9626 Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 

29 15 U.S.C. 78s(b)(3)(a)(ii). 

30 17 CFR 240.19b–4(f)(2). 31 17 CFR 200.30–3(a)(12). 

appropriate in furtherance of the 

purposes of the Act, as amended. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act 29 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder.30 At any time within 60 

days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–BX–2011–008 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BX–2011–008. This file 

number should be included on the 

subject line if e-mail is used. 

To help the Commission process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/sro.shtml). 

Copies of the submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices of the Exchange. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–BX–2011–008, and should 

be submitted on or before March 11, 

2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–3691 Filed 2–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Docket No. SBA 2011–0003] 

Community Advantage Pilot Program 

AGENCY: U.S. Small Business 

Administration (SBA). 

ACTION: Notice and request for 

comments. 

SUMMARY: SBA is introducing a new 

pilot loan program called ‘‘Community 

Advantage’’ to provide 7(a) loan 

guaranties to small businesses in 

underserved markets, including 

Veterans and members of the military 

community. The Community Advantage 

Pilot Program will allow mission 

oriented lenders, primarily non-profit 

financial intermediaries that are focused 

on economic development in 

underserved markets, access to 7(a) loan 

guaranties for loans of $250,000 or less. 

DATES: Effective Date: The Community 

Advantage Pilot Program will be 

effective on February 15, 2011, and will 

remain in effect through March 15, 

2014. SBA will begin accepting 

applications from lenders for 

participation in the Community 

Advantage Pilot Program February 15, 

2011. 

Comment Date: Comments must be 

received on or before April 19, 2011. 

ADDRESSES: You may submit comments, 

identified by SBA docket number SBA– 

2011–0003 by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Community Advantage Pilot 

Program Comments—Office of Financial 

Assistance, U.S. Small Business 

Administration, 409 Third Street, SW., 

Suite 8300, Washington, DC 20416. 

• Hand Delivery/Courier: Grady B. 

Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street, SW., Washington, DC 20416. 

SBA will post all comments on 

http://www.regulations.gov. If you wish 

to submit confidential business 

information (CBI) as defined in the User 

Notice at http://www.regulations.gov, 

please submit the information to Grady 

B. Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street, SW., Washington, DC 20416, or 

send an e-mail 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 whether it will 

publish the information. 

FOR FURTHER INFORMATION CONTACT: 

Grady B. Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street, SW., Washington, DC 20416; 

(202) 205–7562; 

grady.hedgespeth@sba.gov. 

SUPPLEMENTARY INFORMATION: SBA is 

implementing a new pilot loan program 

called Community Advantage (CA) to 

provide 7(a) loan guaranties to small 

businesses located in underserved 

markets and to veterans and other 

members of the military community. 

This new pilot program will replace the 

current Community Express Pilot Loan 

Program, which has been extended 

through April 30, 2011. (75 FR 80561, 

December 22, 2010) No new Community 

Express Pilot Loan Program loans will 

be approved after that date. 

1. Background 

The Community Express Pilot Loan 

Program was created over 11 years ago 

and combined the delegated and 

expedited SBA Express processing 

flexibility with a requirement that 

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Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 9627 

Community Express borrowers be 

provided with management and 

technical assistance (M&TA). The 

M&TA was intended to mitigate risks 

and to provide support for offering the 

higher 7(a) guaranty levels as opposed 

to the 50% guaranty on SBA Express 

products. Because Community Express 

was a pilot program it was statutorily 

limited to no more than 10% of the 

number of 7(a) guaranteed loans in any 

given fiscal year. 

The Community Express product has 

resulted in loans to new businesses, 

minority-owned businesses and other 

underserved sectors; however, it has 

consistently ranked as SBA’s highest 

loss product, even when controlling for 

loan size, and it has never had 

widespread acceptance by SBA lenders 

or good geographical dispersion. 

Throughout its history, Community 

Express has had significantly higher 

default rates (almost 40% of loans 

defaulted in certain cohort years) 

compared with other similarly sized 7(a) 

loans, which also resulted in higher net 

losses because most Community Express 

loans are unsecured. In addition, the 

difficulty of coordinating and ensuring 

efficient access to quality management 

and technical assistance to borrowers 

resulted in large lenders abandoning the 

product a few years after its creation. 

Many commercial lenders may not have 

been willing or able to meet SBA’s 

technical assistance delivery and 

reporting requirements because the 

provision and reporting of management 

and technical assistance is not normally 

part of their lending model. Eventually, 

less than 5% of SBA’s active lenders 

were using the product and most of the 

activity was concentrated in a handful 

of lenders (three lenders comprised 

approximately 85% of the Community 

Express loan volume in recent years, 

one of which has been taken over by the 

FDIC and is no longer in operation). 

For the reasons discussed above, SBA 

is replacing Community Express with 

the new Community Advantage Pilot 

Program designed to reach underserved 

markets more efficiently and effectively 

and at a lower cost to the taxpayer. 

2. Comments 

Although the new Community 

Advantage Pilot Program will be 

effective February 15, 2011, comments 

are solicited from interested members of 

the public on all aspects of the new 

pilot program. These comments must be 

submitted on or before the deadline for 

comments listed in the DATES section. 

The SBA will consider these comments 

and the need for making any revisions 

as a result of these comments. 

3. Community Advantage Pilot Program 

Overview 

The Community Advantage Pilot 

Program (CA Pilot Program) will allow 

mission oriented lenders, primarily nonprofit financial intermediaries that are 

focused on economic development in 

underserved markets, access to 7(a) loan 

guaranties for loans of $250,000 or less. 

For purposes of the CA Pilot Program, 

the underserved markets will include: 

(1) Low-to-Moderate Income (LMI) 

communities (while not a specific 

requirement, CA Lenders are 

encouraged to serve low and very-low 

income communities); (2) 

Empowerment Zones and Enterprise 

Communities; (3) HUBZones; (4) New 

businesses, e.g., firms in business for no 

more than two years; (5) Businesses 

eligible for Patriot Express, including 

Veteran-owned businesses; and (6) 

Firms where more than 50% of their full 

time workforce is low-income or resides 

in LMI census tracts. 

The CA Pilot Program will be effective 

February 15, 2011 and will continue 

through March 15, 2014. 

Key features of the new CA Pilot 

Program are set forth below. More 

detailed guidance on the CA Pilot will 

be provided in a participant guide 

(‘‘Community Advantage Participant 

Guide’’) that will be available on SBA’s 

Web site at http://www.sba.gov. 

Eligible Lenders 

The long experience of Community 

Express indicates that the participating 

lenders have not been able to lend 

successfully in these target markets and 

maintain acceptable losses. SBA 

believes that an alternate distribution 

channel, of community-based, mission 

lenders, will mitigate the risks 

associated with lending in these 

markets, reduce losses, deploy more 

capital and enhance access to capital for 

a number of underserved groups. In this 

pilot, SBA will leverage three 

historically successful programs of 

mission-based lending. During the pilot, 

Community Advantage will only be 

open to: (1) Community Development 

Financial Institutions (CDFIs) certified 

by the U.S. Treasury, but that do not 

have a Federal financial regulator; 

(2) SBA Certified Development 

Companies (CDCs); and (3) SBA 

Microlenders. 

Any lender who is already 

participating in SBA’s 7(a) program, as 

evidenced by an executed Loan 

Guaranty Agreement (SBA Form 750), is 

not eligible to participate in the CA Pilot 

Program, but should continue to use the 

7(a) loan program in that lender’s 

current capacity. Other lenders that are 

not eligible for the CA Pilot Program but 

are eligible for the 7(a) loan program are 

encouraged to apply to participate in the 

7(a) loan program by contacting their 

local SBA Field Office. The local SBA 

Field Office may be found at http:// 

www.sba.gov/local. 

Process To Become a CA Lender 

Eligible organizations will apply to 

SBA for approval to participate in the 

CA Pilot Program. The application will 

be available on SBA’s Web site at: 

http://archive.sba.gov/tools/Forms/ 

SBApartnerforms/index.html. A 

lender’s application to participate in the 

CA Pilot Program also should indicate 

whether or not the lender wishes to 

apply to sell CA loans in SBA’s 

secondary market. 

The application will be evaluated and 

a decision made for participation in the 

CA Pilot Program. As part of this 

evaluation, a determination as to 

whether the lender may be granted 

‘‘delegated authority’’ for the CA Pilot 

Program and whether the lender may 

participate in the secondary market, if 

applicable, also will be made. If an 

applicant is approved to participate, it 

will be designated a Community 

Advantage Lending Company (CA 

Lender). Also, if approved to participate 

in the CA Pilot Program, the lender will 

not be able to make 7(a) loans other than 

through the pilot. 

Each CA Lender will be identified as 

either a Small Business Lending 

Company (SBLC) or a Non-Federally 

Regulated Lender (NFRL), depending on 

whether the lender is subject to 

regulation by a State. Accordingly, all 

CA Lenders will be SBA Supervised 

Lenders, as that term is defined in 

13 CFR 120.10, and will be subject to all 

regulations applicable to such lenders 

unless specifically waived or modified 

in the regulatory waiver section of this 

Notice. 

Approval to participate in the CA 

Pilot Program will be for the three year 

period of the pilot. If the CA Pilot 

Program is not extended, each CA 

Lender will be required to continue to 

service and liquidate its CA loans in 

accordance with the terms of the pilot, 

but will not be able to make any new CA 

loans. If the CA Pilot Program is 

extended or made permanent, each CA 

Lender’s authority to participate will be 

renewed based on the CA Lender’s 

compliance with the program 

requirements, including the requirement 

to make 60% of their loans to small 

businesses in the CA underserved 

markets. 

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9628 Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 

Reserve Requirement 

CA Lenders are required to create a 

Loan Loss Reserve Account (LLRA) to 

cover potential losses arising from 

defaulted loans. The reserve fund is to 

cover both losses from the unguaranteed 

portion of defaulted loans as well as 

possible repairs and denials associated 

with SBA’s guaranty on the defaulted 

loan. The LLRA must be maintained 

separate from other reserve accounts the 

CA Lender may maintain and it must be 

deposited in a Federally insured 

demand, savings or certificate of deposit 

account in an amount, to the extent 

practicable, not in excess of the 

maximum insured amount. The LLRA 

cannot be commingled with any other 

loan loss reserve fund of the CA Lender, 

its parent or related entities. The LLRA 

must equal 15 percent of the 

outstanding amount of the unguaranteed 

portion of a CA Lender’s CA loan 

portfolio including loans sold in the 

secondary market. The CA Lender must 

reconcile the LLRA and, if necessary, 

add funds to the LLRA on a monthly 

basis to ensure the appropriate amount 

is maintained. The CA Lender’s audited 

financial statements must include an 

assessment of the lender’s compliance 

with loan loss reserve account 

requirements for the CA Pilot Program. 

Failure to maintain the loan loss reserve 

account as required may result in 

removal from the CA Loan Program 

and/or the imposition of additional 

controls or reserve amounts. SBA in its 

discretion may require additional 

amounts to be included in the LLRA 

based on the risk characteristics and 

performance of the CA Lender. SBA 

microloan intermediaries may not use 

their SBA intermediary loan to fund the 

reserve for CA loans (nor may they use 

it to fund CA loans). 

In connection with the reserve 

requirement, SBA particularly would 

like to solicit comments regarding any 

implications this, or other pilot 

requirements, might have on Statechartered pilot participants in regards to 

Federalism, as expressed in Executive 

Order 13132, Federalism. The Executive 

Order requires SBA to have a process to 

ensure meaningful and timely input by 

State and local officials in the 

development of policies that have 

substantial direct effects on the States, 

the relationship between the Federal 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Since the pilot 

reserve requirement is for participants 

agreeing to be in the pilot, SBA believes 

that it can work in concert with any 

existing State loan loss reserve 

requirements. We are also interested in 

comments discussing this and any other 

issues arising from this pilot that might 

have implications for State-chartered 

institutions. 

CA Loans 

The loan terms and conditions of CA 

loans are the same as standard 7(a) loans 

with the following exceptions: (1) The 

maximum loan amount is $250,000; (2) 

the maximum allowable interest rate is 

prime + 4%; and (3) revolving loans are 

not allowed in the CA Pilot. While 

management and technical assistance 

(M&TA) is not required for each CA 

loan, it is encouraged and, if any has 

been provided prior to the application 

for loan guaranty, information 

concerning the M&TA will be identified 

on the application. Although not every 

CA loan must be made to a small 

business in the underserved markets 

identified above, CA Lenders will be 

required to demonstrate annually that 

60% of their CA loans have been made 

to such small businesses. SBA 

Microlenders may not use their SBA 

intermediary loan to fund either the CA 

loan or the required loan loss reserve 

account for CA loans. 

All CA borrowers must meet the 

eligibility requirements of standard 7(a) 

loans, as set forth in 13 CFR part 120 

and Standard Operating Procedure 

(SOP) 50 10 5(C), Subpart B, Chapter 2. 

CA Lenders are to follow the credit 

underwriting procedures for the Small/ 

Rural Lender Advantage (S/RLA) loan 

program as set forth in SOP 50 10 5(C), 

Subpart B, Chapter 4. Additionally, CA 

Lenders are to follow the collateral and 

environmental requirements applicable 

to standard 7(a) loans, which also are set 

forth in SOP 50 10 5(C), Subpart B, 

Chapter 4. (The SOP 50 10 5(C) can be 

found on SBA’s Web site at: http:// 

archive.sba.gov/tools/resourcelibrary/ 

sops/index.html.) SBA Microlenders 

may not use their SBA intermediary 

loan to fund CA loans. CA loans may 

not be used to refinance loans made by 

or guaranteed by the Department of 

Agriculture or loans made by SBA 

microlenders using their SBA 

intermediary loan. 

Allowable Fees 

The SBA guaranty fee and the lender’s 

annual service fee set forth in 13 CFR 

120.220 apply to loans approved under 

the CA Pilot Program and CA Lenders 

may charge the borrower the same fees 

allowed under SBA’s standard 7(a) loan 

program as set forth in 13 CFR 120.221 

and 120.222. 

Secondary Market and Participating 

Lender Financings or Other 

Conveyances 

Qualified CA Lenders will be allowed 

to sell SBA loan guaranties made under 

the CA Pilot Program on the secondary 

market provided they comply with 

Agency regulations at 13 CFR part 120, 

subpart F—Secondary Market. 

SBA loan guaranties approved under 

the CA Pilot Program, however, may not 

be included in any participating lender 

financings or other conveyances, 

including securitizations, participations 

and pledges. 

Application Forms and Authorization 

CA Lenders will utilize the 

application forms required for the 

S/RLA process, as set forth in SOP 50 

10 5(C), Subpart B, Chapter 6. More 

specific guidance on the application 

forms, including the addendum for CA 

loans to identify any management and 

technical assistance the applicant may 

have received, will be provided in the 

Community Advantage Participant 

Guide, which will be available on SBA’s 

Web site. 

In addition, the CA Lender will be 

required to execute an SBA 

Authorization (‘‘Authorization’’) for each 

CA loan. The Authorization is SBA’s 

written agreement between the SBA and 

the CA Lender providing the terms and 

conditions under which SBA will 

guarantee a business loan. For further 

guidance on the Authorization, see SOP 

50 10 5(C), Subpart B, Chapter 5. 

CA Lenders are to follow the loan 

closing and disbursement requirements 

set forth in SOP 50 10 5(C), Subpart B, 

Chapter 7. 

CA Lenders must follow the servicing 

and liquidation requirements set forth 

in 13 CFR 120.535 and 120.536 and 

SOPs 50 50 and 50 51. (SOPs 50 50 and 

50 51 can be found at http:// 

archive.sba.gov/tools/resourcelibrary/ 

sops/index.html.) 

Guaranty Purchase 

Under the CA Pilot Program, loans 

will be subject to SBA’s requirements 

regarding purchase of its guaranty as set 

forth in 13 CFR 120.520 through 

120.524 and Chapters 22 & 23 of SOP 50 

51 3. 

Reporting Requirements 

CA Lenders will be required to submit 

annual reports demonstrating 

compliance with their business plan 

and showing that 60% of CA loans have 

been made to small businesses in the 

CA underserved markets identified 

above. 

Additionally, CA Lenders will be 

required to submit quarterly reports, 

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Federal Register / Vol. 76, No. 34 / Friday, February 18, 2011 / Notices 9629 

including balance sheet, LLRA levels 

and income statements. 

CA Lenders will be required to report 

on the status of their CA loans on SBA 

Form 1502 in accordance with SOP 50 

10 5(C), Subpart B, Chapter 8. (SBA 

Form 1502 can be found at http:// 

www.colsonservices.com/main/ 

f_n_r_main.shtml.) 

In addition, CA Lenders will be 

required to comply with the reporting 

requirements in 13 CFR 120.464. 

Lender Oversight 

CA Lender oversight procedures shall 

follow the requirements set forth in 13 

CFR Part 120—Subpart I and SOPs 50 

53 (Lender Supervision and 

Enforcement) and 51 00 (On-Site Lender 

Reviews and Examinations). (The SOPs 

can be found at: http://archive.sba.gov/ 

tools/resourcelibrary/sops/index.html.) 

CA Lenders will be monitored both for 

performance and other risk 

characteristics as well as for compliance 

with the requirements of the CA Pilot 

Program. The CA Lender must maintain 

compliance with its business plan and 

the requirement that 60% of the lender’s 

CA loans have been made to small 

businesses in the underserved markets, 

along with other program requirements. 

Office of Credit Risk Management 

(OCRM) off-site monitoring will be 

conducted using the Loan and Lender 

Monitoring System (L/LMS). L/LMS 

details historical, current and projected 

performance data for each individual 

lender. As noted above, CA Lenders will 

be required to submit both Quarterly 

Reports and Annual Reports. Lender 

review/examination cycles will vary 

based upon the underlying risk their 

SBA portfolio poses. Lender reviews/ 

examinations will follow the 

requirements set forth in 13 CFR 

120.1025 through 120.1060 and SOP 

51 00. 

OCRM will conduct desk reviews, 

targeted reviews, on-site reviews, 

expanded on-site reviews and/or 

examinations based on the lender’s level 

of activity, performance metrics, risk 

rating and other risk characteristics. All 

participating lenders will receive an 

examination or a review after the first 

year of operation. CA lenders will pay 

the costs of such reviews and/or 

examinations and, if assessed by SBA, 

other lender oversight activities, as set 

forth in 13 CFR 120.1070. 

CA Lenders also will be subject to 13 

CFR 120.1400 through 120.1600 and the 

provisions of SOP 50 53 concerning 

supervision and enforcement. 

Regulatory Waivers 

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 for a limited period of time, 

SBA will modify or waive as 

appropriate the following regulations, 

which otherwise apply to 7(a) loans, for 

the CA Pilot Program only: (1) 13 CFR 

120.10, which defines various terms 

applicable to the 7(a) loan program, 

including the term ‘‘Small Business 

Lending Company’’ and which states 

that SBA has imposed a moratorium on 

licensing new SBLCs since January 

1982, is being waived only to allow 

organizations that meet the definition of 

an SBLC but that do not currently have 

an SBLC license to participate in the CA 

Pilot Program; (2) 13 CFR 120.151, 

which states the statutory limit for total 

loans to a borrower and the maximum 

loan amount for a 7(a) loan, is being 

modified because the maximum loan 

amount under the CA Pilot Program is 

$250,000; (3) 13 CFR 120.213, 120.214 

and 120.215, which set the maximum 

interest rates lenders may charge on 

standard 7(a) loans, are being waived as 

the maximum allowable interest rate for 

CA loans will be prime + 4%; (4) 13 CFR 

120.420 through 120.435, which govern 

participant lender financings and other 

conveyances, including securitizations, 

participations and pledges, are being 

waived as CA Lenders will not be 

allowed to include CA loans in 

participant lender financings or other 

conveyances, including securitizations, 

participations and pledges; (5) 13 CFR 

120.452, which describes the 

requirements for PLP loan processing, is 

being modified because CA Lenders 

with delegated authority will be 

required to comply with these 

requirements even though they will not 

be PLP lenders; (6) 13 CFR 120.462, 

which describes the additional 

requirements on capital maintenance 

SBA requires for SBA Supervised 

Lenders, is being waived as CA Lenders 

will not be subject to these requirements 

because CA Lenders will be required to 

maintain a separate Loan Loss Reserve 

Account for their CA loans; (7) 13 CFR 

120.463(a), which describes the 

regulatory accounting requirements for 

SBA Supervised Lenders is being 

modified as CA Lenders will not be 

required to keep their books and records 

on an accrual basis; (8) 13 CFR 

120.463(e)(1), which requires SBA 

Supervised Lenders to maintain loan 

loss allowances, is being waived 

because CA Lenders will be required to 

maintain a separate Loan Loss Reserve 

Account as described previously in this 

notice to cover losses on their CA loan 

portfolio; (9) 13 CFR 120.470(a), which 

states that an SBLC may only make 

loans under section 7(a) of the Small 

Business Act or loans to Intermediaries 

under the Microloan program, is being 

waived because a CA Lender may only 

make loans under the CA Pilot Program; 

(10) 13 CFR 120.471(a) and (b), which 

describe the minimum capital 

requirements for SBLCs and the 

composition of the capital, are being 

waived as CA Lenders will not be 

subject to these requirements because 

CA Lenders will be required to maintain 

a separate Loan Loss Reserve Account 

for their CA loans and because CA 

Lenders are generally non-profit 

organizations with less capitalization 

and SBA will evaluate their capital base 

as part of the CA Lender approval 

process; and (11) 13 CFR 120.852(a), 

which prohibits a CDC from investing in 

or being an affiliate of a lender 

participating in the 7(a) loan program, is 

being waived in order to allow CDCs or 

their affiliates to participate in the CA 

Pilot Program. 

SBA is particularly interested in 

comments discussing the regulatory 

accounting requirements for CA 

Lenders. 

All provisions of the Small Business 

Act applicable to the 7(a) loan program 

apply to loans made under this pilot. 

Unless waived or modified by this 

Notice, all regulations applicable to the 

7(a) loan program apply to loans made 

under this pilot. All standard operating 

procedures applicable to the 7(a) loan 

program that are not superseded by any 

provision of this Notice or the 

Community Advantage Participant 

Guide apply to loans made under this 

pilot. 

CA Lenders must use prudent lending 

practices in the making, servicing and 

liquidating of CA loans and must 

comply with all SBA Loan Program 

Requirements. 

SBA has provided more detailed 

guidance in the form of a participant 

guide which is available on SBA’s Web 

site, http://www.sba.gov. SBA may also 

provide additional guidance, if needed, 

through SBA notices, which will also be 

published on SBA’s Web site, http:// 

www.sba.gov. 

Questions on the CA Pilot Program 

may be directed to the Lender Relations 

Specialist in the local SBA district 

office. The local SBA district office may 

be found at http://www.sba.gov/local. 

Authority: 15 U.S.C. 636(a)(25) and 13 

CFR 120.3. 

Karen G. Mills, 

Administrator. 

[FR Doc. 2011–3758 Filed 2–17–11; 8:45 am] 

BILLING CODE 8025–01–P 

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