[Rev. 13, 41 FR 5809, Feb. 10, 1976]

§ 121.3-17 Formal size determinations on concerns for 8(a) assistance.

(a) As set forth in paragraph (b) of this section, SBA may make formal size determinations under this Part 121 to assist in eligibility findings of concerns under Part 124 (8(a) assistance). Eligibility for 8(a) assistance is determined by the SBA Associate Administrator for Minority Small Business and Capital Ownership Development. Such eligibility is determined with reference to the 8(a) program in general and not with reference to award of particular 8(a) procurements. The size standards of Part 121 are utilized as related to the primary industry classification of the 8(a) concern.

(b) The Associate Administrator for Minority Small Business and Capital Ownership Development (AAMSBCOD) or a Regional Administrator may refer a case of 8(a) size eligibility to the regional office where the concern is located for a size determination

under Part 121 (which is appealable by either party to the Size Appeals Board). Size determinations under Part 121 on initial entry into the 8(a) program or on program completion or termination are advisory to the ASMSB-COD; and/or to the Administrative Law Judge in 8(a) proceedings under Part 124.

[Amdt. 38, 46 FR 2593, Jan. 12, 1981]

§ 121.3-18 Definition of small business for paying reduced patent fees under Title 35, U.S. Code.

(a) Pursuant to Pub. L. 97-247, a small business concern for purposes of paying reduced fees under 35 U.S. Code 41 (a) and (b) to the Patent and Trademark Office means any business concern (1) whose number of employees, including those of its affiliates, does not exceed 500 persons and (2) which has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey or license, any rights in the invention to any person who could not be classified as an independent inventor if that person had made the invention, or to any concern which would not qualify as a small business concern or a nonprofit organization under this section. For the purpose of this section concerns are affiliates of each other when either, directly or indirectly, one concern controls or has the power to control the other, or a third party or parties controls or has the power to control both. The number of employees of the business concern is the average over the fiscal year of the persons employed during each of the pay periods of the fiscal year. Employees are those persons employed on a full-time, parttime or temporary basis during the previous fiscal year of the concern.

(b) If the Patent and Trademark Office determines that a concern is not eligible as a small business concern within this section, the concern shall have a right to appeal that determination to the Small Business Administration. The Patent and Trademark Office shall transmit its written decision and the pertinent size determination file to the SBA in the event of such adverse determination and size appeal. Such appeals by concerns

should be submitted to the SBA at 1441 L Street, NW., Washington, D.C. 20416 (Attention: SBA Office of General Counsel). The appeal should state the basis upon which it is claimed that the Patent and Trademark Office initial size determination on the concern was in error and the facts and arguments supporting the concern's claimed status as a small business concern under this section.

(Sec. 3 of the Small Business Act and Pub. L. 97-247)

[47 FR 43273, Sept. 30, 1982]

(a) It is the intent of Congress that Government assistance should be extended only after all other possible avenues for solving a small firm's financial problems have been explored. Frequently firms do not need financial assistance but are in need most of counseling on financial management problems. In such cases SBA provides assistance through its Financial Counseling Program.

(b) In response to requests for financial assistance, consideration is given to (1) possible assistance available from local and State development corporations; (2) possible means of obtaining credit on reasonable terms from banks, other private financing sources, or from utilization of the per

sonal credit or resources of the applicant's owners or management; (3) adequacy of accounting methods and other aspects of financial management; (4) means of increasing equity capital; (5) eligibility for V loan financing of defense contracts; (6) feasibility of obtaining advance or partial payments on contracts.

(c) All loans shall be of such sound value, or so secured as reasonably to assure repayment. Security may include, but shall not be limited to, mortgage on real or personal property, monies due on contracts, assignment of warehouse receipts, guarantees, and under certain circumstances assignment of receivables or pledge of inventories.

(d) It is the policy of the U.S. Government and of the Small Business Administration to encourage by affirmative action the elimination of discrimination because of race, creed, color, or national origin in employment opportunities created by construction contracts involving Federal financial assistance.

(1) "Construction contract" means any contract or subcontract for the alteration, rehabilitation, construction, conversion, extension, or repairing of buildings, highways, or other improvements to real property.

(2) Applicants for financial assistance are required to execute the Small Business Administration's "Applicant's Agreement of Compliance," SBA Form 601 and, as therein provided, shall cooperate with the Small Business Administration in fostering nondiscrimination in employment opportunities.

(3) All complaints alleging discrimination in construction contracts performed by or with financial assistance shall be investigated by the Small Business Administration. Complaints alleging discrimination must be filed with the Small Business Administration within 90 days of the alleged discrimination. The Small Business Administration may hold informal hearings and make findings regarding the allegation of discrimination in accord with the rules of the President's Committee on Equal Opportunity. In the event that the Small Business Administration finds discrimination to have occurred, it may cancel loans approved

but not disbursed to an applicant, it may refuse to make further disbursements on account of the loan, it may accelerate the maturity of the Note between Borrower and SBA, or it may take any action of a lesser nature. Failure of the Small Business Administration to invoke or assert any of the aforesaid sanctions, or any other sanctions, shall not be construed to be a waiver of SBA's right to assert any of such sanctions.

(e) It is also the policy, as set forth in Parts 112 and 113 of this chapter, to require nondiscrimination in employment and services to the public by SBA borrowers.

(f)(1) Financial assistance as used in this part shall include direct loans made by SBA, immediate participation loans, and guaranteed loans.

(2) Financial institution as used in this part shall include, but not be limited to, banks and other concerns whose regular course of business entails the making of commercial and industrial loans. The eligibility qualifications for financial institutions set forth in Part 120 of this chapter are incorporated herein.

[Rev. 3, 32 FR 11699, Aug. 12, 1967, as amended by Amdt. 4, 37 FR 26709, Dec. 15, 1972; Amdt. 3, 40 FR 7626, Feb. 21, 1975]

may not exceed $250,000 for each small business concern which formed and capitalized the Group Corporation.

(b) Ceiling on loans to a single borrower. The administrative ceiling on loans to a single borrower made directly or on an immediate participation basis is $150,000, but the administrative ceiling may be extended up to the statutory maximum amount of $350,000 where such action is authorized in writing by the Regional Administrator.

[42 FR 61858, Dec. 7, 1977, as amended at 44 FR 72102, Dec. 13, 1979]

§ 122.6 Deferred participation loans.

(a) From and after July 1, 1963, no applications for a deferred participation loan will be accepted by this Administration. The existing provisions concerning deferred participation loans are retained in the regulations in this part so as to govern deferred participation loans made prior to July 1, 1963.

(b) Deferred participation loans are those in which a bank or other financial institution advances the capital needed, and SBA agrees to purchase, upon demand by the lending institution, an agreed portion of the unpaid balance then outstanding. SBA's participation in a deferred participation loan shall not exceed 90 percent of the principal balance of the loan outstanding at the time SBA disburses its funds.

(c) In deferred participation loans a participation charge shall be payable by the bank or other lending institution to SBA for such agreement. The participation charges shall be on a sliding scale, depending upon the percentage of the loan which SBA is obligated to purchase. Such participation charges, which shall not be charged to borrower by the participating institution, shall be as follows:

(1) For an amount not in excess of 50 percent of the loan, one-half of 1 percent per annum on the portion of the loan which SBA is obligated to purchase;

(2) For an amount in excess of 50 percent of the loan but not in excess of 75 percent of the loan, three

fourths of 1 percent per annum on the portion of the loan which SBA is obligated to purchase; and

(3) For an amount in excess of 75 percent of the loan but not in excess of 90 percent of the loan, 1 percent per annum on the portion of the loan which SBA is obligated to purchase.

(d) In deferred participation loans the interest rate on the bank's share applies to the entire loan until SBA purchases its share of such loan.

§ 122.7 Immediate participation loans.

Immediate participation loans are those where either SBA or a financial institution agrees to purchase from the other, immediately upon disbursement, and agreed percentage of each disbursement, SBA's participation shall not exceed 75 percent of the amount of the loan. Exceptions may be made in cases where the participant's legal lending limit precludes a 25-percent participation. In such cases the participant will be required to share in the loan to the extent of its legal lending limit but in no event less than 10 percent. An immediate participation loan may not be made if a guaranteed loan is available.

[Rev. 3, 33 FR 11652, Aug. 16, 1968]

§ 122.8 Direct loans.

Direct loans are those made by SBA to a borrower when no participation or guaranteed loan is available.

§ 122.9 Group corporations.

(a) Limitation of financial assistance. In the case of a corporation formed and capitalized by a group of small-business concerns with resources provided by them to obtain for their own use raw materials, equipment, inventories, supplies or benefits of research and development or to establish facilities for such purposes, (1) the limitation on SBA's share of such assistance is $250,000 multiplied by the number of separate small businesses participating in the Group Corporation; and (2) such assistance, including renewals and extensions thereof, may not be made for a period or periods exceeding ten years except that, if the assistance is made for the purpose of constructing facilities, it may have a

maturity of 20 years plus such additional time as is required to complete the construction.

(b) Use of proceeds. Under the provisions of paragraph (a) of this section, the raw materials, equipment, inventories or supplies, or the benefits of research and development must be primarily for the use of the concerns organizing the Group Corporation.

(c) Eligibility. The applicant corporation shall be owned by a group of small business concerns, including corporations, partnerships, individuals or any combination of the foregoing, each of which shall itself qualify as a small business concern which would be eligible for a small business loan. Each such concern shall share a need in common with the other small business concerns forming said corporation, the satisfaction of which need is the purpose for which the Group Corporation is being organized. Such Group Corporation shall file its application in the same manner as other eligible business concerns.

(d) Antitrust exemption. In the event that such a corporation desires exemption from the prohibitions of the antitrust laws or the Federal Trade Commission laws, it may obtain such exemption by using the procedures prescribed in paragraph (e) of this section.

(e) Procedures for obtaining antitrust exemptions. (1) A Group Corporation desiring an antitrust exemption, pursuant to section 7(a)(6) of the Small Business Act, as amended, will include a specific request for such exemption in its application.

(2) On reviewing an application containing an antitrust exemption request, the Administrator of SBA will consult with the Attorney General and the Chairman of the Federal Trade Commission with respect to the exemption. Upon receipt of the written approval of the Attorney General, the Administrator may make a finding that the formation of the Group Corporation will contribute to the needs of small business, and may approve the exemption.

(3) Upon the making of any such finding and approval, a copy of the finding and approval by the Administrator shall be furnished to the Attor