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.

Rules and Regulations Federal Register

69003 

Vol. 88, No. 192 

Thursday, October 5, 2023 

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 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. 

FOR FURTHER INFORMATION CONTACT: 

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 

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. 


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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

Year Number of 

CA loans 

Number of 

CA pilot lenders 

that made a loan 

Average amount 

of CA loans 

Volume of 

CA 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 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 

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 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

State Percent of 

CA loans 

California ..................................... 30.80 

Texas .......................................... 10.90 

Ohio ............................................ 6.46 

TABLE 2—PERCENTAGE OF CA LOANS

BY STATE—Continued 

State Percent of 

CA loans 

New York .................................... 5.60 

New Jersey ................................. 4.27 

Wisconsin ................................... 4.11 

North Carolina ............................ 4.00 

Arizona ........................................ 3.95 

Florida ......................................... 3.04 

Georgia ....................................... 2.16 

TABLE 2—PERCENTAGE OF CA LOANS

BY STATE—Continued 

State Percent of 

CA loans 

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

Year Number of 

CA loans 

Borrower was 

women-owned 

small businesses 

Borrower was 

veteran-owned 

small business 

Borrower was 

minority-owned 

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 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 

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

Assistance type Loan count 

Percent of loans 

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 


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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

Assistance type Assistance hours Loan count 

Percent of loans 

receiving 

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 

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 


ddrumheller on DSK120RN23PROD with RULES1ER05OC23.065</GPH>

Figure 1. One-on-one Counseling 

ONE-ON-ONE COUNSELING 

• S+ Haws • 3-5 Hcurs • l.es.slhan S Haws 
Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Rules and Regulations 69007 

TABLE 6—CA PILOT PROGRAM JOBS CREATED AND RETAINED BY YEAR—Continued 

Year Jobs created Jobs retained Total jobs 

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

Year Number of 

CA loans 

Number of 

CA loans to 

new businesses 

Percentage of 

CA loans to 

new 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 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 

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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69008 Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Rules and Regulations 

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 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. 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 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: 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. 

ADDRESSES: 

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 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 

(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 


ddrumheller on DSK120RN23PROD with RULES1