[Federal Register Volume 87, Number 63 (Friday, April 1, 2022)]
[Notices]
[Pages 19165-19166]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06919]


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SMALL BUSINESS ADMINISTRATION

[Docket No. SBA-2022-0002]


Community Advantage Pilot Program

AGENCY: Small Business Administration.

ACTION: Notice; request for comments.

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SUMMARY: To support the Small Business Administration's (``SBA'' or 
``Agency'') commitment to expanding access to capital for eligible 
small businesses in underserved markets and to refine and improve the 
Community Advantage (``CA'') Pilot Program, the purpose of which is 
increasing 7(a) loans to small business in underserved markets, SBA is 
issuing this notice to extend the term of the CA Pilot Program through 
September 30, 2024, and to remove the temporary moratorium on the SBA's 
acceptance of new Community Advantage Lender Participation Applications 
(``CA Lender Applications'').

DATES: The changes identified in this notice take effect April 1, 2022. 
SBA will begin accepting new CA Lender Participation Applications May 
2, 2022. The CA Pilot Program will remain in effect until September 30, 
2024.
    Comment Date: Comments must be received on or before May 2, 2022.

ADDRESSES: You may submit comments, identified by SBA docket number 
SBA-2022-0002, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov/. 
Follow the instructions for submitting comments.
     Mail: Darrel Eddingfield, Office of Financial Assistance, 
U.S. Small Business Administration, 409 Third Street SW, Washington, DC 
20416.
     Hand Delivery/Courier: Darrel Eddingfield, 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 Darrel Eddingfield, 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.

[[Page 19166]]


FOR FURTHER INFORMATION CONTACT: Darrel Eddingfield, Office of 
Financial Assistance, U.S. Small Business Administration, 409 Third 
Street SW, Washington, DC 20416; telephone: (202) 516-6676; email: 
[email protected].

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 
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: 
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), March 2, 2020 (85 FR 12369), and July 
15, 2020 (85 FR 42964). 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 Lender Participation Applications (``CA Lender 
Applications'') effective October 1, 2018, among other changes to the 
CA Pilot Program. This Notice announces 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. 
This extension and the acceptance of new CA Lenders will enable SBA to 
better evaluate the impact of the CA Pilot Program. As indicated in 
prior Federal Register Notices, SBA will evaluate the CA Pilot Program 
to refine the program and 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 will consider additional program enhancements to 
streamline the process for mission-based Lenders to make loans in 
underserved markets. Further, SBA will examine data to evaluate the 
effectiveness of adding new CA Lenders towards the outcome of 
increasing loan approval volume to small businesses in underserved 
markets. Effective 30 days from the date of this Notice, SBA will 
accept new CA Lender Applications using SBA Form 2301, Community 
Advantage Lender Participation Application (https://www.sba.gov/document/sba-form-2301-community-advantage-lender-participation-application). Additional guidance may be found in the Community 
Advantage Participant Guide (https://www.sba.gov/document/support-community-advantage-participant-guide).

2. Comments

    Although the changes take effect April 1, 2022, comments are 
solicited from interested members of the public on all aspects of the 
CA Pilot Program. Comments must be submitted on or before the deadline 
for comments listed in the DATES section. SBA will consider these 
comments and the need for making any revisions as a result of these 
comments.

3. Changes to the Community Advantage Pilot Program--Lifting the 
Moratorium on Acceptance of New CA Lender Applications

    SBA stated in the September 2018 Notice that it limited the number 
of lenders participating in the CA Pilot Program to allow the Agency to 
test new methods for expanding access to capital for small businesses 
in underserved markets. Each year since FY 2018, the number and dollar 
amount of CA loans approved and number of CA Lenders making a loan 
during the fiscal year has decreased.\1\ In FY 2018, 1,118 CA loans 
totaling $157,529,500 were approved by 75 CA Lenders. In FY 2021, 565 
CA loans totaling $82,834,100 were approved by 64 CA Lenders. As of 
March 9, 2022, which is nearly halfway through FY 2022, 260 CA loans 
totaling $38,104,200 were approved by 46 CA Lenders. Additionally, of 
the 108 total CA Lenders approved to participate in the program, only 
96 CA Lenders have any outstanding CA loans in their portfolio. Based 
on this analysis, the Agency has determined that the CA Pilot Program 
is not reaching its goal of providing capital to small businesses in 
underserved markets due to the small number of CA loans being made. 
Therefore, the Agency is lifting its moratorium on accepting new CA 
Lender Applications in order to increase the number of active CA 
Lenders making CA loans.
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    \1\ The exception is FY 2019, where the number of CA Lenders 
making a CA loan remained constant at 75.
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    The extension of the CA Pilot Program through September 30, 2024, 
and the acceptance of new CA Lenders will enable SBA to better evaluate 
the impact of the CA Pilot Program. SBA will evaluate the CA Pilot 
Program to refine the program and 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.

4. General Information

    The changes in this notice are limited to the CA Pilot Program 
only. All other SBA Loan Program Requirements and regulatory waivers or 
modifications related to the CA Pilot Program remain unchanged.
    SBA has provided more detailed guidance in the form of a 
Participant Guide, which will be updated to reflect these changes and 
will be available on SBA's website at http://www.sba.gov. SBA may 
provide additional guidance, through SBA notices, which may also be 
published on SBA's website at http://www.sba.gov/category/lender-navigation/forms-notices-sops/notices. Questions regarding the CA Pilot 
Program may be directed to the local SBA district office. The local SBA 
district office may be found at http://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. 2022-06919 Filed 3-31-22; 8:45 am]
BILLING CODE 8026-03-P