Summary of Proposed Rules: Microloan Program Expanded Eligibility and Other Program Changes

On March 17, 2014, the U.S. Small Business Administration announced proposed rules to amend the Microloan Program.



The proposed rules were formally posted in the Federal Register on Monday, March 17, 2014, Docket Number SBA-2013-0002, RIN 3245-AG53.  The proposed rules are now open for public comment for 60 days.

To read the proposed rules, please click here.

AEO plans to comment on the proposed rules in the coming weeks, ensuring that the proposed changes meet the needs of our members who are Microloan intermediaries.  The comment window will remain open until May 16, 2014.  All comments must be submitted by then on

Please feel free to share any comments and concerns about the proposed rules with Martin Feeney (.(JavaScript must be enabled to view this email address) or 202-626-8528).  The insights and commentary of our members is appreciated and will help guide the drafting of AEO’s comments to the Small Business Administration.


Summary of Proposed Rule

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.  

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.

Currently, intermediaries must make a minimum of four microloans to remain in the program.

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

Participating Microloan Intermediaries