§ 120.712 How does an Intermediary get a grant to assist Microloan borrowers?

(a) General. (1) Except as provided in (a)(2) of this section, an Intermediary is eligible to receive a base grant of not more than 25 percent of the outstanding balance of all SBA loans to the Intermediary. (2) In fiscal years in which the amount appropriated for grants is sufficient to provide all Intermediaries with a base grant equal to 25 percent or more of their total outstanding SBA loan balances, then the amount of base grants to eligible Intermediaries will be equal to at least 25 percent of the outstanding balance of all SBA loans to the Intermediary and not more than 30 percent of such balance. (3) The Intermediary must contribute, solely from non-Federal sources, an amount equal to 25 percent of the grant. Contributions may be made in cash or in kind. (b) Limitations on grant funds. An Intermediary may not borrow its contribution. It may only use grant funds to provide Microloan borrowers with marketing, management, and technical assistance, except that: (1) Up to 50 percent of the grant funds may be used to provide information and technical assistance to prospective Microloan borrowers; provided, however, that no more than 5 percent of the grant funds may be used to market or advertise the products and services of the Microloan Intermediary directly related to the Microloan Program; and (2) Grant monies may be used to attend training required by SBA. (c) Intermediaries eligible to receive additional bonus grant monies. An Intermediary may receive an additional SBA grant equal to five percent of the outstanding balance of all loans received from SBA (with no obligation to contribute additional matching funds) if the Intermediary: (1) Is a Specialized Intermediary; (2) Provides not less than 25 percent of its loans to small business concerns located in or owned by one or more residents of an Economically Distressed Area; or (3) Maintains a portfolio of Microloans of which at least 25 percent is serving Rural Areas. (d) Third party contracts for technical assistance. An Intermediary may use no more than 50 percent of the grant funds it receives from SBA for contracts with third parties for the latter to provide technical assistance to Microloan borrowers.