intermediary, acceptance of and willingness to be bound by the terms and conditions set forth in the application, including the loan agreement and the grant agreement. (c) Grant procedure for nonintermediaries. (1) Any nonprofit entity, which is not a participating intermediary, believing itself qualified to provide marketing, management, and technical assistance to low-income individuals seeking to enlarge their small business concern may forward to SBA information regarding their ability to undertake such assistance, as well as any other information deemed appropriate by SBA. (2) Any grant awarded to a nonintermediary will be awarded and administered according to the terms and conditions set forth in the grant agreement. [57 FR 3851, Jan. 31, 1992, as amended at 57 FR 48312, Oct. 23, 1992] §122.61-12 Technical intermediaries. ensure assistance for SBA may procure technical assistance for intermediaries participating in the Microloan Demonstration Program to that such intermediaries have a sufficient level of knowledge, skills, and understanding of microlending to successfully operate as an intermediary within the program. SBA may also obtain such assistance for organizations in areas of the country which are either underserved or not presently served by an existing intermediary for the purpose of providing such organizations with the necessary information and experience to be eligible to participate as intermediaries. SBA will provide such assistance by awarding at least one (1) grant to an experienced microlending organization(s). [57 FR 48312, Oct. 23, 1992] § 122.62 Defense economic transition assistance under section 7(a)(21) of the Act. §122.62-1 General rule. (a) Business. The Act authorizes SBA, subject to the availability of funds appropriated for this purpose, to make direct or guaranteed loans to assist a small business concern that has been (or can reasonably be expected to be) detrimentally affected by: (1) Closure. The closure (or substantial reduction) of a Department of Defense installation; or (2) Termination. The termination (or substantial reduction) of a Department of Defense program on which such small business was a prime contractor or subcontractor (or supplier) at any tier. (b) Qualified individual. Under this program, SBA is authorized to make direct or guaranteed loans to a qualified individual who seeks to establish (or acquire) and operate a small busi ness concern. [59 FR 5941, Feb. 9, 1994] § 122.62-2 Qualified individual. Qualified individual, for purposes of this program, is: (a) Military status. A member of the Armed Forces of the United States, honorably discharged from active duty involuntarily or pursuant to a program providing bonuses or other inducements to encourage voluntary separation or early retirement; or (b) Civilian status. A civilian employee of the Department of Defense involuntarily separated from Federal service or retired pursuant to a program offering inducements to encourage early retirement; or (c) Contractor or supplier. An employee of a prime contractor, subcontractor, or supplier at any tier of a Department of Defense program whose employment is involuntarily terminated (or voluntarily terminated pursuant to a program offering inducements to encourage voluntary separation or early retirement) due to the termination (or substantial reduction) of a Department of Defense program. [59 FR 5941, Feb. 9, 1994] § 122.62-3 Repayment ability. Any reasonable doubts concerning the small business concern's proposed business plan for transition to nondefense-related markets shall be resolved in favor of the loan applicant when making any determination regarding the sound value of the proposed loan. In order to determine "sound value", SBA will consider such factors as quality of the product or service, technical qualifications of the applicant's management and employees, sales projections and the applicant's financial status. [59 FR 5941, Feb. 9, 1994] § 122.62-4 Loan making authority. Since greater risk may be associated with a loan to an applicant under this program, any defense economic assistance loan made by a participating lender cannot be made under the Certified Lenders Program pursuant to part 120, subpart E of this chapter, or under the Preferred Lenders Program pursuant to part 120, subpart D of this chapter. [59 FR 5941, Feb. 9, 1994] TABLE 1 TO PART 122-ELIGIBLE ENERGY MEASURES Subject to the requirements and limitations set forth in title 10, Code of Federal Regulations, chapter II, §450.32 (1984), an energy conservation measure shall be (a) Ceiling insulation in a residential or commercial building which is a material which is installed on the surface of the ceiling facing the building interior or between the heated top level living area and the unheated attic space and which resists heat flow through the ceiling; (b) Wall insulation in a residential or commercial building or industrial plant, which is a material which is installed on the surface facing the building interior or in the cavity of an exterior wall and which functions to resist heat flow through the wall; (c) Floor insulation in a residential or commercial building, which is a material which resists heat flow through the floor between the first level heated space and the unheated space beneath it, including a basement or crawl space; (d) Insulation for hot bare pipes in a residential or commercial building or industrial plant, which is a material which resists heat flow from the pipes to the surrounding space; (e)(1) Caulks and sealants in a residential or commercial building or industrial plant, which are nonrigid materials placed in joints of buildings to prevent the passage of heat, air and moisture; (2) Weatherstripping in a residential or commercial building or industrial plant, which consists of narrow strips of flexible material placed over or in movable joints of windows and doors to reduce the passage of air and moisture; (f) Roof insulation in a commercial building or industrial plant which is insulation placed on the surface of the roof facing the building interior or between a roof deck and its water repellent roof surface; (g) Clock thermostat in a residential building, which is a temperature control device for interior spaces incorporating more than one temperature control point and a clock for switching from one control point to another; (h) Exterior insulation for a hot water heater in a residential or commercial building or industrial plant, which is a material placed around the tank which resists the heat flow from the hot water heater to its surrounding space; (1) Insulation for forced air ducts in a residential or commercial building or industrial plant, which is a material which resists heat flow from the duct to its surrounding space; (j) Storm window in a residential or commercial building which is an extra window, normally installed to the exterior, but which may be installed to the interior, of the primary or ordinary window, to increase resistance to heat flow and to decrease air infiltration; (k) Efficient lighting fixture or lamp in a residential or commercial building or industrial plant, which is one which (1) Replaces an incandescent fixture or lamp with a type of lighting system including fluorescent, mercury vapor, metal halide, and high pressure sodium or ellipsoidal reflector lamps; or (2) Replaces a mercury vapor fixture or lamp with a high pressure sodium lighting system. (1) Mixing valve for a hot water supply line in a residential or commercial building or industrial plant, which is a type of valve mounted in the hot water supply line, close to the water heater, which mixes cold water with hot, reducing the temperature of the water in the hot water distribution system; (m) Flow restrictor for hot water lines in a residential or commercial building or industrial plant, which is a device that limits the rate of flow of hot water from shower heads and faucets; (n) Burner for oil fired heating equipment in a residential building, which is a device which atomizes the fuel oil, mixes it with air and ignites the fuel-air mixture, and is an integral part of an oil fired furnace or boiler, including the combustion chamber; (0) Individual meters to replace a master meter for gas, electricity and hot water in a commercial building, which are meters that measure the consumption of gas, electricity or centrally distributed hot water for individual users, instead of the total consumption which is measured by a master meter; (p)(1) New oil burner in a commercial building or industrial plant, which is a device that meters, atomizes, ignites and mixes the oil with air for the combustion process of boiler; or (2) New boiler controls in a commercial building or industrial plant, which are devices that sense the need for reducing or increasing the firing rate and change the combustion air and oil flow rate accordingly; (q) Controls for lighting in a residential or commercial building or industrial plant which are manual or automatic cut off switches for lighting systems that allow cut off of all lighting or a portion of the lighting systems when lighting is not required; (r) Automatic HVAC control system in a commercial building or industrial plant, which is a device which adjusts the supply of heating or cooling to meet space conditioning requirements; (s) High efficiency electric motor or motor controls in a commercial building or industrial plant, which replace an existing motor or motor controls, resulting in not less than a specified increase in efficiency at a specified level of use, as determined by DOE; and (t) Whole house ventilation fan in a residential building, which is a fan which removes air from the inside of a residential building to the outside. (u) Air source heat pump, which is a system which is part of the central heating system and which has the capability of extracting heat from a body of air and transferring this heat to a body of liquid or to another body of air for space conditioning purposes; (v) Water source heat pump, which is a system which is part of the central heating system and which has the capability of extracting heat from a body of water and transferring this heat to another body of liquid or to a body of air for space conditioning purposes. § 123.1 Explanation of regulations. (a) Programs covered. This part covers the disaster programs authorized under subsections 7(b), (c) and (f) of the Small Business Act, 15 U.S.C. 636(b) and (c) and (f), and is published pursuant to section 5(b)(6) of that Act, 15 U.S.C. 634(b)(6). Subpart A includes regulations common to all disaster programs. Subpart B includes regulations governing physical disaster loans, including loans to Major Sources of Employment. Subpart C includes regulations for loan programs designed to alleviate economic injury resulting from a physical disaster. Subpart D includes regulations for direct loans to small business concerns which have suffered economic 157-041 0-95-16 injury as a result of troop deployments, related to the Persian Gulf conflict, from military installations located in the same county or a county contiguous thereto. (b) Emergency Changes. Because of the emergency nature of the programs covered by this part, particularly the impossibility of foreseeing the occurrence or magnitude of disasters covered by the physical disaster loan programs in subparts B and C, the regulation cannot anticipate all the contingencies, problems and needs which may arise in any given situation. SBA therefore advises that the regulations under this part must be and are subject to change without advance notice by publication of interim emergency regulations in the FEDERAL REGISTER. For example, the legislative limitation in the Omnibus Budget Reconciliation Act of 1983, Pub L. 98-270, of the combined physical disaster loan programs pursuant to paragraphs 7(b) (1) and (2) of the Small Business Act, 15 U.S.C. 636(b) (1) and (2), to $500 million for each of the fiscal years 1984, 1985 and 1986 may make it necessary to establish priorities which would favor applicants unable to obtain credit elsewhere over applicants to whom such credit is available. SBA will also make every effort to publicize changes of substance and procedure by whatever means practicable under the circumstances, including, but not limited to press releases to newspapers, radio and television stations, posting notices in public places, and by direct mailings (when possible) to affected concerns or persons. (c) Captions. Captions are inserted for the reader's convenience only, and are not a part of these regulations. (d) Savings clause. Financial assistance granted pursuant to prior regulations shall be governed by the related contractual terms and these prior regulations, unless a supervening statute requires otherwise. Nothing herein shall bar SBA enforcement action with respect to such financial assistance pursuant to contractual terms no longer in use and prior regulations no longer in effect. If any subpart, section or part of a section of these regulations should be adjudged invalid, only that part shall be invalid, and other parts shall not be affected thereby. [49 FR 32311, Aug. 13, 1984, as amended at 56 FR 65955, Dec. 19, 1991] Subpart A-Conditions Applicable to All Loans Under This Part $123.2 Introduction. SBA is authorized to make or to guarantee loans as necessary or appropriate to victims of sudden physical disaster, or of economic injury caused by unforeseeable and unintended events resulting from a sudden physical disaster. SBA is not authorized to provide assistance in gradual physical occurrences such as shoreline erosion or gradual land subsidence. Congress has not reopened programs now repealed which in the past provided, among other things, disaster assistance to businesses adversely affected by Federal government actions or by price or market fluctuations. SBA is authorized to make economic injury disaster loans to nurseries that are victims of drought (see §123.41(b)). No economic injury disaster loans are authorized for applicants able to obtain Credit Elsewhere (see definition in §123.3). No person who has been convicted of a felony during and in connection with a riot or civil disorder shall be permitted, for a period of one year after the date of the conviction, to receive any benefit under any law of the United States providing relief for disaster victims (5 U.S.C. 7313 note). [55 FR 23073, June 6, 1990] § 123.3 Definitions. Defined terms are capitalized through this part. Adjusted Treasury Rate: The rate of interest determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaininig period to maturity comparable to the average maturities of loans made under section 7(b) of the Act, plus an additional charge of not to exceed one percent per annum as determined by the Administrator, and adjusted to the nearest one-eighth of one percent. Commencement Date: The beginning of an event of a catastrophic or calamitous nature culminating in a Disaster or in economic injury. Such Commencement Date will be stated in the relevant Disaster declaration. (See also §123.23(a).) Credit Elsewhere: The availability, based on cash flow and disposable assets of the applicant, of sufficient credit from non-Federal sources on reasonable terms and conditions, taking into consideration prevailing rates and terms in the community in or near where the concern transacts business or the Homeowner resides, for similar purposes and periods of time. Disaster means a sudden event which causes severe physical damage, including, but not limited to, floods, hurricanes, tornadoes, earthquakes, volcanic eruptions, windstorms, land- or mudslides, tidal waves, fires, explosions, riots or civil disorders and industrial accidents (including oil spills). It also means sudden physical events that cause substantial economic injury, but may not cause physical damage to the victim's property, events such as ocean conditions resulting in a significant displacement, (e.g., by major ocean currents) or closure (e.g., because of toxic algae blooms) of customary fishing waters, and contamination of food or other products for human consumption from unforeseeable and unintended events beyond the control of the victim. Disaster Area: (a) Except as provided in paragraph (b) below, an area which has been declared or designated as such by the Administrator of SBA, because of damage suffered as a result of a physical disaster, or by the Secretary of Agriculture in accordance with section 7(b)(2)(B) of the small Business Act (15 U.S.C. 636(b)(2)(B)), and the counties or other political subdivisions contiguous thereto. (b) For major disasters declared by the President, the disaster area as determined by the Federal Emergency Management Agency constitutes the disaster area for purposes of SBA physical disaster assistance pursuant to subpart B of this part. However, for purposes of Economic Injury Disaster Assistance in such disasters pursuant to subpart C of this part, the disaster area also includes counties or other smaller political subdivisions contiguous thereto. (c) For purposes of this definition, contiguous counties or other political subdivisions are those whose land areas abut the land area of the declared county without geographic separation other than by a minor body of water, not to exceed one mile between such counties. Eligible Physical Loss: (a) A physical loss is necessary to establish loan eligibility under subpart B. Such loss must be verified by SBA. Loss may be claimed only by the owner(s) (or the lessee(s) of the property if the lease requires the lessee to repair or rebuild) at the time of the disaster. Beneficial ownership as well as legal title (real or personal) may be considered in determining who suffered the loss, except that an equitable interest resulting from a mortgage or deed of trust will not make the holder of such interest eligible. (b) Losses shall not be eligible: (1) When a substantial (more than 50%) voluntary change of ownership occurred after the Disaster, and no contract of sale existed at the time of the disaster; (2) When the replacement value is extraordinarily high, and is not easily verified, such as in the case of the value of antiques or hobby collections; (3) To the extent that such loss is covered by insurance, grants, gifts to replace personal property (such as from the American Red Cross), or other compensation, if all or part of such compensation is available for repair or replacement. Such compensation must either be deducted from the claim, or assigned (paid) to SBA to reduce the outstanding balance of the loan, since Federal law prohibits duplication of benefits. (Borrowers must notify SBA of any amounts so received (OMB Approval No. 3245-0124) and must apply them to the outstanding loan balance in inverse order of maturity.) However, any financial assistance supplied by an Individual and Family Grant Program (Federal Emergency Management Agency) solely to meet an emergency need pending processing of an SBA loan may be repaid out of SBA loan proceeds, provided the funds were used for |