[Federal Register Volume 73, Number 126 (Monday, June 30, 2008)]
[Pages 36950-36951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-14846]



Community Express Pilot Program

AGENCY: U.S. Small Business Administration (SBA).

ACTION: Notice of Plan to Extend and Restructure the Community Express 
Pilot Program.


SUMMARY: This notice extends the Community Express Pilot Program in its 
current form through September 30, 2008 and announces SBA's plan to 
restructure the program. The restructured Community Express will be 
effective October 1, 2008 to provide SBA's lending partners a 
transition period to implement the changes and to accommodate any 
Community Express loan applications lenders may have in process. This 
notice also extends the Community Express Pilot Program through 
December 31, 2009. Finally, this notice reminds SBA's participating 
lenders of the statutory limitation on the number of loans SBA can 
process under a pilot program.

DATES: The Community Express Pilot Loan Program is extended in its 
current form through September 30, 2008. The effective date of the 
changes to Community Express is October 1, 2008, and SBA is extending 
the restructured Community Express as a pilot program through December 
31, 2009.

FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial 
Assistance, U.S. Small Business Administration, 409 Third Street, SW., 
Washington, DC 20416; Telephone (202) 205-6490; [email protected].

SUPPLEMENTARY INFORMATION: The Community Express Pilot Program was 
established in 1999 based on the Agency's SBA Express Program. Lenders 
approved for participation in Community Express are authorized to use 
the expedited loan processing procedures in place for SBA Express, but 
the loans approved under Community Express must be to distressed or 
underserved markets. In addition, participating lenders must arrange 
and, when necessary, pay for appropriate management and technical 
assistance for their Community Express borrowers. To encourage lenders 
to make these loans, SBA provides its standard 75-85 percent guaranty, 
which contrasts with the 50 percent guaranty the Agency provides under 
SBA Express. The maximum loan amount under this pilot program is 
    Following extensive internal analysis and discussion, as well as 
discussions with SBA's lending partners, SBA is restructuring and 
enhancing the Community Express Pilot Program to improve its 
management, administration, oversight, and delivery. Through this 
notice, SBA is extending the Community Express Pilot Program in its 
current form through September 30, 2008. Also, SBA is providing its 
lending partners with advance notification of the key features of the 
restructured Community Express Pilot Program and SBA's plans for 
implementing the restructured program, including the publication of 
procedural guidance and the availability of a transition period for 
    Under the restructured Community Express Pilot Program, borrower 
eligibility will be more clearly defined. First, small businesses whose 
principal office (as defined in 13 CFR 126.103) is located in a HUBZone 
or Community Reinvestment Act (CRA) area will be eligible for Community 
Express. These geographic areas are easily identifiable and searchable 
through Web-based facilities available through the Internet. Second, 
loans of $25,000 or less regardless of where the principal office of 
the business is located will be eligible for Community Express. Third, 
loans made under SBA Headquarters approved special market initiatives 
designed to support local community/economic development will be 
eligible for Community Express.
    In addition, SBA is retaining the technical assistance (T/A) 
requirement of Community Express, but giving lenders the option to use 
SBA's new online Small Business Training Network (SBTN) and other SBA 
T/A resources to meet the program's requirements. Lenders will continue 
to be required to document in their loan file the T/A received by the 
    With the availability of SBA's SBTN and SBA's other T/A resources 
and with the Agency's higher 75-85 percent guaranty, the maximum 
interest rate lenders may charge for Community Express loans will be 
limited to the rate applicable under standard 7(a). Under standard 
7(a), lenders may charge interest rates up to Prime plus 2.25 percent 
for loans with maturities of less than seven years and Prime plus 2.75 
percent for loans with maturities that are seven years or greater. 
Lenders may charge rates 2 percent higher for loans of $25,000 or less 
and 1 percent higher for loans between $25,000 and $50,000.
    SBA will publish detailed procedural guidance on the program's 
changes in coming weeks, which will be followed by lender support and 
training through its district offices. To assist lenders in 
understanding and implementing the restructured Community Express Pilot 
Program and to accommodate Community Express loan applications that 
lenders may already have in process, SBA will delay implementation of 
the changes until October 1, 2008. But, as of October 1, 2008, all 
Community Express loans must conform to the requirements and procedures 
of the restructured Community Express Pilot Program.
    Community Express is being extended as a pilot program until 
December 31, 2009, which will allow SBA time to fully evaluate the 
results of these changes.
    Because Community Express is a pilot program, SBA must ensure that 
it complies with Section 7(a)(25) of the Small Business Act, which 
prohibits the Agency from approving under any 7(a) pilot loan program 
more than 10 percent of the total number of 7(a) loans SBA approves in 
any fiscal year. During the early months of Fiscal Year 2008, SBA 
received loan guaranty requests under Community Express at a volume 

[[Page 36951]]

would have exceeded this statutory limit by year end, if unchecked. As 
a result, during Fiscal Year 2008, the SBA has taken steps to limit the 
number of Community Express loans it will accept each month. In 
addition to keeping the number of Community Express loans within the 
statutory limitation, this action will help enhance competition, 
diversify SBA lending, and control SBA's risk under the pilot program. 
SBA will continue to closely monitor the number of Community Express 
loans approved and make further adjustments as needed.

    Authority: 13 CFR 120.3.

Eric R. Zarnikow,
Associate Administrator for Capital Access.
[FR Doc. E8-14846 Filed 6-27-08; 8:45 am]