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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: March 31, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration; Liquidation of Collateral and Sale of Disaster Assistance Loans

SOURCE: Federal Register, March 31, 2000, Vol. 65, No. 63, page 17132

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is amending its regulations regarding the liquidation and sale of Disaster Assistance Loans to comply with a governmentwide Office of Management and Budget (OMB) initiative which directs federal credit agencies to sell their loan portfolios. This follows the August 13, 1999, amendment of SBA's regulations which permitted the sale of direct and purchased loans made under the authorities of the 7(a) and 501, 502, 503, and 504 programs.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations. The SBA regulations that are affected by this final rule are under "Chapter 1, Small Business Administration," "Part 120, Business Loans," "Subpart E. Loan Administration," "Liquidation of Collateral," then "Section 120.540, What are SBA's policies concerning the liquidation of collateral and the sale of business loans and physical disaster assistance loans, physical disaster business loans and economic injury disaster loans?").

For more on the proposed rule, see the January 10, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Liquidation of Collateral and Sale of Disaster Assistance Loans".

EFFECTIVE DATE: May 1, 2000.

FOR FURTHER INFORMATION CONTACT: Richard Blewett, 202-205-4202.

SUPPLEMENTAL INFORMATION: Section 120.540 of SBA's regulations establishes SBA's policy for the liquidation of collateral and the sale of commercial loans. To comply with OMB's direction to sell loan portfolios, and in accordance with the statutory authority provided by the Debt Collection Improvement Act of 1996 (Public Law 104-134) and the Small Business Act, SBA amended Section 120.540 on August 13, 1999, to established an asset sales program to sell portions of its direct and participation loan portfolios that were made under the authorities of the 7(a) and 501, 502, 503, and 504 programs. On January 10, 2000, SBA proposed to further expand Section 120.540 to include the sale of Disaster Assistance Loans in asset sales. Since no comments were received, SBA is amending its regulations as proposed.

This final rule revises the first sentence of Section 120.540(b)(4) from "Sell direct and purchased 7(a) and 501, 502, 503 and 504 loans in asset sales," to "Sell direct and purchased 7(a) and 501, 502, 503 and 504 loans and physical disaster home loans, physical disaster business loans and economic injury disaster loans in asset sales."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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