(d) The term of a loan made pursuant to this section shall not exceed thirty (30) years.

(e) Repayment ability shall be determined by SBA. Maturity and installment terms shall be established on each loan on the basis of the borrower's ability to pay. In most cases, equal monthly installment payments of principal and interest, beginning five (5) months from the date of the note, are required, but other payment terms may be accorded borrowers with seasonal or fluctuating income, and installment payments of varying amounts over the first two (2) years of the loan may be agreed upon if SBA determines that such schedule better reflects the borrower's ability to pay. There is no penalty for prepayment of a direct loan.

(f) SBA will require such collateral as is available for any economic injury loan made pursuant to this subpart which exceeds five thousand dollars ($5,000). When SBA requires an applicant to pledge available collateral in accordance with this section, the applicant's refusal to pledge such collateral may justify the decline of a loan. Generally, SBA will not decline a loan where the applicant does not have any fixed amount of collateral available to pledge if there is reasonable assurance of repayment.

§123.65 Applications for loans.

(a) To receive a loan pursuant to this section, a small business concern shall submit an application to the SBA Disaster Area Office which serves the area where the small business concern is located. The application form and procedures are as set forth in §123.7 of this part.

(b) The application filing period for small business concerns seeking a loan will begin 30 days from the effective date of this regulation. Applications will not be available, nor will they be accepted, prior to that date. The filing period ends 180 days after the application filling period commences. Applications cannot be accepted after the 180day filing period.

(c) The provisions of § 123.12, concerning reconsideration, apply to all loans made pursuant to this subpart. However, any request for reconsideration

submitted in accordance with §123.12(b) must be received by SBA within 30 days of the initial decline. Further, in no event may SBA obligate funds pursuant to this subpart for a loan after the 270-day period has expired. Thus, any application for a loan under this subpart which is not funded at the expiration of the 270-day period, no matter what the circumstances or reasons, cannot and will not be approved.

§ 123.66 Expiration of authority.

The authority of the Administrator of the Small Business Administration to obligate funds for loans pursuant to this subpart shall expire after a 270-day period beginning on the date the application filing period commences (see § 123.65(b)).

§123.67 Relationship to SBA disaster loan program.

This program will be administered in a manner similar to the Economic Injury Disaster Loan Program (15 U.S.C. 7(b)) and the regulations promulgated thereunder.

§123.68 Funding.

Public Law 102-190 provides that the source of funding for this program is funds appropriated to the Department of Defense in Public Law 101-511, if and to the extent such funding is available.

§ 123.69 Other requirements.

For explanation of regulations, see §123.1; for fees and charges, see §123.6(a); for loan authorization and closing requirements, see §123.8; for loan administration, extension, and liquidation, see §§ 123.13(a) and (b); for civil rights requirements, see § 123.15(a); for books and records requirements, see §123.18; and for use of proceeds, see § 123.41(g).

PART 124-MINORITY SMALL BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS PROTEST AND APPEAL PROCEDURES

Subpart A-Minority Small Business and Capital Ownership Developmen

plan.

124.303 Stages of 8(a) program participation. 124.304 Statutory exemption from the Walsh-Healey Act.

124.305 Statutory exemption from Miller Act bonds.

124.306 Financial assistance for skills training.

124.307 Contractual assistance. 124.308 Procedures for obtaining and accepting procurements for the 8(a) program. 124.309 Barriers to acceptance.

124.310 Approval of lower tier subcontractors.

124.311 8(a) competition.

124.312 Competitive business mix.

124.313 Certification of SBA's competency. 124.314 Performance of work by the 8(a) concern.

124.602 General definitions.

124.603 Who may protest the disadvantaged status of a concern.

124.604 Who makes disadvantaged status determinations.

124.605 Protest procedures. 124.606 Grounds of protest.

124.607 Form and specificity of protest. 124.608 Notification of protest.

124.609 Making the disadvantaged status determination.

124.610 Appeals of disadvantaged status determinations.

AUTHORITY: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub. L. 99-661, sec. 1207, Pub. L. 100-656, and Pub. L. 101-37.

Subpart A-Minority Small Business and Capital Ownership Development

SOURCE: 54 FR 34712, Aug. 21, 1989, unless otherwise noted.

§ 124.1 Scope of regulations.

(a) General. (1) These regulations implement sections 8(a) and 7(j) of the Small Business Act, as amended by the Business Opportunity Development Reform Act of 1988, and Business Opportunity Development Reform Act Technical Corrections Act, (15 U.S.C. 637(a) and 636(j), as amended by Pub. L. 100656 and Pub. L. 101-37.). Sections 8(a) and 7(j) of the Small Business Act establish the Minority Small Business and Capital Ownership Development Program or 8(a) Program. The 8(a) Program is intended to be used exclusively for business development purposes to help small businesses owned and controlled by socially and economically

disadvantaged individuals, economically disadvantaged Indian tribes, including Alaska Native Corporations, and economically Native Hawaiian Organizations to compete on an equal basis in the mainstream of the American economy.

(2)(i) Except as set forth in paragraphs (a)(2)(ii) and (iii) of this section and §124.311(b) of this title, these regulations apply to all business concerns that are 8(a) Program Participants, or have 8(a) Program applications in process as of the effective date of the regulations. As noted, portions of these regulations also apply to other Federal programs for which social and economic disadvantaged status is a requirement of program eligibility. Such programs include, among others, the Small Disadvantaged Business (SDB) Set-aside and Bid Preference Programs authorized by section 1207(a) of Pub. L. 99-661, and the Minority Small Business Subcontracting Program authorized by section 8(d) of the Small Business Act (15 U.S.C. 637(d)).

(ii) Applications in process as of the effective date of these regulations, including applications that have been declined but have not received final determinations on requests for reconsideration, will not be subject to the new provisions of §124.107(a) regarding length of time in business or the new provisions of §124.109(b) which make franchises ineligible for 8(a) program participation. Such applicants will be subject to Agency policy requirements regarding potential for success and ineligible businesses which were in effect on the date of application.

(iii) Procedures described in §124.210 relating to appeal of SBA's decline of an application are effective as to applications which are declined, after reconsideration, by the Associate Administrator for Minority Small Business and Capital Ownership Development on or after the effective date of these regulations. Procedures described in §§ 124.208, 124.209, 124.211, relating to Program graduation, Program termination and Program suspension shall apply to concerns which SBA seeks to graduate, terminate or suspend but to which, as of the effective date of these regulations, an Order to Show Cause has not been issued pursuant to 13 CFR

124.110(k), 124.112 and 124.113 of SBA's rules which were in effect on July 31, 1989. Proceedings relating to any concern to which SBA has issued an Order to Show Cause prior to the effective date of these regulations shall be governed by 13 CFR part 124 and part 134 as it existed on the date of the issuance of the Order to Show Cause.

(b) The 8(a) and 7(j) programs. (1) Section 8(a) authorizes SBA to enter into all types of contracts, including, but not limited to, contracts for supplies, services, construction, research and development with other Government departments and agencies and to subcontract the performance of these contracts to small business concerns owned and controlled by socially and economically disadvantaged individuals, Indian tribes or Hawaiian Native Organizations.

(2) Section 7(j) authorizes SBA to provide financial assistance to public or private organizations to pay all or part of the cost of projects designed to provide technical or management assistance to individuals or small business concerns eligible for assistance under sections 7(1), 7(j)(10), and 8(a) of the Small Business Act.

[54 FR 34712, Aug. 21, 1989, as amended at 55 FR 34902, Aug. 27, 1990]

$124.2 Associate Administrator for Minority Small Business and Capital Ownership Development.

The Associate Administrator for Minority Small Business and Capital Ownership Development (AA/ MSB&COD), who shall be an employee in the competitive service or in the Senior Executive Service, and a career appointee, is responsible for the formulation and execution of the policies and programs under sections 7(j) and 8(a) of the Small Business Act. The AA/ MSB&COD operates under the ultimate supervision of, and is generally responsible to, the Administrator of SBA.

§ 124.3 Division of Program Certification and Eligibility.

The Division of Program Certification and Eligibility (Division) within the Office of Minority Small Business and Capital Ownership Development (MSB&COD) shall be responsible for handling all matters relating to 8(a)

program eligibility, termination and graduation from 8(a) program participation, and certifications of disadvantaged status for purposes of any program or activity conducted under the authority of section 8(d) of the Small Business Act or any Federal law that references such section. The Division, headed by a Director who shall report directly to the AA/MSB&COD, shall have field offices within some or all of the Agency's regional offices.

§ 124.4 Commission on Minority Business Development.

A Commission on Minority Business Development (Commission) shall be established pursuant to section 505 of the Business Opportunity Development Reform Act of 1988 (Pub. L. 100-656). This Commission is authorized to review all Federal programs designed to promote the development of minority-owned businesses in order to ascertain whether the congressionally described goals and purposes of such programs are being realized.

§ 124.5 Violations.

Willful violation by an applicant for admission to the section 8(a) program or an applicant for participation in the section 7(j) program or any of SBA's regulations governing these or its other programs may result in the applicant's denial of admission to the program. The nature and severity of any such violation will be considered by the AA/MSB&COD in making a determination on the admission of an applicant to the program.

$124.6 Penalties for misrepresentations and false statements.

(a) General. Section 16 of the Small Business Act (15 U.S.C. 645) sets forth penalties for false statements and misrepresentations.

(b) Misrepresentation of small business or small disadvantaged business status. The Business Opportunity Develop ment Reform Act of 1988 (Pub. L. 100656) increased the penalties for intentional misrepresentation of small business status or small disadvantaged business status. Generally, section 16(d) of the Small Business Act provides that a person or entity that intention esents the status of

any concern or person as a "small business concern" or "small business concern owned and controlled by socially and economically disadvantaged individuals" in order to obtain for him/herself or another any of the contracting opportunities set forth in paragraph (b)(1) of this section will be subject to the penalties set forth in paragraph (b)(2) of this section. The following contracting opportunities are subject to penalties for misrepresentation described in this section:

(1)(i) A prime contract to be awarded pursuant to section 9 (Small Business Innovation Research Program authority) or section 15 (various small business set-aside authorities) of the Small Business Act;

(ii) A subcontract to be awarded pursuant to section 8(a) of the Small Business Act;

(iii) A subcontract that is to be included as part or all of a goal contained in a subcontracting plan required pursuant to section 8(d) of the Small Business Act; or

(iv) A prime or subcontract to be awarded as a result, or in furtherance, of any other provision of Federal law that specifically references section 8(d) of the Small Business Act for a definition of program eligibility.

(2) The following penalties apply for violations of this section:

(i) A fine of not more than $500,000 or by imprisonment for not more than 10 years, or both;

(ii) The administrative remedies prescribed by the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 38013812) and implementing regulations in part 142 of this chapter;

(iii) Suspension and debarment as specified in 13 CFR part 145 of subpart 9.4 of the Federal Acquisition Regulation (FAR) (48 CFR subpart 9.4), or any successor regulation, on the basis that such misrepresentation indicates a lack of business integrity that seriously and directly affects the present responsibility of a person or entity to transact business wtih the Federal government; and

(iv) Ineligibility for participation in any program or activity conducted under the authority of the Small Business Act or the Small Business Invest

ment Act of 1958 (15 U.S.C. 661, et seq.) for a period not to exceed 3 years.

(c) Misrepresentation concerning compliance with competitive mix targets. Section 16(f) of the Small Business Act, as amended by Public Law 100-656, imposes the penalties set forth in paragraph (b)(2) of this section on any person or entity that falsely certifies past compliance with the requirements of section 7(j)(10)(I) of the Small Business Act which deals with competitive business mix and attainment of business activity targets (see §124.312).

$124.7 Restrictions on fees for applicant and Participant representatives.

(a) General. The compensation received by any agent or representative of an 8(a) applicant or Program Participant for assisting the applicant in obtaining 8(a) certification or for assisting the Program Participant in obtaining 8(a) contracts must be reasonable in light of the service(s) performed by the agent or representative.

(b) Contingent fees. (1) The fee charged by any agent or representative of an 8(a) applicant for assisting the applicant in obtaining 8(a) certification cannot be contingent upon the applicant/ Participant receiving 8(a) certification.

(2) Payment of a contingent fee for assisting a Program Participant in obtaining any 8(a) contract is generally prohibited as contrary to public policy, but is permitted if the payment is made by a Program Participant to a "bona fide employee" or a "bona fide agency," as defined by the FAR, 48 CFR subpart 3.4, and § 124.100.

[54 FR 34712, Aug. 21, 1989, as amended at 55 FR 34902, Aug. 27, 1990]

$124.100 Definitions.

Alaska Native means a citizen of the United States who is a person of onefourth degree or more Alaskan Indian (including Tsimshian Indians not enrolled in the Metlaktla Indian Community), Eskimo, or Aleut blood, or a combination thereof. The term includes, in the absence of proof of a minimum blood quantum, any citizen who is regarded as an Alaska Native by a Native village or Native group and whose father or mother is regarded as an Alaska Native.

Alaska Native Corporation means any Regional Corporation, Village Corporation, Urban Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act, as amended (43 U.S.C. 1601, et seq.)

Application or 8(a) application means all forms and attachments required by SBA to be completed by an applicant for the 8(a) program for the purpose of establishing program eligibility.

Bona fide agency means an established commercial or selling agency, maintained by a contractor (or subcontractor where SBA is the contractor) for the purpose of securing business that neither exerts nor proposes to exert improper influence to solicit or obtain government contracts nor holds itself out as being able to obtain any government contract or contracts through improper influence.

Bona fide employee, means a person, who is employed by a contractor (or subcontractor where SBA is the contractor) and subject to the contractor's, (or where SBA is the contractor, the subcontractor's) supervision; control as to time, place, and manner of performance; and who neither exerts nor proposes to exert improper influence to solicit or obtain government contracts nor holds himself/herself out as being able to obtain any government contract or contracts through improper influence.

Business Opportunity Specialist (BOS) means the SBA field office employee responsible for providing business development assistance to Program Participants pursuant to sections 7(j) and 8(a) of the Small Business Act (15 U.S.C. 636(j) 637(a)).

Business plan means the business plan documents as submitted by the 8(a) concern and approved in writing by SBA which include the objectives, goals, and business projections of an 8(a) concern, and all written amendments or modifications which have also been approved in writing by SBA.

Certification of SBA's competency means a certification by SBA, based on its assessment of an 8(a) concern's competency to perform, that SBA is competent to perform the requirements as stated in the contrac ment does not reming i

apag