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CHAPTER SMALL BUSINESS ADMINISTRATION

SUBCHAPTER A

GENERAL

Part 101 102 103 104

Administration.
Disclosure of information.
Appearances and compensation of persons appearing before SBA.
Proceedings to suspend or revoke the privilege of any agent to appear before

SBA.
Standards of conduct.

105

SUBCHAPTER B-REGULATIONS UNDER SMALL BUSINESS INVESTMENT

ACT

107 108 109 110 111 112

Small business investment companies.
Loans to State and local development companies.
Adjudicative proceedings; small business investment companies.
Investigations; small business investment companies.
System of account classifications for small business investment companies.
Nondiscrimination in Federally assisted program of SBA-effectuation of

Title VI of the Civil Rights Act of 1964.
Nondiscrimination in financial assistance programs of SBA-effectuation of

policies of Loan Policy Board.

113

SUBCHAPTER C-REGULATIONS UNDER SMALL BUSINESS ACT

120 121

122

123 124 125 126 127 128

Loan policy.
Small business size standards.
Business loans.
Disaster loans.
Procurement and technical assistance.
Research and development assistance.
Defense production pools.
Joint set-asides.
Grants for small business research.

ABBREVIATIONS USED IN THIS CHAPTER:

SBA=Small Business Administration.
SBID=The Small Business Investment Division of SBA.

RFC=Reconstruction Finance Corporation.
CROSS REFERENCE: For regulations of the Securities and Exchange Commission, see 17 CFR,
Chapter II.

SUBCHAPTER A GENERAL

PART 101-ADMINISTRATION construction, conversion, or expansion,

or to finance the acquisition of equipSec.

ment, facilities, machinery, supplies, or 101.1 Purpose, function, general organization.

materials, and to supply such concerns 101.2 Organization of the Washington Of

with working capital; make loans to aid fice-Administrator.

victims of floods or other catastrophes 101.2-1 Office of Economic Adviser.

and displaced business disaster loans; 101.2-2 Office of the General Counsel.

certify with respect to the competency, 101.2-3 Deputy Administrator for Financial

as to capacity and credit, of any small Assistance.

business concern or group of such con101.2–4 Deputy Administrator for Procurement and Technical Assistance.

cerns to perform a specific Government 101.2–5 Deputy Administrator for the In

contract; enter into joint determinations vestment Division.

with Government procurement and dis101.2–6 Deputy Administrator for Manage- posal agencies with respect to awarding

ment and Research Assistance. of procurement contracts or sale of prop101.2–7 Assistant Administrator (Manage

erty to assure that it is in the interest ment).

of (1) maintaining or mobilizing the Na101.2-8 Assistant Administrator (Controller).

tion's full productive capacity, (2) na101.2–9 Assistant Administrator (Informa

tional defense programs and (3) insuring tion Services).

a fair proportion of the total contracts 101.3 Field Offices.

for property and service and total sales 101.5 Statutory provisions.

of property be made to small businesses; 101.5-1 Seal.

consult with procurement officials in or101.5—2 Litigation.

der to attain full use of productive capac101.5-3 Employment of fee counsel. 101.5-4 Miscellaneous.

ity of small business concerns; recom

mend approval of small business defense AUTHORITY: The provisions of this part 101 production pools and research and deissued under sec. 3, 60 Stat. 238, 72 Stat.

velopment pools; take prime contracts 384, as amended, 72 Stat. 689, as amended;

and sublet their performance to small 5 U.S.C. 1002, 15 U.S.C. 631 note, 661 note.

businesses; provide technical and man$ 101.1 Purpose, function, general or- agerial aids to small business; make an ganization.

inventory of productive facilities of

small concerns; to obtain information (a) Purpose. To aid, counsel, assist,

as to methods and practices which Govand protect, insofar as possible, the in

ernment prime contractors utilize in leta terest of small business concerns in order

ting subcontracts and cooperatively de to preserve free competitive enterprise;

velop with the Department of Defense to insure that a fair proportion of the

and the General Services Administration total purchases and contracts or subcon

a small business subcontracting program tracts for property and services for the

to enable small business concerns to be Government be placed with small busi

considered fairly as subcontractors to ness enterprises; to insure that a fair

Government prime contractors; consult proportion of the total sales of Govern

with Government agencies to insure fair ment property be made to such enter

and reasonable treatment for small busiprises; and to maintain and strengthen

ness concerns; counsel and advise small the overall economy of the Nation. 'TO

firms on foreign trade matters; assist aid and assist victims of floods, other

small firms in obtaining Government catastrophes, and small business con

contracts for research and development cerns displaced by federally aided con

and obtaining the benefits of research struction. To stimulate and supplement

and development performed with Govthe flow of private equity capital and

ernment funds; make grants to State long-term loans to small business by small business investment companies and

governments, State-chartered corporastate and local development companies.

tions, colleges, universities and schools (b) Functions. To make a detailed

of business, engineering, commerce, or definition of what constitutes a small

agriculture for studies, research and business concern using, among other

counseling concerning the managing, ficriteria, number of employees and dol

nancing and operation of small busilar volume of business; make loans to nesses; license and regulate small small business concerns to finance plant business investment companies; and

make loans to small business investment companies and state and local development companies, and under authority delegated by the Secretary of Commerce, perform relevant functions provided for in the Area Redevelopment Act.

(c) Organization. (1) Management of the Small Business Administration is vested in an Administrator appointed by the President with the advice and consent of the Senate. The Administrator is authorized to appoint three Deputy Administrators under the Small Business Act and one Deputy Administrator under the Small Business Investment Act. The Administrator is authorized, subject to the Civil Service and Classification Laws, to select employees, appoint and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary to carry out the provisions of the Small Business Act of 1958 and the Small Business Investment Act of 1958.

(2) The Small Business Act of 1958 created the Loan Policy Board of the Small Business Administration which consists of the following members:

(i) The Administrator as chairman, the Secretary of the Treasury, and the Secretary of Commerce (or the presidentially appointed designee of each of said Secretaries). The Loan Policy Board is charged with the establishment of general policies (particularly with reference to the public interest) which govern the granting and denial of applications for financial assistance by the Administration.

(ii) A Hearing Examiner or Hearing Examiners appointed or selected in accordance with section 11 of the Administrative Procedure Act, shall conduct hearings pursuant to section 309 of the Small Business Investment Act of 1958, as amended. Hearing Examiner functions shall be appropriately, separated from investigative and prosecuting functions of the staff as required by law.

(iii) The Program Administration and Compliance Division administers prosecuting and investigative functions under sections 309 and 310 of the Small Business Investment Act.

(3) The Headquarters office of the Small Business Administration is located at 811 Vermont Avenue NW., Washington, D.C., 20416. Further information concerning the organization and functions of SBA can be obtained by calling the Agency Information and Reception Center, Dudley 2–3301.

(d) Applicable law. (1) Loans made by SBA are authorized and executed pursuant to Federal programs adopted by Congress to achieve national purposes of the United States Government.

(2) Instruments evidencing a loan, obligation or security interest in real or personal property payable to or held by the Administration or the Administrator, such as promissory notes, bonds, guaranty agreements, mortgages, deeds of trust and other evidences of debt or security shall be construed and enforced in accordance with applicable Federal law.

(3) In order to implement and facilitate these Federal loan programs, the application of local procedures, especially for recordation and notification purposes, may be utilized to the fullest extent feasible and practicable. However, the use of local procedures shall not be deemed or construed to be any waiver by SBA of any Federal immunity from any local control, penalty or liability.

(4) Any person, corporation or organization that applies for and receives any benefit or assistance from SBA, or that offers any assurance or security upon which SBA relies for the granting of such benefit or assistance, shall not be entitled to claim or assert any local immunity to defeat the obligation such party incurred in obtaining or assuring such Federal benefit or assistance. (Amdt. 2, 27 F.R. 6777, July 18, 1962, as amended by Amdt. 5, 31 F.R. 10466, Aug. 4, 1966] $ 101.2 Organization of the Washing.

ton Office Administrator. All offices heading $ $ 101.2 to 101.2-9 are located in Washington, D.C., and their heads report directly to the Administrator. The Administrator determines policy and directs programs to aid, assist and protect small business, serves as Chairman of the Loan Policy Board and of the White House Committee on Small Business, and reports to the President and Congress on Agency program accomplishments and small business problems. (Amdt. 3, 27 F.R. 12919, Dec. 29, 1962) $ 101.2-1 Office of Economic Adviser.

(a) The Office of Economic Adviser provides the focus for research in the economic dynamics of small business. Analyzes the economic effects of SBA activities and advises the Administrator. Makes continuing studies and analyses of

small firms and the competitive factors affecting them. Conducts industry and environmental studies of economic changes. At the request of other offices, or the operating departments of SBA, conducts research on specific problems.

(b) Gathers and evaluates size information and suggests changes in size standards. Directs research required to advise the Administrator concerning the effect of economic conditions on funds required by the Agency to meet financing demands of small business,

(c) Conducts economic and statistical research showing the impact of SBA policies and programs on small business for inclusion in official reports. Conducts negotiations for studies on competitive factors affecting small business authorized by section 8(c) of the Small Business Act, as amended. Performs other duties, including membership on the Size Appeals Board, as assigned to the office by the Administrator. [Amdt. 3, 27 F.R. 12919, Dec. 29, 1962) § 101.2–2 Office of the General Counsel.

Serves as legal adviser to the Administrator and program and administrative oficials of the Agency Analyzes and interprets legislation, regulations, and orders relating to the operations of SBA. Negotiates with other Government agencies as to the legal aspects of SBA programs and operations. Gives legal counsel, drafts legal instruments and operating procedures, and provides assistance on procurement and technical assistance and management and research assistance programs and administrative operations of the Agency. Participates with the Department of Justice in litigation arising from delinquent loans, criminal matters, and other SBA activities. Reviews legislative proposals affecting small business and develops recommendations for the Bureau of the Budget and Congressional committees, prepares legislative proposals relating to SBA and develops reports for Congressional hearings or the Office of the President. Serves as Chairman of the Size Appeals Board.

(a) Liquidation and Litigation Division. Advises operating officials with respect to legal action to be taken in connection with the servicing and collection of loans and investments. Refers to the Department of Justice for collection and other action to protect the interests of SBA, delinquent loans and all other civil litigation. Refers to the

Department of Justice any evidence indicating a violation of the Small Business Act, the Small Business Investment Act, or the Criminal Code of the United States. Prepares cases for submission to the Department of Justice for litigation or prosecution and assists U.S. Attorneys in the trial of cases whenever necessary. Participates with other divisions of the Office of General Counsel with respect to any litigation in connection with their functions and activities.

(b) Loan Division. Provides legal counsel to Agency officials in the development and implementation of policies and procedures relating to the financial assistance programs including advice with respect to loan applications, disbursement and servicing of current loans under the Small Business Act, as amended. Renders opinions regarding loan eligibility. Advises field counsel of legal responsibilities in loan programs. Analyzes comments on proposed new loan programs and new legislative lending proposals. Drafts or reviews SBA loan forms and instructions. Reviews and evaluates security information for loan and investment programs.

(c) Legal Investment Division. (1) Advises operating officials in the development of policies, regulations, instructions and forms relating to the Small Business Investment Program under the Small Business Investment Act of 1958. Provides legal advice with respect to the granting of licenses to small business investment companies, the regulation of such companies and loans to state and local development companies. Prepares documents for publication in the FEDERAL REGISTER and is responsible for interpreting the Administrative Procedure Act as it applies to the Small Business Investment Act of 1958. Maintains liaison with appropriate Government agencies on legal matters relating to the investment program.

(2) The Legal Investment Division is made up of three branches:

(i) Licensing and Operations Branch;

(ii) Development Companies Branch; and

(iii) Regulations Branch.

(d) Procurement, Legislative, and Administrative Division. Is responsible for the legal aspects of policies and procedures relating to the procurement, technical, and management assistance programs of the Agency; provides legal counsel in connection with the administration of the Agency, including fiscal,

personnel, contractural and other prob- the Secretary of Commerce to SBA, dilems of an administrative nature; serves rects the processing of Area Redevelopas liaison with the FEDERAL REGISTER and ment Administration applications for prepares documents for publication financial assistance. Serves as a member therein. Interprets the Administrative of the Size Appeals Board. Procedure Act as it applies to the Agency (a) Office of Loan Processing. Directs other than for purposes of the Small and administers policies and programs Business Investment Act of 1958; has pertaining to the processing of loan apresponsibility for matters pertaining to plications, both business and disaster Agency legislation and other legislation loans, under secton 7 of the Small Busiwhich may affect small business; pro- ness Act, new or special financial assistvides legal counsel to the Agency's Size ance programs, and Certificates of ComAppeals Board and legal advice in con- petency credit analysis; provides technection with the administration of the nical direction and coordination to field Agency's small business size standards. offices in the administration of the loan

(1) Legislative Branch. Reviews leg- processing program; and directs the islation and reviews or prepares legis- processing of Area Redevelopment Adlative proposals affecting the interest of ministration applications for financial small business or the operations of SBA. assistance. Approves or declines loan Prepares reports for the Congressional applications referred to the Washington hearings and Committees and the Bu- office by the field office. reau of the Budget respecting legislative (1) Area Loan Groups (4). Examines matters.

loan applications referred to the Wash(2) Procurement and Administrative ington office by the field offices, and apBranch. Provides legal counsel to offi- proves, declines, or recommends approval cials in the development of policies, in

or declination of such applications. teragency agreements and operating pro- (2) Certificate of Competency Group. cedures relating to the procurement and

Examines and analyzes financial reports technical assistance programs, small on all COC applications received from business research and management coun- field offices. Recommends issuance or seling programs, size standards and size declination of COC's. Gives technical appeals programs and administrative ac- direction to field office operations and tivities of the Agency, and drafts legal performance in connection with financial instruments relating to these programs aspects of COC cases. Contributes to and administrative activities. Analyzes the development of criteria, standards regulations and policies of civilian and and procedures for COC processing. military procurement agencies for the Represents Office of Loan Processing at development of proposals for changes COC Review Committee meetings. therein to assist small business. Pro- (b) Office of Loan Administration. vides legal advice in the formation of Directs and administers policies and prodefense production pools and research gi ns pertaining to the Administration and development pools. Prepares docu- and servicing of loans made pursuant to ments for publication in the FEDERAL section 7 of the Small Business Act, inREGISTER and is responsible for inter- cluding problem and delinquent loans, preting the Administrative Procedure loans in liquidation and the sale or disAct except with respect to its applica- posal of acquired assets. Provides techbility under the Small Business Invest- nical direction and coordination to field ment Act of 1958.

offices in the operation of the loan ad[Amdt. 3, 27 F.R. 12919, Dec. 29, 1962]

ministration program.

(1) Loan Servicing Division. Admin§ 101.2–3 Deputy Administrator for Fi.

isters and coordinates programs for the nancial Assistance.

administration and servicing of loans and Develops and administers the financial other obligations, other than loans in assistance program of the Agency under liquidation, made pursuant to section 7 of the Small Business Act. Recommends the Small Business Act. Approves, deto the Administrator changes in policy clines, or recommends approval or decrequiring approval of the Loan Policy lination of loan servicing actions reBoard. Reviews financial assistance op- ferred to the Washington office by the erations and initiates corrective policies field offices. when required. Carries out assigned (2) Liquidation Division. Administers functions under the Trade Expansion Act and coordinates the liquidation program of 1962. Under authority delegated by as it pertains to loans in liquidation and

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