Community Advantage Pilot Program, 69003-69008 [2023-22185]
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69003
Rules and Regulations
Federal Register
Vol. 88, No. 192
Thursday, October 5, 2023
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
SMALL BUSINESS ADMINISTRATION
[Docket No. SBA–2023–0011]
13 CFR Part 120
U.S. Small Business
Administration.
ACTION: Notification.
AGENCY:
The Small Business
Administration (‘‘SBA’’ or ‘‘Agency’’) is
sunsetting the Community Advantage
Pilot Program effective October 31,
2023.
DATES: The changes identified in this
document take effect October 31, 2023.
ADDRESSES: You may submit comments,
identified by SBA docket number SBA–
2023–0011, by any of the following
methods:
• Federal eRulemaking Portal:
https://www.regulations.gov/. Follow
the instructions for submitting
comments.
• Mail: Dianna Seaborn, Office of
Financial Assistance, U.S. Small
Business Administration, 409 Third
Street SW, Washington, DC 20416.
• Hand Delivery/Courier: Dianna
Seaborn, Office of Financial Assistance,
U.S. Small Business Administration,
409 Third Street SW, Washington, DC
20416.
SBA will post all comments on
https://www.regulations.gov.
If you wish to submit confidential
business information (‘‘CBI’’) as defined
in the User Notice at https://
www.regulations.gov, please submit the
information to Dianna Seaborn, Office of
Financial Assistance, U.S. Small
Business Administration, 409 Third
Street SW, Washington, DC 20416; or
send an email to communityadvantage@
sba.gov. Highlight the information that
you consider to be CBI and explain why
you believe SBA should hold this
information as confidential. SBA will
review the information and make the
final determination as to whether it will
publish the information.
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SUMMARY:
16:35 Oct 04, 2023
Dianna Seaborn, Office of Financial
Assistance, Small Business
Administration, at (202) 205–3645 or
dianna.seaborn@sba.gov. The phone
number above may also be reached by
individuals who are deaf or hard of
hearing, or who have speech
disabilities, through the Federal
Communications Commission’s TTYBased Telecommunications Relay
Service teletype service at 711.
SUPPLEMENTARY INFORMATION:
1. Background
Community Advantage Pilot Program
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As part of its efforts to increase the
number of SBA-guaranteed 7(a) loans
made to small businesses in
underserved markets, on February 18,
2011, SBA issued a notice and request
for comments introducing the
Community Advantage (CA) Pilot
Program (76 FR 9626). That notice
provided an overview of the CA Pilot
Program requirements and, pursuant to
the authority provided to SBA under 13
CFR 120.3 to suspend, modify, or waive
certain regulations in establishing and
testing pilot loan initiatives, SBA
modified or waived as appropriate
certain regulations which otherwise
apply to 7(a) loans for the CA Pilot
Program.
Subsequent notices made changes to
the CA Pilot Program to improve the
program experience for participants,
improve their ability to deliver capital
to underserved markets, and
appropriately manage risk to the
Agency. These notices were issued on
the following dates: February 18, 2011
(76 FR 9626), September 12, 2011 (76
FR 56262), February 8, 2012 (77 FR
6619), November 9, 2012 (77 FR 67433),
December 28, 2015 (80 FR 80872),
September 12, 2018 (83 FR 46237), and
March 2, 2020 (85 FR 12369). In the
notice published September 12, 2018
(the ‘‘September 2018 Notice’’), SBA
extended the pilot program to
September 30, 2022, and implemented a
temporary moratorium on the
acceptance of new Community
Advantage Pilot Lender Participation
Applications (CA Pilot Lender
Applications) effective October 1, 2018,
among other changes to the CA Pilot
Program. On April 29, 2022, notice 87
FR 25398 announced SBA’s intention to
extend the CA Pilot Program through
September 30, 2024, and to remove the
temporary moratorium on the
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acceptance of new CA Lender
Applications.
After evaluating the impact of the CA
Pilot Program, on April 12, 2023, SBA
published the Final Rule on Small
Business Lending Company (SBLC)
Moratorium Rescission and Removal of
the Requirement for a Loan
Authorization (SBLC Rule), 88 FR
21890. In the SBLC Rule, SBA lifted the
moratorium on licensing new SBLCs
and created a new type of SBLC called
a Community Advantage Small Business
Lending Company (CA SBLC). The
SBLC Rule also provided for the
grandfathering of current CA Pilot
Lenders to be licensed as CA SBLCs
with permanent 7(a) lending authority.
This means when SBA authorizes a CA
SBLC license for a CA Pilot Lender, the
CA Pilot Lender will no longer be
making 7(a) loans in a temporary pilot
program but will instead be making
regular 7(a) loans under a CA SBLC
license in the 7(a) program.
On May 1, 2023, SBA published
Information Notice 5000–846918,
Community Advantage Small Business
Lending Company Conversion, to
announce that effective May 12, 2023,
SBA’s Office of Credit Risk Management
(OCRM) initiated a program to enable
current CA Pilot Lenders to become CA
SBLCs. This notice also communicated
to Lenders that SBA intended to sunset
the CA Pilot Program on September 30,
2023.
SBA issued a notice and request for
comments on May 22, 2023, 88 FR
32623, SBLC Application Process, to
announce that SBA’s Office of Capital
Access (OCA) opened the application
period for new SBLC licenses from June
1, 2023, to July 31, 2023, and shared the
process by which interested entities
may apply. SBA also announced in this
notice that the CA Pilot Program will
sunset on September 30, 2023.
2. CA Pilot Program Will Sunset
October 31, 2023
As described above, SBA has
previously announced on two separate
occasions that the CA Pilot Program will
sunset on September 30, 2023. The
purpose of this notice is to provide a
third and final public notice of the CA
Pilot Program’s termination. Although
the previous notices announced the
termination of the CA Pilot Program on
September 30, 2023, the termination
date has been extended and will now be
October 31, 2023.
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3. Program Evaluation
On April 1, 2022, SBA published a
Notice in the Federal Register to, among
other things, extend the term of the CA
Pilot Program. In this notice, SBA stated
that it will evaluate the CA Pilot
Program to determine whether it should
be made permanent, with evaluation
criteria including, but not limited to,
whether the pilot is achieving its
objective(s), impact on job creation and
retention, impact on business creation
and/or business expansion, whether the
costs (including losses) of the pilot are
within an acceptable range, and
portfolio performance as it relates to
other 7(a) programs. SBA’s program
evaluation, found that the record on
both job creation and retention and
business creation and expansion, as
discussed in this analysis, is unclear.
While administrative and subsidy costs
to SBA of the pilot program are
unknown, indicators, such as hours
spent on counseling and the riskiness of
CA loans, are consistent with higher
costs in both categories. Portfolio
measures such as early loan problem
rates, default rates, and Small Business
Risk Portfolio (SBPS) Scores compare
unfavorably with other 7(a) programs.
CA Pilot Program evaluation results:
A. General Community Advantage
characteristics.
B. Increased access to credit for small
businesses in underserved markets.
C. How have CA Pilot Lenders
provided management and technical
assistance to CA Pilot Program
borrowers.
D. CA Pilot Program and job creation/
retention and business creation/
retention.
E. Are CA Pilot Program costs in an
acceptable range?
F. How does CA Pilot Program
portfolio performance relate to other
7(a) programs?
A. General Community Advantage
Characteristics
As Table 1 indicates, the number of
CA Pilot Lenders that made loans in a
fiscal year has ranged from 22 in its first
full year to a high of 75 in 2018 and
2019. Unique CA Pilot Lenders in the
period of the program’s existence
number 121. CA Pilot Lenders have
made a total of 8,248 loans to businesses
totaling over $1.1 billion over the life of
the program. Average loan size on an
annual basis has ranged from $124,665
in 2014 to $176,937 in 2023, for a mean
annual average of $140,728. In
percentage terms, the annual averages
have ranged from 89 percent of the
mean annual average in 2014 to 26
percent above that mean for the first five
months of 2023.
TABLE 1—CA LOANS, LENDERS, AND AMOUNTS
Number of
CA loans
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Average amount
of CA loans
Volume of
CA loans
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
15
188
273
453
828
988
1,043
1,118
947
538
565
717
575
5
22
34
46
64
69
74
75
75
67
64
63
53
142,853
134,260
139,926
124,665
125,019
124,671
131,923
140,903
141,302
141,663
146,609
158,995
176,937
2,142,800
25,240,900
38,199,800
56,473,500
103,516,100
123,175,000
137,595,500
157,529,200
133,813,400
76,214,700
82,834,100
113,999,400
101,739,000
Total ..................................................................................
8,248
..............................
..............................
1,152,473,400
B. Increased Access
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Number of
CA pilot lenders
that made a loan
The purpose of the CA Pilot Program
is to promote lending by missionoriented lenders, primarily non-profit
financial intermediaries that operate in
underserved markets. SBA assessed the
performance of this objective by
examining the number of new Lenders
in the 7(a) market enabled by this pilot
program and the amount of CA loans
made to borrowers in underserved
markets, which includes veteran-owned
and women-owned businesses, loans to
new businesses, and businesses in rural
areas.
Over the period of CA Pilot Program,
121 unique CA Pilot Lenders have made
CA loans. Of the CA loans, 30.98
percent were made to small businesses
owned by women, 7.84 percent to
veteran-owned small businesses, and
36.58 percent to small businesses
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owned by racial and ethnic minorities,
with 11.00 percent of the CA loans
going to small businesses with owners
of undetermined ethnicity. Further,
12.25 percent of loans went to small
businesses located in rural areas, with
rural location defined in accordance
with 13 CFR 120.10 as a political
subdivision or unincorporated area in a
non-metropolitan county (as defined by
the Department of Agriculture), or, if in
a metropolitan county, any such
subdivision or area with a resident
population under 20,000 which is
designated by SBA as rural. For 7(a)
loans other than CA loans, the numbers
were 17.56 percent for small businesses
owned by women, 18.10 percent for
veteran-owned small businesses, 25.48
percent to small businesses owned by
racial and ethnic minorities,15.47
percent going to small businesses with
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owners of undetermined ethnicity, and
18.10 percent for rural small businesses.
For underserved borrowers, the picture
of access has been mixed. Table 2 shows
numbers of loans to women-owned
small businesses, veteran-owned small
businesses, and minority owned small
businesses. The numbers may doublecount some categories, such as
businesses that qualify for two or all
three categories.
A measure of increased access is the
geographic distribution of the number of
CA loans in Table 2. Two states—
California and Texas—with a combined
total of just over 20 percent of the US
population, account for over 40 percent
of the number of CA loans made. This
imbalance could indicate an uneven
distribution of the lending activity, or it
could indicate that there are more
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borrowers in the underserved category
living in these two states.
TABLE 2—PERCENTAGE OF CA LOANS
BY STATE—Continued
TABLE 2—PERCENTAGE OF CA LOANS
BY STATE
Percent of
CA loans
State
California .....................................
Texas ..........................................
Ohio ............................................
30.80
10.90
6.46
TABLE 2—PERCENTAGE OF CA LOANS
BY STATE—Continued
Percent of
CA loans
State
New York ....................................
New Jersey .................................
Wisconsin ...................................
North Carolina ............................
Arizona ........................................
Florida .........................................
Georgia .......................................
5.60
4.27
4.11
4.00
3.95
3.04
2.16
69005
Percent of
CA loans
State
Colorado .....................................
Michigan .....................................
Illinois ..........................................
Indiana ........................................
Nevada .......................................
All others .....................................
2.15
1.98
1.65
1.64
1.19
16.11
TABLE 3—CA LOANS TO BORROWERS IN UNDERSERVED MARKETS
Number of
CA loans
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
.....................................................................................
As shown in Table 3, the number of
veteran-owned small business loans has
not risen above 10 percent of the
number of CA loans in any year of the
pilot program. Women-owned
businesses have received between 26
percent and 36 percent of CA loans and
minority-owned businesses have
received a quarter of the loans since FY
Borrower was
women-owned
small businesses
15
188
273
453
828
988
1,043
1,118
947
538
565
717
575
Borrower was
veteran-owned
small business
4
43
77
116
249
317
308
331
307
153
180
260
210
2013 and over 40 percent in the postpandemic years.
C. Management and Technical
Assistance
Data gathered from the addendum to
SBA Form 1919, ‘‘Borrower Information
Form’’, submitted by lenders to SBA,
indicate that borrowers have requested
management and technical assistance
over the period of the pilot program on
0
9
15
21
61
69
92
110
88
47
35
58
42
Borrower was
minority-owned
small businesses
2
32
73
151
293
324
350
418
355
190
233
321
275
2,968 unique CA loans, or 35.98 percent
of the loans. The addendum did not
separate SBA-provided training from
that provided by CA Pilot Lenders. The
most common assistance type was
Financing/Capital followed by Business
Plan assistance. Some loans involved
multiple types of assistance and these
two categories were both involved in
over half of the loans.
TABLE 4—CA ASSISTANCE BY TYPE
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Assistance type
Loan count
Financing/Capital .......................................................................................................................................
Business Plan ............................................................................................................................................
Start-up Assistance ....................................................................................................................................
Cash Flow Management ............................................................................................................................
Business Accounting/Budget .....................................................................................................................
Marketing/Sales .........................................................................................................................................
Managing Business ...................................................................................................................................
Legal Issues ...............................................................................................................................................
Tax Planning ..............................................................................................................................................
Customer Relations ...................................................................................................................................
Human Resources/Employees ..................................................................................................................
Other ..........................................................................................................................................................
Technology Computers ..............................................................................................................................
Buy/Sell Business ......................................................................................................................................
eCommerce ...............................................................................................................................................
Franchising ................................................................................................................................................
Government Contracting ............................................................................................................................
International Trade .....................................................................................................................................
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1,860
1,561
1,122
960
828
696
694
308
277
265
242
230
176
165
152
119
113
27
05OCR1
Percent of loans
receiving
assistance type
62.67
52.59
37.80
32.35
27.90
23.45
23.38
10.38
9.33
8.93
8.15
7.75
5.93
5.56
5.12
4.01
3.81
0.91
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Modes of delivery included group
training, one-on-one counseling,
telephone counseling, and web-based
tutorials. One-on-one counseling was
the most frequently employed mode,
with over 80 percent of loans benefiting
from this type of counseling and with
over 36 percent of loans involving 5 or
more hours. A borrower may have used
more than one mode of delivery.
Telephone Counseling was the second
most common mode of delivery.
TABLE 5—MODES OF DELIVERY FOR ASSISTANCE TO CA BORROWERS
Percent of loans
receiving
assistance mode
and hours
Assistance type
Assistance hours
Loan count
Group Training .......................................................
Group Training .......................................................
Group Training .......................................................
5+ Hours ................................................................
3–5 Hours ..............................................................
Less Than 3 Hours ................................................
429
119
322
15.08
4.18
11.32
Total Group Training ......................................
One-on-one Counseling .........................................
One-on-one Counseling .........................................
One-on-one Counseling .........................................
................................................................................
5+ Hours ................................................................
3–5 Hours ..............................................................
Less Than 3 Hours ................................................
870
1,037
604
645
30.59
36.46
21.24
22.68
Total One-on-one Counseling ........................
Telephone Counseling ...........................................
Telephone Counseling ...........................................
Telephone Counseling ...........................................
................................................................................
5+ Hours ................................................................
3–5 Hours ..............................................................
Less Than 3 Hours ................................................
2.286
649
529
607
80.38
22.82
18.60
21.34
Total Telephone
Web-based Tutorials
Web-based Tutorials
Web-based Tutorials
Counseling ..........................
..............................................
..............................................
..............................................
................................................................................
5+ Hours ................................................................
3–5 Hours ..............................................................
Less Than 3 Hours ................................................
1,785
340
208
358
62.76
11.95
7.31
12.59
Total Web-based Tutorials .............................
................................................................................
906
31.86
Figure 1. One-on-one Counseling
ONE-ON-ONE COUNSELING
D. CA Pilot Program and Job Creation/
Retention and Business Creation/
Retention
Jobs created plus jobs retained over
the life of CA Pilot Program total 59,487.
This number represents 0.81 percent of
the overall 7(a) portfolio of jobs. CA
lending represents 0.39 percent of total
• 3-5 Hcurs
• l.es.slhan S Haws
7(a) dollars approved; therefore, CA
Pilot Program appears to be performing
better than average when considering
the number of jobs created and retained
relative to dollars in loans. However,
comparison with other 7(a) loan
delivery methods, which have different
equity and other loan criteria and,
hence, lower lending risk, as discussed
below, is not insightful. In Table 6, jobs
created represent 54.87 percent or most
of the total jobs in the CA portfolio. For
comparison, jobs created represent
33.84 percent of the SBA Express loan
jobs, while jobs retained account for the
remainder.
TABLE 6—CA PILOT PROGRAM JOBS CREATED AND RETAINED BY YEAR
Year
Jobs created
2011 ...........................................................................................................................
2012 ...........................................................................................................................
2013 ...........................................................................................................................
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Jobs retained
61
763
1,015
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122
936
1,085
05OCR1
Total jobs
183
1,649
2,100
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69007
TABLE 6—CA PILOT PROGRAM JOBS CREATED AND RETAINED BY YEAR—Continued
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Jobs created
Jobs retained
Total jobs
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
1,563
3,588
3,834
4,298
4,886
3,707
1,703
2,068
2,723
2,431
1,473
3,106
2,861
3,632
4,437
2,736
1,878
1,334
1,631
1,666
3,036
6,694
6,695
7,930
9,323
6,443
3,581
3,402
4,354
4,097
Total ....................................................................................................................
32,640
26,897
59,487
Over the term of CA Pilot Program’s
activities, 57.78 percent of CA loans
have been to new businesses, defined as
in operations for 2 years or less. The
percentage of CA loans going to new
businesses has generally increased over
the life of the program, as shown in
Table 7.
TABLE 7—CA LOANS TO NEW SMALL BUSINESSES
Number of
CA loans
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Percentage of
CA loans to
new businesses
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
15
188
273
453
828
988
1,043
1,118
947
538
565
717
575
7
89
134
239
423
487
580
658
576
304
394
501
374
46.67
47.34
49.08
52.76
51.09
49.29
55.61
58.86
60.82
56.51
69.73
69.87
65.04
Total ....................................................................................................................
8,248
4,766
57.78
E. CA Pilot Program Costs
SBA does not disaggregate 7(a)
administrative or subsidy costs.
Therefore, the agency cannot determine
if these costs are in an acceptable range.
As the following section indicates, loans
in the CA Pilot Program have
characteristics that are consistent with
higher administrative and subsidy costs.
Specifically, the early problem loan rate
for CA loans has been and remains
significantly higher than for other 7(a)
loans, including other small loans, and
the SBPS Score for CA loans has
remained in the high-risk range during
the entire existence of the CA Pilot
Program.
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Number of
CA loans to
new businesses
F. CA Pilot Program Portfolio
Performance
A standard metric for loan portfolio
performance is the early problem loan
rate. This rate is the percentage of the
gross amount of loans that have been in
place for 36 months or less that have
had either a deferred, delinquent (60 or
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more days past due), liquidated,
purchased, or charged off status within
18 months of disbursement. SBA
defines the threshold for higher risk
loans as 4 percent or higher. For CA
loans, the early problem loan rate has
been above 4 percent since the first
quarter of FY 2014 and has more than
doubled to 8 percent in FY 2016. This
increase is on pace with CA Pilot
Program’s expansion (see Table 1).
Since FY 2016, the early problem loan
rate has not dropped below 7 percent,
and the average of annual early problem
loan rates over the life of CA Pilot
Program through the second quarter of
FY 2023 is 8.28 percent. For
comparison, the early problem loan rate
for the entire 7(a) portfolio over the
same period is 2.61 percent and for nonCA Pilot Program 7(a) loans of $250,000
or less, the rate is 3.10 percent. SBA
compared CA Pilot Program loans with
non-CA Pilot Program 7(a) loans of
$250,000 or less because for the
duration of the CA Pilot Program (until
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May 2023), the maximum loan amount
for a CA Pilot Program loan was
$250,000. Default rates for CA loans
have also been higher. Quarterly default
rates over a five-year period from March
2013 to March 2018 average 2.07
percent for CA loans, compared to 0.76
percent for the 7(a) portfolio. The
averages for non-CA Pilot Program 7(a)
loans of $250,000 or less and non-CA
Pilot Programs 7(a) loans to underserved
markets of $250,000 or less were 1.04
percent and 1.15 percent, respectively.
Another metric for comparison is the
Small Business Risk Portfolio Solution
(SBPS) Score, which assesses the
likelihood of debt delinquency in the
next 12 to 24 months. A higher
measurement means lower risk of debt
delinquency, with a score of below 180
defined as high risk. At the end of Q2
in FY 2023, the SBPS Score for CA loans
was 170.94, well below the overall 7(a)
score of 203.51 and below the score of
182.27 for non-CA Pilot Program 7(a)
loans of $250,000 or less. The SBPS
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Score for CA loans has never broken the
180 threshold score over the period of
CA Pilot Program. In contrast, the SBPS
Score for the 7(a) portfolio has not fallen
below 180 for over the period of CA
Pilot Program. SBPS Scores have
averaged 172.62 for CA loans over the
time of the pilot program, 180.2 for 7(a)
loans of $250,000 or less, and 191.09 for
the 7(a) portfolio over the same period.
4. General Information
Questions regarding the CA Pilot
Program may be directed to the local
SBA district office. The local SBA
district office may be found at https://
www.sba.gov/about-offices-list/2.
Authority: 15 U.S.C. 636(a)(25) and 13 CFR
120.3.
Isabella Guzman,
Administrator.
[FR Doc. 2023–22185 Filed 10–4–23; 8:45 am]
BILLING CODE 8026–09–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2023–1056; Project
Identifier MCAI–2023–00179–T; Amendment
39–22563; AD 2023–20–04]
RIN 2120–AA64
Airworthiness Directives; Airbus SAS
Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
ddrumheller on DSK120RN23PROD with RULES1
VerDate Sep<11>2014
16:35 Oct 04, 2023
Jkt 262001
AD Docket: You may examine the AD
docket at regulations.gov under Docket
No. FAA–2023–1056; or in person at
Docket Operations between 9 a.m. and
5 p.m., Monday through Friday, except
Federal holidays. The AD docket
contains this final rule, the mandatory
continuing airworthiness information
(MCAI), any comments received, and
other information. The address for
Docket Operations is U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
Material Incorporated by Reference:
• For material incorporated by
reference in this AD, contact EASA,
Konrad-Adenauer-Ufer 3, 50668
Cologne, Germany; telephone +49 221
8999 000; email ADs@easa.europa.eu;
website easa.europa.eu. You may find
this material on the EASA website
ad.easa.europa.eu.
• You may view this material at the
FAA, Airworthiness Products Section,
Operational Safety Branch, 2200 South
216th Street, Des Moines, WA. For
information on the availability of this
material at the FAA, call 206–231–3195.
It is also available in the AD docket at
regulations.gov under Docket No. FAA–
2023–1056.
FOR FURTHER INFORMATION CONTACT: Dat
Le, Aviation Safety Engineer, FAA, 1600
Stewart Avenue, Suite 410, Westbury,
NY 11590; telephone 516–228–7317;
email dat.v.le@faa.gov.
SUPPLEMENTARY INFORMATION:
Background
The FAA is adopting a new
airworthiness directive (AD) for certain
Airbus SAS Model A350–941 and
A350–1041 airplanes. This AD is
prompted by reports that excessively
deep spot faces on the front engine
mounting bolt holes on the wing pylon
were detected on the production line.
This AD requires a one-time inspection
for clash (interference) of the three front
engine mounting bolt holes on both the
left and right wing pylons, and,
depending on findings, accomplishment
of applicable corrective actions, as
specified in a European Union Aviation
Safety Agency (EASA) AD, which is
incorporated by reference. The FAA is
issuing this AD to address the unsafe
condition on these products.
DATES: This AD is effective November 9,
2023.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of November 9, 2023.
SUMMARY:
ADDRESSES:
The FAA issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would
apply to certain Airbus SAS Model
A350–941 and A350–1041 airplanes.
The NPRM published in the Federal
Register on June 1, 2023 (88 FR 35785).
The NPRM was prompted by AD 2023–
0026, dated January 30, 2023, issued by
EASA (EASA AD 2023–0026) (also
referred to as the MCAI), which is the
Technical Agent for the Member States
of the European Union. The MCAI states
excessively deep spot faces have been
detected on the production line on rib
1 at the level of the front engine mount
bolting. This could cause possible
integration issues between the pylon
and the front engine mount, which
could lead to interference damage. This
condition, if not detected and corrected,
could lead to a reduced fatigue life,
which could adversely affect the
structural integrity of the airplane.
In the NPRM, the FAA proposed to
require a one-time inspection for clash
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
(interference) of the three front engine
mounting bolt holes on both the left and
right wing pylons, and, depending on
findings, accomplishment of applicable
corrective actions, as specified in EASA
AD 2023–0026. The FAA is issuing this
AD to address the unsafe condition on
these products.
You may examine the MCAI in the
AD docket at regulations.gov under
Docket No. FAA–2023–1056.
Discussion of Final Airworthiness
Directive
Comments
The FAA received comments from Air
Line Pilots Association, International
(ALPA) who supported the NPRM
without change.
The FAA received additional
comments from Delta Air Lines (Delta).
The following presents the comments
received on the NPRM and the FAA’s
response to each comment.
Request for Another Exception to the
MCAI
Delta requested an exception to
require only accomplishment of Airbus
Service Bulletin A350–71–P011,
Revision 01, dated December 20, 2022
(ASB A350–71–P011) and Airbus
Service Bulletin A350–71–P015, dated
December 20, 2022 (ASB A350–71–
P015), ‘‘in accordance’’ with steps in
those bulletins. Otherwise, the ‘‘in
accordance with’’ in Airbus Service
Bulletin A350–54–P006, Rev 01, dated
December 20, 2022 (ASB A350–54–
P006), and Airbus Service Bulletin
A350–54–P008, dated December 20,
2022 (ASB A350–54–P008) might
otherwise be inferred as requiring the
entire service bulletin, ASB A350–71–
P011 or ASB A350–71–P015, as
mandatory.
Delta explained that ASB A350–54–
P006 and ASB A350–54–P008 required
to be accomplished by EASA AD 2023–
0026, use the ‘‘in accordance with’’
language to call for implementation of
ASB A350–71–P011, and ASB A350–
71–P015 and states that ASB A350–71–
P011 and ASB A350–71–P015 do not
have the paragraph specifying
‘‘Required for compliance’’ (RC) actions.
Delta states this might infer the entire
ASB A350–71–P011 or ASB A350–71–
P015 must be accomplished for AD
compliance.
The FAA agrees to clarify. The FAA
AD refers to EASA AD 2023–0026,
which requires following the mandatory
(required for compliance) actions in
ASB A350–54–P006 and ASB A350–54–
P008. These two service bulletins
include RC actions that specify that
specific actions must be done in
E:\FR\FM\05OCR1.SGM
05OCR1
]]>Agencies
[Federal Register Volume 88, Number 192 (Thursday, October 5, 2023)]
[Rules and Regulations]
[Pages 69003-69008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22185]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 /
Rules and Regulations
[[Page 69003]]
SMALL BUSINESS ADMINISTRATION
[Docket No. SBA-2023-0011]
13 CFR Part 120
Community Advantage Pilot Program
AGENCY: U.S. Small Business Administration.
ACTION: Notification.
-----------------------------------------------------------------------
SUMMARY: The Small Business Administration (``SBA'' or ``Agency'') is
sunsetting the Community Advantage Pilot Program effective October 31,
2023.
DATES: The changes identified in this document take effect October 31,
2023.
ADDRESSES: You may submit comments, identified by SBA docket number
SBA-2023-0011, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov/.
Follow the instructions for submitting comments.
Mail: Dianna Seaborn, Office of Financial Assistance, U.S.
Small Business Administration, 409 Third Street SW, Washington, DC
20416.
Hand Delivery/Courier: Dianna Seaborn, Office of Financial
Assistance, U.S. Small Business Administration, 409 Third Street SW,
Washington, DC 20416.
SBA will post all comments on https://www.regulations.gov.
If you wish to submit confidential business information (``CBI'')
as defined in the User Notice at https://www.regulations.gov, please
submit the information to Dianna Seaborn, Office of Financial
Assistance, U.S. Small Business Administration, 409 Third Street SW,
Washington, DC 20416; or send an email to [email protected].
Highlight the information that you consider to be CBI and explain why
you believe SBA should hold this information as confidential. SBA will
review the information and make the final determination as to whether
it will publish the information.
FOR FURTHER INFORMATION CONTACT: Dianna Seaborn, Office of Financial
Assistance, Small Business Administration, at (202) 205-3645 or
[email protected]. The phone number above may also be reached by
individuals who are deaf or hard of hearing, or who have speech
disabilities, through the Federal Communications Commission's TTY-Based
Telecommunications Relay Service teletype service at 711.
SUPPLEMENTARY INFORMATION:
1. Background
As part of its efforts to increase the number of SBA-guaranteed
7(a) loans made to small businesses in underserved markets, on February
18, 2011, SBA issued a notice and request for comments introducing the
Community Advantage (CA) Pilot Program (76 FR 9626). That notice
provided an overview of the CA Pilot Program requirements and, pursuant
to the authority provided to SBA under 13 CFR 120.3 to suspend, modify,
or waive certain regulations in establishing and testing pilot loan
initiatives, SBA modified or waived as appropriate certain regulations
which otherwise apply to 7(a) loans for the CA Pilot Program.
Subsequent notices made changes to the CA Pilot Program to improve
the program experience for participants, improve their ability to
deliver capital to underserved markets, and appropriately manage risk
to the Agency. These notices were issued on the following dates:
February 18, 2011 (76 FR 9626), September 12, 2011 (76 FR 56262),
February 8, 2012 (77 FR 6619), November 9, 2012 (77 FR 67433), December
28, 2015 (80 FR 80872), September 12, 2018 (83 FR 46237), and March 2,
2020 (85 FR 12369). In the notice published September 12, 2018 (the
``September 2018 Notice''), SBA extended the pilot program to September
30, 2022, and implemented a temporary moratorium on the acceptance of
new Community Advantage Pilot Lender Participation Applications (CA
Pilot Lender Applications) effective October 1, 2018, among other
changes to the CA Pilot Program. On April 29, 2022, notice 87 FR 25398
announced SBA's intention to extend the CA Pilot Program through
September 30, 2024, and to remove the temporary moratorium on the
acceptance of new CA Lender Applications.
After evaluating the impact of the CA Pilot Program, on April 12,
2023, SBA published the Final Rule on Small Business Lending Company
(SBLC) Moratorium Rescission and Removal of the Requirement for a Loan
Authorization (SBLC Rule), 88 FR 21890. In the SBLC Rule, SBA lifted
the moratorium on licensing new SBLCs and created a new type of SBLC
called a Community Advantage Small Business Lending Company (CA SBLC).
The SBLC Rule also provided for the grandfathering of current CA Pilot
Lenders to be licensed as CA SBLCs with permanent 7(a) lending
authority. This means when SBA authorizes a CA SBLC license for a CA
Pilot Lender, the CA Pilot Lender will no longer be making 7(a) loans
in a temporary pilot program but will instead be making regular 7(a)
loans under a CA SBLC license in the 7(a) program.
On May 1, 2023, SBA published Information Notice 5000-846918,
Community Advantage Small Business Lending Company Conversion, to
announce that effective May 12, 2023, SBA's Office of Credit Risk
Management (OCRM) initiated a program to enable current CA Pilot
Lenders to become CA SBLCs. This notice also communicated to Lenders
that SBA intended to sunset the CA Pilot Program on September 30, 2023.
SBA issued a notice and request for comments on May 22, 2023, 88 FR
32623, SBLC Application Process, to announce that SBA's Office of
Capital Access (OCA) opened the application period for new SBLC
licenses from June 1, 2023, to July 31, 2023, and shared the process by
which interested entities may apply. SBA also announced in this notice
that the CA Pilot Program will sunset on September 30, 2023.
2. CA Pilot Program Will Sunset October 31, 2023
As described above, SBA has previously announced on two separate
occasions that the CA Pilot Program will sunset on September 30, 2023.
The purpose of this notice is to provide a third and final public
notice of the CA Pilot Program's termination. Although the previous
notices announced the termination of the CA Pilot Program on September
30, 2023, the termination date has been extended and will now be
October 31, 2023.
[[Page 69004]]
3. Program Evaluation
On April 1, 2022, SBA published a Notice in the Federal Register
to, among other things, extend the term of the CA Pilot Program. In
this notice, SBA stated that it will evaluate the CA Pilot Program to
determine whether it should be made permanent, with evaluation criteria
including, but not limited to, whether the pilot is achieving its
objective(s), impact on job creation and retention, impact on business
creation and/or business expansion, whether the costs (including
losses) of the pilot are within an acceptable range, and portfolio
performance as it relates to other 7(a) programs. SBA's program
evaluation, found that the record on both job creation and retention
and business creation and expansion, as discussed in this analysis, is
unclear. While administrative and subsidy costs to SBA of the pilot
program are unknown, indicators, such as hours spent on counseling and
the riskiness of CA loans, are consistent with higher costs in both
categories. Portfolio measures such as early loan problem rates,
default rates, and Small Business Risk Portfolio (SBPS) Scores compare
unfavorably with other 7(a) programs.
CA Pilot Program evaluation results:
A. General Community Advantage characteristics.
B. Increased access to credit for small businesses in underserved
markets.
C. How have CA Pilot Lenders provided management and technical
assistance to CA Pilot Program borrowers.
D. CA Pilot Program and job creation/retention and business
creation/retention.
E. Are CA Pilot Program costs in an acceptable range?
F. How does CA Pilot Program portfolio performance relate to other
7(a) programs?
A. General Community Advantage Characteristics
As Table 1 indicates, the number of CA Pilot Lenders that made
loans in a fiscal year has ranged from 22 in its first full year to a
high of 75 in 2018 and 2019. Unique CA Pilot Lenders in the period of
the program's existence number 121. CA Pilot Lenders have made a total
of 8,248 loans to businesses totaling over $1.1 billion over the life
of the program. Average loan size on an annual basis has ranged from
$124,665 in 2014 to $176,937 in 2023, for a mean annual average of
$140,728. In percentage terms, the annual averages have ranged from 89
percent of the mean annual average in 2014 to 26 percent above that
mean for the first five months of 2023.
Table 1--CA Loans, Lenders, and Amounts
----------------------------------------------------------------------------------------------------------------
Number of CA
Year Number of CA pilot lenders Average amount Volume of CA
loans that made a loan of CA loans loans
----------------------------------------------------------------------------------------------------------------
2011................................ 15 5 142,853 2,142,800
2012................................ 188 22 134,260 25,240,900
2013................................ 273 34 139,926 38,199,800
2014................................ 453 46 124,665 56,473,500
2015................................ 828 64 125,019 103,516,100
2016................................ 988 69 124,671 123,175,000
2017................................ 1,043 74 131,923 137,595,500
2018................................ 1,118 75 140,903 157,529,200
2019................................ 947 75 141,302 133,813,400
2020................................ 538 67 141,663 76,214,700
2021................................ 565 64 146,609 82,834,100
2022................................ 717 63 158,995 113,999,400
2023................................ 575 53 176,937 101,739,000
---------------------------------------------------------------------------
Total........................... 8,248 ................. ................. 1,152,473,400
----------------------------------------------------------------------------------------------------------------
B. Increased Access
The purpose of the CA Pilot Program is to promote lending by
mission-oriented lenders, primarily non-profit financial intermediaries
that operate in underserved markets. SBA assessed the performance of
this objective by examining the number of new Lenders in the 7(a)
market enabled by this pilot program and the amount of CA loans made to
borrowers in underserved markets, which includes veteran-owned and
women-owned businesses, loans to new businesses, and businesses in
rural areas.
Over the period of CA Pilot Program, 121 unique CA Pilot Lenders
have made CA loans. Of the CA loans, 30.98 percent were made to small
businesses owned by women, 7.84 percent to veteran-owned small
businesses, and 36.58 percent to small businesses owned by racial and
ethnic minorities, with 11.00 percent of the CA loans going to small
businesses with owners of undetermined ethnicity. Further, 12.25
percent of loans went to small businesses located in rural areas, with
rural location defined in accordance with 13 CFR 120.10 as a political
subdivision or unincorporated area in a non-metropolitan county (as
defined by the Department of Agriculture), or, if in a metropolitan
county, any such subdivision or area with a resident population under
20,000 which is designated by SBA as rural. For 7(a) loans other than
CA loans, the numbers were 17.56 percent for small businesses owned by
women, 18.10 percent for veteran-owned small businesses, 25.48 percent
to small businesses owned by racial and ethnic minorities,15.47 percent
going to small businesses with owners of undetermined ethnicity, and
18.10 percent for rural small businesses. For underserved borrowers,
the picture of access has been mixed. Table 2 shows numbers of loans to
women-owned small businesses, veteran-owned small businesses, and
minority owned small businesses. The numbers may double-count some
categories, such as businesses that qualify for two or all three
categories.
A measure of increased access is the geographic distribution of the
number of CA loans in Table 2. Two states--California and Texas--with a
combined total of just over 20 percent of the US population, account
for over 40 percent of the number of CA loans made. This imbalance
could indicate an uneven distribution of the lending activity, or it
could indicate that there are more
[[Page 69005]]
borrowers in the underserved category living in these two states.
Table 2--Percentage of CA Loans by State
------------------------------------------------------------------------
Percent of
State CA loans
------------------------------------------------------------------------
California.................................................. 30.80
Texas....................................................... 10.90
Ohio........................................................ 6.46
New York.................................................... 5.60
New Jersey.................................................. 4.27
Wisconsin................................................... 4.11
North Carolina.............................................. 4.00
Arizona..................................................... 3.95
Florida..................................................... 3.04
Georgia..................................................... 2.16
Colorado.................................................... 2.15
Michigan.................................................... 1.98
Illinois.................................................... 1.65
Indiana..................................................... 1.64
Nevada...................................................... 1.19
All others.................................................. 16.11
------------------------------------------------------------------------
Table 3--CA Loans to Borrowers in Underserved Markets
----------------------------------------------------------------------------------------------------------------
Borrower was women- Borrower was Borrower was
Year Number of CA owned small veteran-owned minority-owned
loans businesses small business small businesses
----------------------------------------------------------------------------------------------------------------
2011.............................. 15 4 0 2
2012.............................. 188 43 9 32
2013.............................. 273 77 15 73
2014.............................. 453 116 21 151
2015.............................. 828 249 61 293
2016.............................. 988 317 69 324
2017.............................. 1,043 308 92 350
2018.............................. 1,118 331 110 418
2019.............................. 947 307 88 355
2020.............................. 538 153 47 190
2021.............................. 565 180 35 233
2022.............................. 717 260 58 321
2023.............................. 575 210 42 275
----------------------------------------------------------------------------------------------------------------
As shown in Table 3, the number of veteran-owned small business
loans has not risen above 10 percent of the number of CA loans in any
year of the pilot program. Women-owned businesses have received between
26 percent and 36 percent of CA loans and minority-owned businesses
have received a quarter of the loans since FY 2013 and over 40 percent
in the post-pandemic years.
C. Management and Technical Assistance
Data gathered from the addendum to SBA Form 1919, ``Borrower
Information Form'', submitted by lenders to SBA, indicate that
borrowers have requested management and technical assistance over the
period of the pilot program on 2,968 unique CA loans, or 35.98 percent
of the loans. The addendum did not separate SBA-provided training from
that provided by CA Pilot Lenders. The most common assistance type was
Financing/Capital followed by Business Plan assistance. Some loans
involved multiple types of assistance and these two categories were
both involved in over half of the loans.
Table 4--CA Assistance by Type
------------------------------------------------------------------------
Percent of loans
Assistance type Loan count receiving
assistance type
------------------------------------------------------------------------
Financing/Capital................ 1,860 62.67
Business Plan.................... 1,561 52.59
Start-up Assistance.............. 1,122 37.80
Cash Flow Management............. 960 32.35
Business Accounting/Budget....... 828 27.90
Marketing/Sales.................. 696 23.45
Managing Business................ 694 23.38
Legal Issues..................... 308 10.38
Tax Planning..................... 277 9.33
Customer Relations............... 265 8.93
Human Resources/Employees........ 242 8.15
Other............................ 230 7.75
Technology Computers............. 176 5.93
Buy/Sell Business................ 165 5.56
eCommerce........................ 152 5.12
Franchising...................... 119 4.01
Government Contracting........... 113 3.81
International Trade.............. 27 0.91
------------------------------------------------------------------------
[[Page 69006]]
Modes of delivery included group training, one-on-one counseling,
telephone counseling, and web-based tutorials. One-on-one counseling
was the most frequently employed mode, with over 80 percent of loans
benefiting from this type of counseling and with over 36 percent of
loans involving 5 or more hours. A borrower may have used more than one
mode of delivery. Telephone Counseling was the second most common mode
of delivery.
Table 5--Modes of Delivery for Assistance to CA Borrowers
----------------------------------------------------------------------------------------------------------------
Percent of loans
receiving
Assistance type Assistance hours Loan count assistance mode
and hours
----------------------------------------------------------------------------------------------------------------
Group Training............................ 5+ Hours..................... 429 15.08
Group Training............................ 3-5 Hours.................... 119 4.18
Group Training............................ Less Than 3 Hours............ 322 11.32
---------------------------------------------------------------------
Total Group Training.................. ............................. 870 30.59
One-on-one Counseling..................... 5+ Hours..................... 1,037 36.46
One-on-one Counseling..................... 3-5 Hours.................... 604 21.24
One-on-one Counseling..................... Less Than 3 Hours............ 645 22.68
---------------------------------------------------------------------
Total One-on-one Counseling........... ............................. 2.286 80.38
Telephone Counseling...................... 5+ Hours..................... 649 22.82
Telephone Counseling...................... 3-5 Hours.................... 529 18.60
Telephone Counseling...................... Less Than 3 Hours............ 607 21.34
---------------------------------------------------------------------
Total Telephone Counseling............ ............................. 1,785 62.76
Web-based Tutorials....................... 5+ Hours..................... 340 11.95
Web-based Tutorials....................... 3-5 Hours.................... 208 7.31
Web-based Tutorials....................... Less Than 3 Hours............ 358 12.59
---------------------------------------------------------------------
Total Web-based Tutorials............. ............................. 906 31.86
----------------------------------------------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] TR05OC23.065
D. CA Pilot Program and Job Creation/Retention and Business Creation/
Retention
Jobs created plus jobs retained over the life of CA Pilot Program
total 59,487. This number represents 0.81 percent of the overall 7(a)
portfolio of jobs. CA lending represents 0.39 percent of total 7(a)
dollars approved; therefore, CA Pilot Program appears to be performing
better than average when considering the number of jobs created and
retained relative to dollars in loans. However, comparison with other
7(a) loan delivery methods, which have different equity and other loan
criteria and, hence, lower lending risk, as discussed below, is not
insightful. In Table 6, jobs created represent 54.87 percent or most of
the total jobs in the CA portfolio. For comparison, jobs created
represent 33.84 percent of the SBA Express loan jobs, while jobs
retained account for the remainder.
Table 6--CA Pilot Program Jobs Created and Retained by Year
----------------------------------------------------------------------------------------------------------------
Year Jobs created Jobs retained Total jobs
----------------------------------------------------------------------------------------------------------------
2011................................................... 61 122 183
2012................................................... 763 936 1,649
2013................................................... 1,015 1,085 2,100
[[Page 69007]]
2014................................................... 1,563 1,473 3,036
2015................................................... 3,588 3,106 6,694
2016................................................... 3,834 2,861 6,695
2017................................................... 4,298 3,632 7,930
2018................................................... 4,886 4,437 9,323
2019................................................... 3,707 2,736 6,443
2020................................................... 1,703 1,878 3,581
2021................................................... 2,068 1,334 3,402
2022................................................... 2,723 1,631 4,354
2023................................................... 2,431 1,666 4,097
--------------------------------------------------------
Total.............................................. 32,640 26,897 59,487
----------------------------------------------------------------------------------------------------------------
Over the term of CA Pilot Program's activities, 57.78 percent of CA
loans have been to new businesses, defined as in operations for 2 years
or less. The percentage of CA loans going to new businesses has
generally increased over the life of the program, as shown in Table 7.
Table 7--CA Loans to New Small Businesses
----------------------------------------------------------------------------------------------------------------
Number of CA Percentage of CA
Year Number of CA loans to new loans to new
loans businesses businesses
----------------------------------------------------------------------------------------------------------------
2011................................................... 15 7 46.67
2012................................................... 188 89 47.34
2013................................................... 273 134 49.08
2014................................................... 453 239 52.76
2015................................................... 828 423 51.09
2016................................................... 988 487 49.29
2017................................................... 1,043 580 55.61
2018................................................... 1,118 658 58.86
2019................................................... 947 576 60.82
2020................................................... 538 304 56.51
2021................................................... 565 394 69.73
2022................................................... 717 501 69.87
2023................................................... 575 374 65.04
--------------------------------------------------------
Total.............................................. 8,248 4,766 57.78
----------------------------------------------------------------------------------------------------------------
E. CA Pilot Program Costs
SBA does not disaggregate 7(a) administrative or subsidy costs.
Therefore, the agency cannot determine if these costs are in an
acceptable range. As the following section indicates, loans in the CA
Pilot Program have characteristics that are consistent with higher
administrative and subsidy costs. Specifically, the early problem loan
rate for CA loans has been and remains significantly higher than for
other 7(a) loans, including other small loans, and the SBPS Score for
CA loans has remained in the high-risk range during the entire
existence of the CA Pilot Program.
F. CA Pilot Program Portfolio Performance
A standard metric for loan portfolio performance is the early
problem loan rate. This rate is the percentage of the gross amount of
loans that have been in place for 36 months or less that have had
either a deferred, delinquent (60 or more days past due), liquidated,
purchased, or charged off status within 18 months of disbursement. SBA
defines the threshold for higher risk loans as 4 percent or higher. For
CA loans, the early problem loan rate has been above 4 percent since
the first quarter of FY 2014 and has more than doubled to 8 percent in
FY 2016. This increase is on pace with CA Pilot Program's expansion
(see Table 1). Since FY 2016, the early problem loan rate has not
dropped below 7 percent, and the average of annual early problem loan
rates over the life of CA Pilot Program through the second quarter of
FY 2023 is 8.28 percent. For comparison, the early problem loan rate
for the entire 7(a) portfolio over the same period is 2.61 percent and
for non-CA Pilot Program 7(a) loans of $250,000 or less, the rate is
3.10 percent. SBA compared CA Pilot Program loans with non-CA Pilot
Program 7(a) loans of $250,000 or less because for the duration of the
CA Pilot Program (until May 2023), the maximum loan amount for a CA
Pilot Program loan was $250,000. Default rates for CA loans have also
been higher. Quarterly default rates over a five-year period from March
2013 to March 2018 average 2.07 percent for CA loans, compared to 0.76
percent for the 7(a) portfolio. The averages for non-CA Pilot Program
7(a) loans of $250,000 or less and non-CA Pilot Programs 7(a) loans to
underserved markets of $250,000 or less were 1.04 percent and 1.15
percent, respectively.
Another metric for comparison is the Small Business Risk Portfolio
Solution (SBPS) Score, which assesses the likelihood of debt
delinquency in the next 12 to 24 months. A higher measurement means
lower risk of debt delinquency, with a score of below 180 defined as
high risk. At the end of Q2 in FY 2023, the SBPS Score for CA loans was
170.94, well below the overall 7(a) score of 203.51 and below the score
of 182.27 for non-CA Pilot Program 7(a) loans of $250,000 or less. The
SBPS
[[Page 69008]]
Score for CA loans has never broken the 180 threshold score over the
period of CA Pilot Program. In contrast, the SBPS Score for the 7(a)
portfolio has not fallen below 180 for over the period of CA Pilot
Program. SBPS Scores have averaged 172.62 for CA loans over the time of
the pilot program, 180.2 for 7(a) loans of $250,000 or less, and 191.09
for the 7(a) portfolio over the same period.
4. General Information
Questions regarding the CA Pilot Program may be directed to the
local SBA district office. The local SBA district office may be found
at https://www.sba.gov/about-offices-list/2.
Authority: 15 U.S.C. 636(a)(25) and 13 CFR 120.3.
Isabella Guzman,
Administrator.
[FR Doc. 2023-22185 Filed 10-4-23; 8:45 am]
BILLING CODE 8026-09-P
