B-125699, OCTOBER 20, 1955, 35 COMP. GEN. 219

B-125699: Oct 20, 1955

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A SMALL BUSINESS CONCERN WHICH WOULD BE ELIGIBLE FOR A DISASTER LOAN AS RESULT OF RECENT FLOODS IN NORTHEASTERN STATES IS NOT BARRED FROM RECEIVING A BUSINESS LOAN. 1955: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 5. IT APPEARS THAT FUNDS ALREADY AUTHORIZED AND APPROPRIATED TO YOUR ADMINISTRATION FOR DISASTER LOANS WILL BE INSUFFICIENT TO MEET DEMANDS DUE TO THE RECENT FLOODS WHICH STRUCK THE NORTHEASTERN STATES. IN ANSWER TO THIS QUESTION IT MUST BE STATED THAT WE ARE NOT AWARE OF ANY FUNDS WHICH MAY BE TRANSFERRED FROM "THE EXECUTIVE DEPARTMENT OF THE GOVERNMENT" TO YOUR ADMINISTRATION FOR DISASTER PURPOSES. YOUR FIRST QUESTION IS ANSWERED ACCORDINGLY. IT IS ASSUMED. THE TOTAL OF WHICH WILL BE IN EXCESS OF THE $25.

B-125699, OCTOBER 20, 1955, 35 COMP. GEN. 219

APPROPRIATIONS - AVAILABILITY - DISASTER LOANS SECTION 204 (B) OF THE SMALL BUSINESS ACT OF 1953, WHICH PROVIDES THAT NOT TO EXCEED $25,000,000 SHALL BE OUTSTANDING AT ANY ONE TIME FOR DISASTER LOANS, PRECLUDES DISASTER LOANS IN EXCESS OF THAT LIMITATION; HOWEVER, A SMALL BUSINESS CONCERN WHICH WOULD BE ELIGIBLE FOR A DISASTER LOAN AS RESULT OF RECENT FLOODS IN NORTHEASTERN STATES IS NOT BARRED FROM RECEIVING A BUSINESS LOAN.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, OCTOBER 20, 1955:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 5, 1955, AND ATTACHMENT, RELATING TO THE AVAILABILITY OF CERTAIN FUNDS FOR USE IN THE DISASTER PROGRAM OF YOUR ADMINISTRATION AND PRESENTING FOR OUR CONSIDERATION TWO QUESTIONS IN CONNECTION THEREWITH.

IT APPEARS THAT FUNDS ALREADY AUTHORIZED AND APPROPRIATED TO YOUR ADMINISTRATION FOR DISASTER LOANS WILL BE INSUFFICIENT TO MEET DEMANDS DUE TO THE RECENT FLOODS WHICH STRUCK THE NORTHEASTERN STATES. IN VIEW THEREOF YOU FIRST REQUEST A DECISION WHETHER FUNDS AVAILABLE IN "THE EXECUTIVE DEPARTMENT OF THE GOVERNMENT" MAY BE TRANSFERRED TO YOUR ADMINISTRATION FOR USE IN THE DISASTER PROGRAM.

IN ANSWER TO THIS QUESTION IT MUST BE STATED THAT WE ARE NOT AWARE OF ANY FUNDS WHICH MAY BE TRANSFERRED FROM "THE EXECUTIVE DEPARTMENT OF THE GOVERNMENT" TO YOUR ADMINISTRATION FOR DISASTER PURPOSES. YOUR FIRST QUESTION IS ANSWERED ACCORDINGLY.

YOU ALSO REQUEST A DECISION AS TO YOUR RIGHT TO USE FUNDS AVAILABLE TO YOUR ADMINISTRATION FOR BUSINESS LOANS FOR DISASTER PURPOSES.

SECTION 204 (B) OF THE SMALL BUSINESS ACT OF 1953, APPROVED JULY 30, 1953, 67 STAT. 233, 15 U.S. CODE 633, AUTHORIZES APPROPRIATIONS OF NOT TO EXCEED $275,000,000 TO BE MADE TO A REVOLVING FUND IN THE TREASURY TO BE USED BY YOUR ADMINISTRATION FOR MAKING LOANS TO SMALL BUSINESS CONCERNS, DISASTER LOANS, AND VARIOUS OTHER PURPOSES. IT ALSO PROVIDES THAT NOT TO EXCEED AN AGGREGATE OF $25,000,000 OF SUCH FUNDS SHALL BE OUTSTANDING AT ANY ONE TIME FOR DISASTER LOANS. IT IS ASSUMED, THEREFORE, IN CONNECTION WITH YOUR SECOND QUESTION, THAT YOU WISH TO MAKE LOANS FOR DISASTER PURPOSES FROM THE REVOLVING FUND, THE TOTAL OF WHICH WILL BE IN EXCESS OF THE $25,000,000 LIMITATION OF SECTION 204 (B).

IN VIEW OF THE LIMITATION IN SECTION 204 (B) OF THE SMALL BUSINESS ACT OF 1953, IT MUST BE HELD THAT YOUR ADMINISTRATION MAY NOT LEGALLY MAKE DISASTER LOANS IN EXCESS OF THE $25,000,000 LIMITATION CONTAINED IN THAT SECTION. HOWEVER, THE FACT THAT A SMALL BUSINESS CONCERN IS IN A DISASTER AREA AND HAS SUFFERED DAMAGE AS THE RESULT OF A FLOOD OR OTHER CATASTROPHE AND HENCE IS ELIGIBLE FOR A DISASTER LOAN DOES NOT BAR SUCH CONCERN FROM RECEIVING A BUSINESS LOAN, IF THE GRANTING OF A BUSINESS LOAN IS OTHERWISE PROPER. YOUR SECOND QUESTION IS ANSWERED ACCORDINGLY.