with OSDBU for a period of not less
than three years from the date of termination of the Cooperative
Agreement or payment in full from the borrower; except in cases where
litigation, collection action, or audit is commenced. In these cases,
records and other materials shall be retained until the litigation,
collection action, or audit is judicially or administratively final.
Respondents: 100.
Frequency: Annually.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
Participating Lender Reporting Requirements
The STLP is subject to the requirements of the Federal Credit
Reform Act of 1990 (FCRA) that includes certain budgeting and
accounting requirements for Federal credit programs. The Participating
Lender must undertake processes to activate, monitor, service, and
close out STLP loans. To fulfill the requirements of FCRA, the
Participating Lender must submit regular reports and required
documentation to OSDBU on these processes.
(A) Loan Activation: The Participating Lender must submit to OSDBU
a form DOT F 2303-1 Bank Verification Loan
[[Page 19289]]
Activation Form that indicates the date in which the loan has been
activated/funded. The form is available at http://www.osdbu.dot.gov/financial/docs/Loan_Activation_DOT_F_2303-1.pdf.
Respondents: 100.
Frequency: Annually, up to five years.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
(B) Loan Close-out: The Participating Lender must submit to OSDBU a
form DOT F 2304-1 Bank Acknowledgement Loan Close-Out Form upon full
repayment of the STLP loan, or upon expiration of the loan guarantee.
The form is available at http://www.osdbu.dot.gov/financial/docs/Loan_Close-Out_DOT_F_2304-1.pdf.
Respondents: 100.
Frequency: Annually.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
(C) Monthly Reporting Requirement: The Participating Lender must
submit each month to OSDBU form DOT F 2306-1 Pending Loan Status Report
and form DOT F 2305-1 Guaranty Loan Status Report detailing the
previous month's activity for their STLP loans. These forms are
available at http://www.osdbu.dot.gov/financial/docs/Pending_Loan_DOT_F_2306-1.xls and http://www.osdbu.dot.gov/financial/docs/Guaranty_Loan_DOT_F_2305-1.xls respectively.
Respondents: 100.
Frequency: Monthly.
Estimated Average Burden per Response: 1 hour.
Estimated Total Annual Burden Hours: 1,200 hours.
(D) Call Reports or Thrift Financial Reports: Participating Lenders
shall provide two copies of their quarterly Reports of Condition and
Income (Federal Financial Institutions Examination Council--FFIEC Form
041), or quarterly Thrift Financial Reports (Office of Thrift
Supervision--OTS Form 1313) within 60 days after the close of each
calendar quarter.
Respondents: 100.
Frequency: Quarterly.
Estimated Average Burden per Response: 15 minutes.
Estimated Total Annual Burden Hours: 100 hours.
(E) Credit verification: The Participating Lender's internal credit
approval memo, credit analysis, and any other third-party credit
verifications obtained to the process the loan application must
accompany their internally-approved loan package submission to OSDBU.
Respondents: 100.
Frequency: For each loan submitted (minimum 1, approximate maximum
5).
Estimated Average Burden per Response: 12 hours.
Estimated Total Annual Burden Hours: (1,200, 6,000).
(F) Loan Guarantee Extension: The Participating lender must submit
to OSDBU a form DOT F 2310-1 to request an extension of the original
loan guarantee for a maximum period of ninety (90) days. The form is
available at http://www.osdbu.dot.gov/financial/docs/Loan_Extension_DOT_F_2310-1.pdf.
Respondents: 100.
Frequency: Annually.
Estimated Average Burden per Response: \1/2\ hour.
Estimated Total Annual Burden Hours: 50 hours.
Loan Application Process--Loan Renewal
A current STLP participant may submit a guaranteed loan renewal
application package, comprised of an updated loan application, with
supporting documentation.
(A) Updated loan application form. The application may be obtained
directly from OSDBU, from a current Participating Lender, or online
from the agency's Web site currently at http://osdbu.dot.gov/documents/pdf/stlp/stlpapp.pdf.
Respondents: 100.
Frequency: Annually, up to five years.
Estimated Average Burden per Response: 8 hours.
Estimated Total Annual Burden Hours: 800 hours.
(B) Application supporting documentation. Supporting documentation
may include, but is not limited to, the following items:
a. Current job performance reference letter (within the past 12
months);
b. Evidence of current DBE and/or other eligible certification;
c. Business tax returns for the most recent fiscal year;
d. Business financial statements for the most recent fiscal year;
e. If the business' last fiscal year has ended longer than 90 days
at the time of application, then applicant must submit interim business
financial statements to include balance sheet, P&L and updated aging
reports of both receivables and payables;
f. Current work in progress schedule or statement;
g. Personal income tax returns;
h. Personal financial statements;
i. Signed and dated copy of transportation-related contracts to be
used as collateral;
j. Updated cash flow projections;
Respondents: 100.
Frequency: Annually, up to five years.
Estimated Average Burden per Response: 4 hours.
Estimated Total Annual Burden Hours: 400 hours.
New Loan Application Process
A potential STLP participant must submit a guaranteed loan
application package, comprised of a loan application, with supporting
documentation.
(A) Completed loan application form. The application may be
obtained directly from OSDBU, from a current Participating Lender, or
online from the agency's Web site currently at http://osdbu.dot.gov/documents/pdf/stlp/stlpapp.pdf.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 2 hours.
Estimated Total Annual Burden Hours: 200 hours.
(B) New loan application supporting documentation may include, but
is not limited to, the following items:
a. Business, trade or job performance reference letters;
b. DBE or other eligible certification letters;
c. Signed and dated borrower certification that all federal, state
and local taxes are current;
d. Business tax returns;
e. Business financial statements;
f. Personal income tax returns;
g. Personal financial statements;
h. Schedule of work in progress;
i. Signed and dated copy of transportation-related contracts to be
used as collateral;
j. Business debt schedule;
k. Income and cash flow projections;
l. Evidence of bonding and insurance.
Respondents: 100.
Frequency: Once.
Estimated Average Burden per Response: 12 hours.
Estimated Total Annual Burden Hours: 1,200 hours.
(C) Loan package submission: Application packages are submitted
directly to a Participating Lender in the applicant's geographic area.
The list of Participating Lenders is available on the OSDBU Web site:
http://osdbu.dot.gov/Default.aspx?tabid=72. In the event that there is
no Participating Lender in the applicant's geographic area, the loan
application package may be sent directly to OSDBU at 400 Seventh
Street, SW., Room 9414, S-40, Attention STLP, Washington, DC 20590.
Respondents: 100.
Frequency: Once.
[[Page 19290]]
Estimated Average Burden per Response: 1 hour.
Estimated Total Annual Burden Hours: 100 hours.
Authority: The Paperwork Reduction Act of 1995; 44 U.S.C.
Chapter 35, as amended; and 49 CFR 1.48.
Issued this 25th day of March 2010, at Washington, DC.
Ray LaHood,
Secretary of Transportation.
List of Subjects in 49 CFR Part 22
Loan programs--Business and industry, Programs, Small business,
Transportation, Commerce.
0
For the reasons set forth in this preamble, the Department is adding 49
CFR part 22 as follows:
PART 22-SHORT-TERM LENDING PROGRAM (STLP)
Subpart A-General
22.1 Purpose.
22.3 Definitions.
Subpart B--Policies Applying to STLP Loans
22.11 Eligibility Criteria.
22.13 Loan terms and Conditions.
22.15 Delinquency on Federal, State, and Municipal Debt.
22.17 Compliance with Child Support Obligations.
22.19 Credit Criteria.
Subpart C--Participating Lenders
22.21 Participation Criteria.
22.23 Agreements.
22.25 Lender Deliverables and Delivery schedule.
22.27 Eligible Reimbursements to Participating Lenders.
22.29 DOT access to Participating Lender Files.
22.31 Suspension or Revocation of Eligibility to Participate.
22.33 Termination of Participation in the STLP.
Subpart D--Loan Application Process
22.41 Application Procedures.
22.43 Approvals and Denials.
22.45 Allowable Fees to Borrowers.
Subpart E--Loan Administration
22.51 Loan Closings.
22.53 Loan Monitoring & Servicing Requirements.
22.57 Loan Reporting Requirements.
22.59 Loan Modifications.
22.61 Loan Guarantee Extensions.
22.63 Loan Close Outs.
22.65 Subordination.
22.67 Delinquent Loans and Loan Defaults.
22.69 Claims Process.
Authority: 49 U.S.C. 332.
Subpart A--General
Sec. 22.1 Purpose.
The purpose of the DOT OSDBU STLP is to provide financial
assistance in the form of short-term loans from Participating Lenders
that are guaranteed by DOT OSDBU, to DBEs and SDBs for the execution of
DOT funded and supported transportation-related contracts.
Sec. 22.3 Definitions.
As used in this part:
Accounts receivable means monies that are due to the borrower for
work performed or services rendered under a contract, subcontract, or
purchase order.
Activation date means the date that the STLP loan is established on
the Participating Lender's books and recorded as an open loan. It is
also the date that the borrower can begin to drawn funds from the line
of credit. Activation date is also the date in which the DOT OSDBU
guarantee becomes effective.
Assigned contract means the transportation-related contract(s),
subcontract(s), and/or purchase order(s) that has been pledged as
collateral to a STLP loan and perfected through an assignment form
executed by all appropriate parties.
Borrower is the obligor of a DOT OSDBU guaranteed loan.
Cooperative agreement is the written agreement between DOT OSDBU
and a Participating Lender that outlines the terms and conditions under
which the lender may submit eligible loan requests to DOT OSDBU for
consideration of its loan guarantee. The cooperative agreement further
outlines the responsibilities and requirements of the lender in order
to participate in the STLP.
Director means Director, Office of Small and Disadvantaged Business
Utilization, U.S. Department of Transportation.
Disadvantaged business enterprise or DBE means a business that is
certified as such by a recipient of DOT financial assistance as
provided in 49 CFR part 23 or 49 CFR part 26.
Guarantee agreement means DOT OSDBU's written agreement with a
Participating Lender that provides the terms and conditions under which
DOT OSDBU will guarantee a STLP loan. It is not a contract to make a
direct loan to the borrower.
Loan guarantee means the agreement of DOT OSDBU to issue a
guarantee of payment of a specified portion of an approved STLP loan to
the Participating Lender, under DOT OSDBU stated terms and conditions,
in the event that the borrower defaults on the loan.
Loan purpose means the approved uses for STLP loan proceeds. That
is, only for short-term working capital needs related to the direct
costs of an eligible transportation-related contract.
Other eligible certifications mean the following certifications
obtained by a borrower through the U.S. Small Business Administration
(SBA): Small Disadvantaged Business (SDB); Section 8(a) Program
participant; HUBZONE Empowerment Contracting Program; and Service-
Disabled Veteran Program (SDV).
Participating Lender (PL) is a bank or other lending institution
that has agreed to the terms of a cooperative agreement and has been
formally accepted into the STLP by DOT OSDBU.
Small and disadvantaged business (SDB) includes 8(a); small
disadvantaged business; women-owned business, HubZone, and service-
disabled veteran-owned business.
Socially and economically disadvantaged individual has the same
meaning as stated in 49 CFR 26.5.
Technical assistance means service provided by the Participating
Lender to the DBE or SDB that will enable the DBE or SDB to become more
capable of managing its transportation-related contracts. Technical
assistance can be provided by collaborating with agencies that offer
small business management counseling such as the SBA, the U. S.
Department of Commerce's Minority Business Development Centers (MBDCs),
the Service Corps of Retired Executives (SCORE), Procurement Technical
Assistance Centers (PTACs), and Small Business Development Centers
(SBDCs).
Transportation-related contract means a contract, subcontract, or
purchase order, at any tier, for the maintenance, rehabilitation,
restructuring, improvement, or revitalization of any of the nation's
modes of transportation that receive DOT funding.
Work-out means a plan that offers options to avoid loan default or
collateral foreclosure and/or liquidation that is intended to resolve
delinquent loans or loans in imminent default, which may include, but
not limited to: deferring or forgiving principal or interest, reducing
the borrower's interest rate, extending the loan maturity and the
government guarantee to the Participating Lender, or postponing
collection action.
[[Page 19291]]
Subpart B--Policies Applying to STLP Loans
Sec. 22.11 Eligibility Criteria.
(a) Eligible Borrower. To be eligible to apply for a STLP loan
guarantee, a borrower must meet the following requirements:
(1) Be a for-profit entity;
(2) Have an eligible transportation-related contract;
(3) Demonstrate an eligible use for the desired credit;
(4) Be an established business with experience in the
transportation industry and trade for which the STLP loan is sought;
(5) Be certified as a DBE or have another eligible certification
issued by the SBA; and
(6) Be current on all federal, state, and local tax liabilities.
(b) Eligible Transportation-Related Contract. Any fully-executed
transportation-related contract, subcontract, or purchase order held
directly with DOT or with grantees and recipients receiving federal
funding from DOT for the maintenance, rehabilitation, restructuring,
improvement or revitalization of any of the nation's modes of
transportation shall be considered an eligible contract.
(c) Eligibility Period. A borrower is eligible for participation in
the STLP for a period up to a total of five (5) years. The STLP renewal
is not automatic. The borrower has to demonstrate its continued
eligibility and creditworthiness for STLP and must submit a complete
application package.
(1) The continued eligibility of any borrower who would exceed the
period limit in paragraph (c) of this section will be determined on a
case-by-case basis by the OSDBU Director and is subject to the
following provisions:
(i) The STLP loan guarantee may be reduced; and
(ii) The STLP loan interest rate may be increased.
(2) Should any borrower currently in the STLP become ineligible per
paragraph (a) of this section during the term of a STLP loan, the
failure to comply with a specific requirement must be brought to the
immediate attention of all remaining parties.
(3) Borrower ineligibility may result in a termination of the
current guarantee.
Sec. 22.13 Loan Terms and Conditions.
(a) Amount. The maximum face amount for an individual STLP loan may
not exceed seven hundred and fifty thousand ($750,000) dollars, unless
the requested increased amount is authorized by the OSDBU Director.
(b) Interest Rates. All STLP loans shall have a variable interest
rate.
(1) Initial Interest Rate. The base rate guideline for STLP loans
is the prime rate in effect on the first business day of the month in
which the STLP loan guarantee is approved by DOT OSDBU. The prime rate
is the rate printed in a national financial newspaper published each
business day. The Participating Lender may increase the base rate by
the maximum allowable percentage points currently allowed by STLP
policies and procedures and as communicated in subsequent DOT OSDBU
notices.
(2) Frequency of Change. The first change may occur on the first
calendar day of the month following the initial loan disbursement,
using the above base rate in effect on the first business day of the
month. Subsequent interest rate changes may occur no more than monthly.
(c) Loan Structure and Term. A STLP loan shall be set up as a
revolving line of credit. The line permits the borrower to request
principal advances, pay them back, and then re-borrow, not to exceed
the face value of the line of credit. Participating Lenders are
required to provide DOT OSDBU written notification of the activation
date of each line of credit under the STLP. The term of the Federal
guarantee of the line of credit commences on the activation date.
(d) Repayment. Interest payments must be made monthly. The
principal of the loan is repaid as payment from approved accounts
receivable are received by the Participating Lender through a joint
payee check system. The assigned contract supporting the STLP loan is
the primary source of repayment.
(e) Use of Loan Proceeds. STLP loans must be used to finance short-
term working capital needs, specifically direct costs generated by the
assigned contract. Proceeds may not be used for the following purposes:
(1) For long term working capital;
(2) To repay delinquent State or Federal withholding taxes, local
taxes, sales taxes or similar funds that should be held in trust or
escrow; and/or
(3) To provide funds for the distribution or payment to the owners,
partners or shareholders of the business; and/or
(4) To retire short or long-term debt.
(f) Non-compliance by the DBE in using the STLP loan for purposes
not consistent with these regulations will result in a non-renewal of
the STLP loan and in forfeiture of the STLP loan guarantee to the PL on
any ineligible principal advances requested by the borrower and made by
the PL.
(g) Disbursements. STLP funds may only be released to an eligible
borrower upon the submission and verification of a valid written
accounts receivable invoice, showing labor and/or materials amounts due
for completed work on the contract. The Participating Lender must
verify the accuracy of the invoice with the paying transportation
government agency, if the borrower is a prime contractor, and/or with
the prime contractor, if the borrower is a subcontractor. This
verification must be obtained by the Participating Lender prior to
advancing funds. No more than 85% of an approved accounts receivable
invoice shall be advanced to the borrower by the Participating Lender.
(1) Processing time. Disbursement of STLP funds to the borrower
should be accomplished within three (3) business days of an accounts
receivable invoice approval by the paying agency and/or prime
contractor.
(2) Electronic funds transfer. If the disbursement of STLP funds is
being sent to the borrower through a local Participating Lender, the
disbursement should be made by electronic funds transfer with the
preferred method of payment being the Automated Clearing House (ACH)
system.
(3) Wire transfers. Wire transfers can be used if the ACH system is
not available or if a same day disbursement is required.
(4) Joint payee check system. A two-party payee check system is
required in which the Participating Lender and the borrower will be the
co-payees of any checks paid to the borrower for performance under the
assigned contract. Alternative payment methods must have prior written
approval by DOT OSDBU.
(h) Personal Guarantees. Individuals who own at least a 20%
ownership interest in the borrower shall personally guarantee the STLP
loan. DOT OSDBU, in its discretion and in consulting with the
Participating Lender, may require other appropriate guarantees for the
loan as well.
(i) Collateral. All advances under the STLP loan must be secured,
at a minimum, by the assignment of the proceeds due under the
transportation-related contract(s) being funded with loan proceeds (the
Assigned Contract). The Participating Lender must have first lien
position on the Accounts Receivable generated by the Assigned Contract.
The Participating Lender and/or DOT OSDBU may request additional
collateral on any loan request or loan guarantee request in order to
mitigate the credit risk and reduce potential defaults and loan losses.
[[Page 19292]]
(j) Key Person Life Insurance. The assignment of existing life
insurance policies of personal guarantors or other individuals critical
to the borrower's operations may be required by the Participating
Lender and/or DOT OSDBU in certain instances; and it is encouraged for
those business applicants that do not have a management succession plan
clearly in place or where a personal guarantee provides nominal
financial strength to the credit.
Sec. 22.15 Delinquency on Federal, State, or Municipality Debt.
(a) The borrower must not be delinquent on any Federal, State, or
municipality debt, including tax debts. Further, none of the principals
and/or owners of the borrower can be delinquent on any Federal, State,
or municipality debt, including personal tax debt. The borrower must
acknowledge its status in writing as part of any STLP loan guarantee
application. Participating Lenders and the DOT OSDBU must verify the
borrower's status through the use of business and personal credit
reports, as well as other appropriate Federal and State databases.
(b) If any delinquencies are determined during the application
process, consideration of the request must be suspended until the
delinquency is satisfactorily resolved, as determined and approved by
the Director. If the delinquency cannot be resolved within a reasonable
amount of time, the loan request must be declined.
Sec. 22.17 Compliance with Child Support Obligations.
Any holder of 50% or more of the ownership interest in the
recipient of a STLP Loan must certify that he or she is not more than
60 days delinquent on any obligation to pay child support arising
under:
(a) An administrative order;
(b) A court order;
(c) A repayment agreement between the holder and a custodial
parent; or
(d) A repayment agreement between the holder and a State agency
providing child support enforcement services.
Sec. 22.19 Credit Criteria.
An applicant for a STLP loan must be creditworthy and demonstrate
an ability to repay the loan as well as satisfactory handling of the
repayment of past and current debts. The Participating Lender and DOT
OSDBU shall consider:
(a) Character, reputation, and credit history of the applicant, its
principals and owners, and all other guarantors;
(b) Experience and depth of key management in the industry;
(c) Financial strength of the business;
(d) Past earnings, projected earnings and cash flow, and work in
progress;
(e) Ability to repay the loan;
(f) Sufficient equity to operate on a sound financial basis; and
(g) Capacity to perform under the transportation-related
contract(s).
Subpart C--Participating Lenders
Sec. 22.21 Participation Criteria.
A lender who participates in the STLP must meet the following
criteria:
(a) It must operate as a lending institution certified by the
Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board,
Office of the Comptroller of the Currency, Office of Thrift
Supervision, Community Development Corporation (CDC), or Community
Development Financial Institution (CDFI), for at least five (5) years;
(b) It must demonstrate a philosophy and history of lending to
small, disadvantaged and women-owned businesses in their communities.
Information will be requested by the Director on the number of short-
term loans made to companies listed in paragraph (a)(5) of Sec. 22.11.
The Participating Lender shall submit information showing its efforts
in relationship to its overall portfolio;
(c) It must demonstrate experience in administering monitored lines
of credit, such as construction loans, accounts receivable financing,
and/or contract financing for at least two years. Such experience
should be held by any Participating Lender representative managing,
reviewing or authorizing STLP loan portfolios;
(d) It must have at least two (2) years experience with other
federal government lending programs such as U.S. Small Business
Administration (SBA), Agriculture Rural Development, Bureau of Indian
Affairs (BIA), Economic Development Administration (EDA), Department of
Housing and Urban Development (HUD), Export Import Bank of the United
States and/or state loan programs.
(e) It must have at least a satisfactory or better Community
Reinvestment Act (CRA) rating;
(f) It must designate a Participating Lender representative to
effectively administer the STLP loan portfolio;
(g) It must have the ability to evaluate, process, close, disburse,
service and liquidate STLP loans;
(h) It must demonstrate the ability to implement, monitor and
manage a two-party payee check system, in which the Participating
Lender and borrower are joint payees of any checks paid to the borrower
for performance under the assigned contract(s);
(i) It must not currently be debarred or suspended from
participation in a government contract or delinquent on a government
debt. The Participating lender must submit a current form DOT F 2309-1
Certification Regarding Debarment, Suspension. The certification form
is available at http://www.osdbu.dot.gov/financial/docs/Cert_Debarment_DOT_F_2309-1.pdf.
(j) It must be a drug-free workplace. The Participating Lender must
execute current form DOT F 2307-1 Drug-Free Workplace Act Certification
For A Grantee Other Than An Individual. The certification form is
available at http://www.osdbu.dot.gov/financial/docs/Cert_Drug-Free_DOT_F_2307-1.pdf.; and
(k) It must certify that no Federal funds will be utilized for
lobbying by executing a current form DOT F 2308-1 Certificate Regarding
Lobbying For Contracts, Grants, Loans, and Cooperative Agreements in
compliance with section 1352, title 21, of the U.S. Code. The
certification form is available at http://www.osdbu.dot.gov/financial/docs/Cert_Lobbying_DOT_F_2308-1.pdf.
Sec. 22.23 Agreements.
(a) DOT OSDBU may enter into a cooperative agreement with a lender
that meets the criteria defined in Sec. 22.21 in order for the lender
to become a Participating Lender in the STLP. Such an agreement does
not obligate DOT OSDBU to participate in any specific proposed loan
that a lender may submit. The existence of a cooperative agreement does
not limit the rights of DOT OSDBU to deny a specific loan or establish
general policies. The current cooperative agreement is available at
http://www.osdbu.dot.gov/financial/docs/Coop_Agreement.pdf.
(b) The cooperative agreement is generally for a minimum period of
twenty-four (24) months. DOT OSDBU will consider the cooperative
agreement for renewal at the end of the designated term. If a
cooperative agreement has expired, no further applications for the STLP
shall be submitted to DOT OSDBU by the Participating Lender until a new
cooperative agreement is executed by both parties.
(c) Unless instructed otherwise by DOT OSDBU, after the expiration
of the cooperative agreement, the Participating Lender will complete
the documentation of any loans which have been given final DOT OSDBU
approval prior to expiration of the cooperative agreement.
(d) Following the expiration of the cooperative agreement, the
Participating
[[Page 19293]]
Lender may, subject to the written concurrence of DOT OSDBU, sell its
STLP loans to another bank or to another Participating Lender that
assumes the original rights and responsibilities to fund, service and
collect the loan or loans.
Sec. 22.25 Lender Deliverables and Delivery Schedule.
All Participating Lenders must adhere to certain required periodic
reports, submissions, and other actions that are outlined in the
cooperative agreement and the loan guarantee agreements, as well as to
the required due dates to DOT OSDBU.
Sec. 22.27 Eligible Reimbursements to Participating Lenders.
Participating Lenders will be reimbursed by DOT OSDBU for
reasonable expenses and costs that are incurred in the processing,
administration, and monitoring of a STLP loan. The Participating Lender
will be reimbursed as follows:
(a) Processing/Underwriting Fee. A fee, as specified in the
cooperative agreement will be reimbursed by DOT OSDBU, with a minimum
fee of not less than one thousand ($1,000), per approved STLP loan
guarantee, provided that DOT OSDBU receives proper notification of the
activation date of the STLP loan.
(b) Additional Administrative Fee: For total loan amounts of
$150,000.00 or less, the Participating Lender can request an additional
one-half (\1/2\) percent administrative fee for the increased loan
monitoring and administrative assistance required to process the loan.
The request must be supported with the information specified in the
cooperative agreement.
(c) Travel Expenses. For any pre-approved travel expenses, the
Participating Lender will be reimbursed for certain costs, provided
that paragraphs (c)(1) and (2) of this section are met:
(1) A written request for travel, along with a statement of the
purpose of the travel and proposed cost estimate, is submitted for DOT
OSDBU for its approval no less than ten (10) business days prior to
travel; and
(2) A travel invoice accompanied by a written report explaining the
findings of the travel is submitted to DOT OSDBU no later than thirty
(30) days following the approved travel. Payment or reimbursement for
travel shall be in accordance with the Joint Travel Regulations,
Federal Travel Regulations and DOD FAR 31.205.46.
(d) Attorney Fees. Legal fees incurred by the PL may be eligible
for reimbursement. Prior written approval from DOT OSDBU is required.
Attorney fees will be reimbursed on a pro-rata basis in proportion to
the percentage of the government loan guarantee in relation to the
total loan amount.
Sec. 22.29 DOT Access to Participating Lenders Files.
A Participating Lender must allow the authorized representatives of
DOT OSDBU, as well as representatives of the Office of Inspector
General (OIG) and General Accountability Office (GAO), access to its
STLP loan files to review, inspect, and copy all records and documents
pertaining to DOT OSDBU guaranteed loans. Record retention of all
relevant documents and other materials is specified in the cooperative
agreement between DOT OSDBU and the Participating Lender.
Sec. 22.31 Suspension or Revocation of Eligibility to Participate.
(a) DOT OSDBU may suspend or revoke the eligibility of a
Participating Lender to participate in the STLP by giving written
notice in accordance with the terms and conditions cited in the
cooperative agreement. Such notice may be given because of a violation
of DOT OSDBU regulations; a breach of any agreement with DOT OSDBU; a
change of circumstance resulting in the Participating Lender's
inability to meet operational requirements; or a failure to engage in
prudent lending practices. A suspension or revocation will not
invalidate a loan guarantee previously approved by DOT OSDBU, providing
that the specific loan was handled in accordance with its guarantee
agreement, the cooperative agreement and/or these regulations.
(b) The written notice to suspend or revoke participation in the
STLP will specify the corrective actions that the Participating Lender
must take, as well as the time period allowed for cure, prior to DOT
OSDBU considering a termination of the cooperative agreement.
Sec. 22.33 Termination of Participation in the STLP.
(a) DOT OSDBU Termination for Convenience. DOT OSDBU may terminate
a cooperative agreement for the convenience of the government, and
without cause, upon prior written notice of thirty (30) days of its
intent to terminate. Upon termination, DOT OSDBU shall remain liable on
the pro-rata share of the loan guarantee(s) received by the PL which
received the Director's final approval, prior to the effective date of
termination.
(b) Participating Lender's Termination. The Participating Lender
may terminate a cooperative agreement with written notice of sixty (60)
days to DOT OSDBU of its intent to terminate. Upon termination, DOT
OSDBU shall remain liable on the pro-rata share of the loan
guarantee(s) received by the Participating Lender which received the
Director's final approval, prior to the effective date of termination
of the cooperative agreement.
(c) DOT OSDBU Termination for Cause. DOT OSDBU may terminate a
cooperative agreement, in whole or in part, at any time before the
expiration of the term of the cooperative agreement or the expiration
of any renewal term of the cooperative agreement, and without allowing
any cure period as described in this section, if it determines that the
Participating Lender failed to comply with any terms and conditions of
its cooperative agreement and such failure cannot be reasonably
addressed. DOT OSDBU shall promptly notify the Participating Lender in
writing of this determination and the reasons for the termination,
together with the effective date of termination.
(d) DOT OSDBU may also terminate for cause any cooperative
agreement with a Participating Lender that fails to comply with the
corrective actions requested in a written notice of suspension of
revocation within the specified cure period, in accordance with the
terms and conditions further described in the cooperative agreement.
Subpart D--Loan Application Process
Sec. 22.41 Application Procedures.
(a) A STLP loan guarantee request application package shall consist
of the DOT OSDBU Application for Loan Guarantee and supporting
documentation as outlined below at paragraph (b) of this section. The
application may be obtained directly from the office of DOT OSDBU, from
a current Participating Lender, or online from the agency's Web site,
currently at http://osdbu.dot.gov/documents/pdf/stlp/stlpapp.pdf.
(b) Supporting documentation may include, but is not limited to,
the following items: Business, trade or job performance reference
letters; current DBE or SDB eligibility certification letters and/or
affidavit; signed and dated borrower certification that all federal,
state and local taxes are current; business tax returns; business
financial statements; personal income tax returns; personal financial
statements; schedule of work in progress; signed and dated copy of
transportation-related contracts; business debt schedule; income and
cash flow projections; and evidence of bonding and insurance. It also
includes,
[[Page 19294]]
from the Participating Lender, the lender's internal credit approval
memo and analysis and other third-party credit verifications obtained.
(c) Application packages are submitted directly to a Participating
Lender, which will perform its own credit review. The Participating
Lender must initially approve or decline the loan based upon its
internal analysis of the request. Loans approved by the Participating
Lender are then forwarded to DOT OSDBU for its STLP eligibility review,
independent credit review, and for presentation to the DOT OSDBU Loan
Committee. All loan approvals shall require the final approval of the
Director, or the Director's designee, for the issuance of a Government
Loan Guarantee.
Sec. 22.43 Approval or Denial.
If a loan guarantee is approved by DOT OSDBU, a Guarantee
Agreement, form DOT F 2314-1, will be issued to the Participating
Lender. If a loan guarantee is declined by the Participating Lender,
the Participating Lender is responsible for communicating the reasons
for the decline to the applicant. The Participating Lender must notify
the applicant, in writing, of the reasons for the decline; and a copy
of this notification must be sent to DOT OSDBU. If a loan guarantee is
declined by the DOT OSDBU, DOT OSDBU will be responsible for
communicating the reasons for the decline to the applicant. The form is
available at http://www.osdbu.dot.gov/financial/docs/Loan_Guarantee_DOT_F_2314-1.pdf.
Sec. 22.45 Allowable Fees to Borrowers.
(a) Application Fees. The Participating Lender may charge the
applicant a non-refundable loan application fee, as determined from
time to time by DOT OSDBU, for each STLP loan application processed,
whether a new loan request or a renewal request.
(b) Reasonable Closing Expenses. Provided the Participating Lender
charges similar fees to its non-STLP borrowers, the Participating
Lender may collect reasonable closing expenses from the borrower,
provided that full disclosure of such fees is made to the borrower
prior to the loan closing date. These expenses include necessary out-
of-pocket expenses to third parties such as filing and recordation
fees, as well as loan closing document preparation fees.
Subpart E-Loan Administration
Sec. 22.51 Loan closings.
(a) The Participating Lender must promptly close all STLP loans in
accordance with the terms and conditions approved by DOT OSDBU in its
Guarantee Agreement. The Participating Lender must report circumstances
concerning any STLP loans not closed within a reasonable time period
after DOT OSDBU approval.
(b) The Participating Lender uses its own internal loan closing
documents and must use standard banking practices and procedures to
ensure proper execution of the debt and perfection of the collateral.
The Participating Lender must forward copies of all executed closing
documents and filings to DOT OSDBU within the time period specified in
the cooperative agreement.
Sec. 22.53 Loan Monitoring and Servicing Requirements.
The Participating Lender must review STLP principal advance
requests, process loan disbursements, and payments, and maintain
contact with the borrower during the term of the loan. The
Participating Lender must monitor the progress of the project being
financed and the borrower's continued compliance with the terms and
conditions of the loan. The Participating Lender must promptly report
any material adverse change in the financial condition or business
operations of the borrower to DOT OSDBU.
Sec. 22.57 Loan Reporting Requirements.
The STLP is subject to the requirements of the Federal Credit
Reform Act of 1990 (FCRA) that includes certain budgeting and
accounting requirements for Federal credit programs. To fulfill the
requirements of FCRA, the Participating Lender must provide DOT OSDBU
prompt written notification of the activation date by the time period
specified in the cooperative agreement. The Participating Lender must
submit to OSDBU a form DOT F 2303-1 Bank Verification Loan Activation
Form that indicates the date in which the loan has been activated/
funded. The form is available at http://www.osdbu.dot.gov/financial/docs/Loan_Activation_DOT_F_2303-1.pdf. The Participating Lender
must also provide DOT OSDBU prompt written notification of the date the
loan is repaid and closed. The Participating Lender must submit to
OSDBU a form DOT F 2304-1 Bank Acknowledgement Loan Close-Out Form upon
full repayment of the STLP loan, or upon expiration of the loan
guarantee. The form is available at http://www.osdbu.dot.gov/financial/docs/Loan_Close-Out_DOT_F_2304-1.pdf. To fulfill this requirement,
the Participating Lender must also submit a monthly report to the DOT
OSDBU detailing the previous month's activity for their STLP loans. The
Participating Lender must submit form DOT F 2306-1 Pending Loan Status
Report and form DOT F 2305-1 Guaranty Loan Status Report. These forms
are available at http://www.osdbu.dot.gov/financial/docs/Pending_Loan_DOT_F_2306-1.xls and http://www.osdbu.dot.gov/financial/docs/Guaranty_Loan_DOT_F_2305-1.xls respectively.
Sec. 22.59 Loan Modifications.
Any modification to the terms of the DOT OSDBU guarantee agreement
must have prior written approval of the Director, and executed in
writing as an Addendum to the original guarantee agreement.
Sec. 22.61 Loan Guarantee Extensions.
An extension of the original loan guarantee may be requested, in
writing, by the Participating Lender. The Participating lender must
submit to OSDBU a form DOT F 2310-1 to request an extension of the
original loan guarantee for a maximum period of ninety (90) days. The
form is available at http://www.osdbu.dot.gov/financial/docs/Loan_Extension_DOT_F_2310-1.pdf. The request must comply with the terms
and conditions described in the guarantee agreement and with the STLP
policies and procedures. All extension requests must be approved by the
Director.
Sec. 22.63 Loan Close Outs.
Upon full repayment of the STLP loan, or upon expiration of the
loan guarantee, the Participating Lender must submit to OSDBU a form
DOT F 2304-1 Bank Acknowledgement Loan Close-Out Form. The form is
available at http://www.osdbu.dot.gov/financial/docs/Loan_Close-Out_DOT_F_2304-1.pdf.
Sec. 22.65 Subordination.
DOT OSDBU must not be placed in a subordinate position to any other
debt.
Sec. 22.67 Delinquent Loans and Loan Defaults.
(a) The Participating Lender must bring to the immediate attention
of the Director any delinquent STLP loans. The Participating Lender and
DOT OSDBU are jointly responsible for establishing collection
procedures and must exercise due diligence with respect to collection
of delinquent debt. The Participating Lender is responsible for
initiating actions to recover such debt. DOT OSDBU must approve any
compromise of a claim, resolution of a dispute, suspension or
termination of
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collection action, or referral for litigation. A work-out solution will
only be considered if it is expected to minimize the cost to the
federal government in resolving repayment delinquencies and/or loan
default. They must only be used when the borrower is likely to be able
to repay the loan under the terms of the work-out, and if the cost of
establishing the work-out plan is less than the costs of loan default
and/or foreclosure.
(b) In an appropriate situation, DOT OSDBU may authorize the
Participating Lender to undertake legal action deemed necessary to
collect delinquent loans and DOT will reimburse the Participating
Lender on a pro rata basis in proportion to the loan guarantee
percentage for the associated fees and costs, with prior authorization
from the Director. Penalties and late fees are not eligible for
reimbursement. Any legal action undertaken by the Participating Lender
without OSDBU authorization will not be eligible for a pro rata basis
reimbursement of the associated fees and costs. Net recoveries
applicable to accrued interest must be applied on a pro rata basis in
proportion to the formula used during the term of the loan.
Sec. 22.69 Claim Process.
After reasonable efforts have been exhausted to collect on a
delinquent debt, the Participating Lender may demand in writing that
DOT OSDBU honor its loan guarantee, provided however that the maximum
liability of DOT OSDBU shall not at any time exceed the guaranteed
amount. The borrower must be in default for no less than thirty (30)
days, and the Participating Lender must have made written demand for
payment from the borrower, in accordance with the guarantee agreement.
[FR Doc. 2010-7622 Filed 4-13-10; 8:45 am]
BILLING CODE 4910-9X-P