1) Revision Regarding Insured Depositary Institutions
The proposed rule would allow microloan intermediaries to maintain their Microloan Revolving Funds (MRFs) and Lon Loss Reserve Funds (LLRFs) in federal insured credit unions. The current definition specifies only insured banks and savings associations.
2) Removal of Interest Bearing Account Requirements
The proposed rule would remove the requirement that the Microloan Revolving Fund (MRF) and the Loan Loss Reserve Fund (LLRF) be held in interest-bearing Deposit Accounts.
3) Borrower Eligibility Expansion
The proposed rule would allow microloan intermediaries to make loans to businesses with an Associate (as defined in § 120.10) who is currently on probation or parole. Individuals who are currently incarcerated or under indictment would remain ineligible for a microloan, as would individuals who are on probation or parole for an offense involving fraud or dishonesty.
4) Increase in Minimum Loan Requirements
The proposed rule would update § 120.716; gradually increasing the minimum number of loans a microloan intermediary must make each fiscal year to twelve. Currently, intermediaries must make a minimum of four microloans to remain in the program. The proposed rule would require intermediaries to make a minimum of:
Six loans in FY2015
Eight loans in FY2016
Twelve loans in FY2017 and thereafter.
The proposed rule would also update § 120.716 to specifically state that intermediaries that do not meet the minimum loan requirement are not eligible to receive new grant funding for management and technical assistance. An intermediary that is ineligible for a grant due to failure to make the minimum number of microloans in the previous Federal fiscal year may become eligible for grant funding the following year by meeting the minimum number of loans for the current year.
Additional Resources:
Federal Register Proposed Rules Publication (March 17, 2014)
Microloan Program Standard Operating Procedure (SOP 52 00)
Microloan Program Overview and Eligibility Requirements