2. The applicant must be unable to obtain the necessary credit 2. Physical disaster loans are made without regard to the from other sources, exclusive of an SBA disaster loan. 3. The applicant must be an established farm, ranch or aquaculture operator, either tenant or owner-operator, who manages the operations. If the applicant is a partnership or corporation it must be primarily engaged in farming operations and the operation(s) must be managed by one or more of the partners or stockholders. 4. The applicant must operate in a county or counties where EM loans have been authorized. availability of other financing or resources. Also, the age of an applicant shall not be a consideration in making the loan provided the disaster victim is of legal age to contract. 3. Most home owners, businesses and nonprofit institutions are eligible for physical disaster assistance. 4. The applicant's physical loss must be within the disaster area as defined by the disaster declarations. 5. The applicant must have suffered qualifying property damage 5. The applicant must have suffered real or personal properor production losses. 6. The applicant must be of good character and have necessary experience, ambition and managerial ability to carry out the proposed operation. ty damage as a direct result of the disaster. 6. The applicant must be able to provide reasonable assurance of ability to repay the loan. LOAN PURPOSES 1. Cover actual losses and expenses for damaged or destroyed 1. The purpose of these physical disaster loans is to restore nonhousing farm property and production. 2. Housing losses-only when SBA's physical disaster assistance is not available. 3. Annual operating loans. 4. Major adjustment loans. TERMS 1. Actual loss loans-5 percent interest for disasters occurring prior to July 1, 1976, disasters occurring on or after July 1, 1976, and prior to October 1, 1978-primary residence and personal property related to the residence 1 percent on the first $10,000, 3 percent on the balance not to exceed $40,000, and 5 percent on the amount over $40,000; and for all other actual loss loans, 3 percent on the first $250,000 and 5 percent on the amount over $250,000-for crop and livestock production and chattel losses up to 7 years with a 5 year renewal, in some cases up to 20 years and for real estate losses or damages up to 40 years. the victim's home or business property, real or personal, as nearly as possible to predisaster condition. No upgrading is permitted. 2. Housing losses-SBA will make all loans when the only losses are housing losses whether on farm housing, rural housing or urban housing. 3. Economic Injury Loans are similar. 4. No comparable disaster loan programs. 1. Interest rate based on a statutory formula. Maturity based on the victim's ability to repay but cannot exceed 30 years. 2. Annual operating-at prevailing current market rate-paid 2. No comparable terms. when principal income from year's operation is received. 3. Major Adjustment Loans at prevailing current market rate- 3. No comparable disaster loan program. chattels up to 7 years with a 5 year renewal, and for real estate up to 40 years. LOAN LIMITS No statutory dollar limit; determined by amount of loss and No statutory dollar limit. However, administrative ceilings credit factors. have been established as follows: a. Home Loans: $50,000 for real estate, $10,000 for personal property, $55,000 for combined purposes. b. Business Loans: $500,000; exception by the Administrator authorized to avoid substantial hardship. TABLE 1.-SBA/FMHA MEMORANDUM OF UNDERSTANDING-Continued (Catalog of Federal Domestic Assistance Programs Nos. 59.002 (Physical Disaster) and 59.008 (economic Injury) Small Business Loans.) 124.1-1 The section 8(a) program. 124.1-2 Advance payments. 124.1-3 Letter of credit. 124.1-4 Business development expense. 124.1-5 Waiver of bonds required by any Government procurement officer. 124.2-1 Development assistance program. 124.3-1 Small business and capital ownership development program. 124.10 Rules of practice for adjudicative proceedings to be used in effecting the completion or termination of a section 8(a) business concern from participating in the section 8(a) program. 124.10-1 Scope of the rules in this part. 124.10-2 Definitions. 124.10-3 Appearances. 124.10-4 Order to show cause and notice of hearing. 124.10-5 Answer. 124.10-18 Petition for review. 124.10-19 AAMSB-COD review. 124.10-20 Decision on review. § 124.1-1 The section 8(a) program. (a) General. These regulations implement section 8(a) of the Small Business Act (15 U.S.C. 637(a)) which authorizes SBA to enter into all types of contracts (including, but not limited to, supply, services, construction, research and development) with other Government departments and agencies and negotiate subcontracts for the performance thereof. (b) Purpose. It is the purpose of section 8(a) to: (1) Foster business ownership by individuals who are both socially and economically disadvantaged; (2) Promote the competitive viability of such firms by providing such availa ble contract, financial, technical, and management assistance as may be necessary; and (3) Clarify and expand the program for the procurement by the United States of articles, equipment, supplies, services, materials, and construction work from small business concerns owned by socially and economically disadvantaged individuals. (c) Eligibility. In order to be eligible to participate in the section 8(a) program, an individual or an applicant concern, as the case may be, must meet all of the pertinent eligibility criteria set forth hereafter in paragraphs (c)(1) through (5) of this section. All determinations pursuant to paragraphs (c)(1) through (5) of this section shall be made by the Associate Administrator for Minority Small Business and Capital Ownership Development (AAMSB-COD) whose decision shall be final; provided, however, that an applicant may request reconsideration of such final decision based upon information discovered subsequent to such decision or upon information which was unavailable at the time of such final decision. The granting of such reconsideration shall be within the absolute discretion of the AAMSB-COD. (1) Small Business Concern. In order to be eligible to participate in the section 8(a) program, an applicant concern must qualify as a small business concern as defined for purposes of Government procurement in § 121.3-8 of the SBA Rules and Regulations. The particular size standard to be applied shall be based on the principal activity of the applicant concern. (2) Ownership and control. In order to be eligible to participate in the section 8(a) program, an applicant concern must be one: (i) Which is at least 51 percent owned by an individual or individuals who are citizens of the United States, (specifically excluding resident aliens) and who are determined to be socially and economically disadvantaged by SBA. (A) In the case of an applicant concern which is a corporation, 51 percent of all classes of voting stock of such corporation must be owned by an individual(s) determined to be socially and economically disadvantaged. (B) In the case of an applicant concern which is a partnership, 51 percent of the partnership interest must be owned by an individual or individuals determined to be socially and economically disadvantaged, and (ii) Whose management and daily business operations are controlled by an individual(s) determined to be socially and economically disadvantaged. Such individual(s) must be engaged in the daily management and operation of the business concern. (iii) State, local and Community Development Corporations, MESBIC'S and SBIC's, profit or nonprofit, may own up to 49 percent interest or voting stock in an applicant concern. State, local and Community Development Corporations, MESBIC's and SBIC's, profit or nonprofit, may own more than 49 percent interest or voting stock in an applicant 8(a) concern pursuant to a written divestiture agreement approved by the AAMSB-COD. The divestiture agreement shall provide that such concern will divest within a specified period of time at least 51 percent of the business interest or voting stock, as the case may be, of the section 8(a) business concern to an individual(s) who is socially and economically disadvantaged within the meaning of these regulations. In determining the "ownership and control" of a business within the meaning of these regulations, the potential ownership interests of state, local and Community Development Corporations, SBIC's and MESBIC'S such as warrants, voting trust interests and other arrangements, shall not be counted until and unless exercised by the subject entity. (3) Social Disadvantage—(i) Gener al. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. The social disadvantage of individuals must stem from circumstances beyond their control. (ii) Members of Designated Groups. In the absence of evidence to the con trary, the following individuals are considered socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians); Asian Pacific Americans (persons with origins from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, U.S. Trust Territory of the Pacific Islands, Northern Mariana Islands, Laos, Cambodia, or Taiwan); and members of other groups designated from time to time by SBA according to the procedures set forth at § 124.11(c)(3)(iv) of this part. (iii) Individuals Not Members of Designated Groups. Individuals who are not members of the above-named groups must establish their social disadvantage on the basis of clear and convincing evidence. A clear and convincing case of social disadvantage must include the following elements: (A) The individual's social disadvantage must stem from his or her color; national origin; gender; physical handicap; long-term resident in an environment isolated from the mainstream of American society; or other similar cause not common to small business persons who are not socially disadvantaged. (B) The individual must demonstrate that he or she has personally suffered social disadvantage, not merely claim membership in a nondesignated group which could be considered socially disadvantaged. (C) The individual's social disadvantage must be rooted in treatment which he or she has experienced in American society, not in other countries. (D) The individual's social disadvantage must be chronic, long-standing, and substantial, not fleeting or insignificant. (E) The individual's social disadvantage must have negatively impacted on his or her entry into, and/or advancement in, the business world. SBA will entertain any relevant evidence in assessing this element of an applicant's case. SBA will particularly consider and place emphasis on the following experiences of the individual, where relevant: Education, employment, and business history. (1) Education. SBA shall consider, as evidence of an individual's social disadvantage, denial of equal access to business or professional schools; denial of equal access to curricula; exclusion from social and professional association with students and teachers; denial of educational honors; social patterns or pressures which have discouraged the individual from pursuing a professional or business education; and other similar factors. (2) Employment. SBA shall consider, as evidence of an individual's social disadvantage, discimination in hiring; discrimination in promotions and other aspects of professional advancement; discrimination in pay and fringe benefits; discrimination in other terms and conditions of employment; retaliatory behavior by an employer; social patterns or pressures which have channelled the individual into nonprofessional or non-business fields; and other similar factors. (3) Business History. SBA shall consider as evidence of an individual's social disadvantage, unequal access to credit or capital; acquisition of credit or capital under unfavorable circumstances; discrimination in receipt (award and/or bid) of government contracts; discrimination by potential clients; exclusion from business or professional organizations; and other similar factors which have retarded the individual's business development. (iv) Minority group inclusion—(A) General. Upon an adequate showing to SBA by representatives of a minority group that the group has suffered chronic racial or ethnic prejudice or cultural bias, and upon the request of the representatives of the group that SBA do so, SBA shall publish in the FEDERAL REGISTER a notice of its receipt of a request that it consider a minority group not specifically named in section 201 of Pub. L. 95-507 to have members which are socially disadvantaged because of their identification as members of the group for the purpose of eligibility for the section 8(a) program. The notice shall adequately identify the minority group making the request, and if a hearing is requested on the matter, the time, date and location at which such hearing is to be held. All information submitted ble contract, financial, technical, and management assistance as may be necessary; and (3) Clarify and expand the program for the procurement by the United States of articles, equipment, supplies, services, materials, and construction work from small business concerns owned by socially and economically disadvantaged individuals. (c) Eligibility. In order to be eligible to participate in the section 8(a) program, an individual or an applicant concern, as the case may be, must meet all of the pertinent eligibility criteria set forth hereafter in paragraphs (c)(1) through (5) of this section. All determinations pursuant to paragraphs (c)(1) through (5) of this section shall be made by the Associate Administrator for Minority Small Business and Capital Ownership Development (AAMSB-COD) whose decision shall be final; provided, however, that an applicant may request reconsideration of such final decision based upon information discovered subsequent to such decision or upon information which was unavailable at the time of such final decision. The granting of such reconsideration shall be within the absolute discretion of the AAMSB-COD. (1) Small Business Concern. In order to be eligible to participate in the section 8(a) program, an applicant concern must qualify as a small business concern as defined for purposes of Government procurement in § 121.3-8 of the SBA Rules and Regulations. The particular size standard to be applied shall be based on the principal activity of the applicant concern. (2) Ownership and control. In order to be eligible to participate in the section 8(a) program, an applicant concern must be one: (i) Which is at least 51 percent owned by an individual or individuals who are citizens of the United States, (specifically excluding resident aliens) and who are determined to be socially and economically disadvantaged by SBA. (A) In the case of an applicant concern which is a corporation, 51 percent of all classes of voting stock of such corporation must be owned by an individual(s) determined to be socially and economically disadvantaged. (B) In the case of an applicant concern which is a partnership, 51 percent of the partnership interest must be owned by an individual or individuals determined to be socially and economically disadvantaged, and (ii) Whose management and daily business operations are controlled by an individual(s) determined to be socially and economically disadvantaged. Such individual(s) must be engaged in the daily management and operation of the business concern. (iii) State, local and Community Development Corporations, MESBIC'S and SBIC's, profit or nonprofit, may own up to 49 percent interest or voting stock in an applicant concern. State, local and Community Development Corporations, MESBIC's and SBIC's, profit or nonprofit, may own more than 49 percent interest or voting stock in an applicant 8(a) concern pursuant to a written divestiture agreement approved by the AAMSB-COD. The divestiture agreement shall provide that such concern will divest within a specified period of time at least 51 percent of the business interest or voting stock, as the case may be, of the section 8(a) business concern to an individual(s) who is socially and economically disadvantaged within the meaning of these regulations. In determining the "ownership and control" of a business within the meaning of these regulations, the potential ownership interests of state, local and Community Development Corporations, SBIC's and MESBIC'S such as warrants, voting trust interests and other arrangements, shall not be counted until and unless exercised by the subject entity. (3) Social Disadvantage-(i) General. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. The social disadvantage of individuals must stem from circumstances beyond their control. (ii) Members of Designated Groups. In the absence of evidence to the con |