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

34021 

Vol. 83, No. 139 

Thursday, July 19, 2018 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

504 Loan Program Rural Initiative— 

Waiver of Limitation on Lending 

Authority 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notification of 504 Loan 

Program Rural Initiative Pilot Program 

and impact on regulatory provisions. 

SUMMARY: The U.S. Small Business 

Administration (SBA) announces the 

504 Loan Program Rural Initiative Pilot 

Program (504 Rural Pilot), as described 

in this document, and its impact on 

Agency regulations. The 504 Rural Pilot 

waives the restrictions on the authority 

of Certified Development Companies 

(CDCs) to make 504 loans outside their 

Area of Operations to allow each CDC 

to make loans for 504 Projects with an 

address located in any rural county if 

the 504 Project is located in the same 

SBA Region in which the CDC is 

incorporated. This pilot will provide 

rural small businesses with increased 

opportunities to access capital and will 

further the statutory public policy goal 

of the 504 Loan Program to achieve rural 

development impact. 

DATES: The 504 Rural Pilot, including 

the waiver of the restrictions in 13 CFR 

120.839 on CDCs’ authority to make 

loans outside their Area of Operations, 

will be available from July 19, 2018, 

through July 20, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Linda Reilly, Chief, 504 Program 

Branch, Office of Financial Assistance, 

U.S. Small Business Administration, 

409 Third Street SW, Washington, DC 

20416; Telephone (202) 205–9949; email 

address: linda.reilly@sba.gov. 

SUPPLEMENTARY INFORMATION: The 504 

Loan Program is a financing tool 

authorized under title V of the Small 

Business Investment Act of 1958 

(SBIAct) to provide small businesses 

with long-term, fixed-rate financing to 

help acquire major fixed assets for 

expansion or modernization. A Certified 

Development Company (CDC) is 

typically a private, nonprofit 

corporation set up to contribute to the 

economic development of its 

community. CDCs work with SBA and 

private sector lenders to provide 

financing to small businesses under the 

504 Loan Program. In general, a 504 

project includes: A loan obtained from 

a private sector lender with a senior lien 

covering at least 50 percent of the 

project cost; a loan obtained from a CDC 

with a junior lien covering up to 40 

percent of the project cost (backed by a 

100 percent SBA-guaranteed debenture); 

and a contribution from the Borrower of 

at least 10 percent of the project cost. 

Under 13 CFR 120.821, a CDC is 

required to operate only within its 

designated Area of Operations approved 

by SBA, except as provided in 13 CFR 

120.839. Each CDC’s approved Area of 

Operations includes the entire State in 

which it is incorporated (see 13 CFR 

120.810(b)). A CDC also may apply and 

be approved to expand its Area of 

Operations into a Local Economic Area 

under 13 CFR 120.835(b) or by 

becoming a Multi-State CDC under 13 

CFR 120.835(c). Under 13 CFR 120.839, 

a CDC may submit a request to the 

Sacramento Loan Processing Center 

(SLPC) to make a 504 loan for a 504 

Project outside its Area of Operations. In 

such case, the CDC must demonstrate 

that it can adequately fulfill its 504 

program responsibilities for the 504 

loan, including proper servicing, and 

have satisfactory SBA performance, as 

determined by SBA in its discretion. 

The SLPC may approve the application 

if, in addition to other requirements, (1) 

the CDC has previously assisted the 

business to obtain a 504 loan, (2) the 

existing CDC or CDCs serving the area 

agree to permit the applicant CDC to 

make the 504 loan, or (3) there is no 

CDC within the Area of Operations in 

which the 504 Project is located. 

One of the statutory public policy 

goals of the 504 Loan Program is to 

achieve rural development. See section 

501(d)(3)(D) of the SBIAct. Since 2013, 

a significant number of rural CDCs have 

voluntarily decertified, while SBA has 

approved only two new rural CDCs. 

SBA has historically found that 

increasing the CDC operating service 

area results in more 504 loan activity. 

However, in accordance with 13 CFR 

120.835, CDCs are only permitted to 

expand their Area of Operations by 

requesting Local Economic Area 

expansion or Multi-State authority. This 

authority limits CDC expansion to areas 

and States contiguous to a CDC’s Area 

of Operations. 

In order to address this issue and 

increase lending in rural areas, SBA has 

developed the 504 Rural Pilot. This 

Pilot allows CDCs to make loans for 504 

Projects with an address located in any 

county classified as ‘‘rural’’ by the U.S. 

Census Bureau if the 504 Project is 

located in the same SBA Region in 

which the CDC is incorporated. SBA 

expects that the expansion of a CDC’s 

authority to process rural loans 

anywhere within their SBA-defined 

Region will result in increased lending 

and economic growth in rural markets. 

Specifically, for purposes of the 504 

Rural Pilot, SBA is waiving the 

following requirements in 13 CFR 

120.839 (i.e., these requirements will 

not apply to 504 Rural Pilot loans): 

(1) The CDC must apply to the 

Sacramento Loan Processing Center in 

order to make the 504 loan for the 504 

Project outside of its Area of Operation; 

(2) The CDC must demonstrate that it 

can adequately fulfill its 504 program 

responsibilities for the 504 loan; 

(3) SBA must determine that the CDC 

has satisfactory SBA performance; and 

(4) The CDC must have previously 

assisted the business to obtain a 504 

loan, the existing CDC or CDCs serving 

the area agree to permit the outside CDC 

to make the 504 loan, or there is no CDC 

within the Area of Operations in which 

the 504 Project is located. 

Under the 504 Rural Pilot, a CDC may 

make a 504 loan for a 504 Project 

located outside the CDC’s Area of 

Operations only if the 504 Project 

address is located in a rural county that 

is in the same SBA Region in which the 

CDC is incorporated. For purposes of 

the 504 Rural Pilot, rural counties are 

those counties classified as ‘‘mostly 

rural’’ or ‘‘completely rural’’ by the U.S. 

Census Bureau in its most recent 

decennial census report, and are 

identified in the County Classification 

Lookup Table that can be downloaded 

at www.sba.gov/about-sba/sbainitiatives/sba-rural-lending-initiative or 

on the Welcome Screen for the Capital 

Access Financial System (CAFS). (CDCs 

must use the U.S. Census Bureau table 

for purposes of identifying rural 


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34022 Federal Register / Vol. 83, No. 139 / Thursday, July 19, 2018 / Rules and Regulations 

counties for the 504 Rural Pilot, which 

may not be the same as the rural areas 

identified by the U.S. Department of 

Agriculture.) SBA Regions are defined 

as follows: 

• Region I: Connecticut, Maine, 

Massachusetts, New Hampshire, 

Rhode Island, and Vermont 

• Region II: New York, New Jersey, 

Puerto Rico, and The U.S. Virgin 

Islands 

• Region III: Delaware, Maryland, 

Pennsylvania, Virginia, Washington, 

DC, and West Virginia 

• Region IV: Alabama, Florida, Georgia, 

Kentucky, Mississippi, North 

Carolina, South Carolina, and 

Tennessee 

• Region V: Illinois, Indiana, Michigan, 

Minnesota, Ohio, and Wisconsin 

• Region VI: Arkansas, Louisiana, New 

Mexico, Oklahoma, and Texas 

• Region VII: Iowa, Kansas, Missouri, 

and Nebraska 

• Region VIII: Colorado, Montana, 

North Dakota, South Dakota, Utah, 

and Wyoming 

• Region IX: Arizona, California, Guam, 

Hawaii, and Nevada 

• Region X: Alaska, Idaho, Oregon, and 

Washington. 

In making, closing, servicing, or 

liquidating a 504 Rural Pilot loan, CDCs 

must follow all other Loan Program 

Requirements under the 504 Loan 

Program, except that 504 Rural Pilot 

loans cannot be made using the CDC’s 

delegated authority (i.e., PCLP or ALP 

authority). Although, as described 

above, CDCs will not be required ‘‘to 

demonstrate’’ that they can adequately 

fulfill their 504 program responsibilities 

for each 504 Rural Pilot loan before 

making the loan, CDCs will still be 

expected to fulfill all such program 

responsibilities with respect to these 

loans. 

Unlike a Multi-State CDC, a CDC 

making a loan under this pilot will not 

be required to establish a separate loan 

committee to cover the State in which 

the rural 504 Project is located. In 

addition, the CDC must advise the local 

District Counsel where the 504 Project 

is located which Designated Attorney, 

or other attorney, will be closing the 

loan. (The attorney must be licensed in 

the State where the loan is being made.) 

CDCs should note that the CDC may not 

close the loan as an expedited loan 

unless the attorney is a Designated 

Attorney licensed to practice in the 

State where the 504 Project is located. 

The CDC is responsible for notifying the 

SLPC that a 504 loan application is 

being submitted under the 504 Rural 

Pilot. 

SBA’s waiver of the above 

requirements is authorized by 13 CFR 

120.3 of its regulations, which provides 

that the SBA Administrator may 

suspend, modify or waive rules for a 

limited period of time to test new 

programs or ideas. The 504 Rural Pilot 

will be available for a two year period 

beginning today. 

SBA will limit the number of loans 

made under the 504 Rural Pilot to not 

more than ten percent of the total 

number of 504 loans guaranteed by SBA 

in any fiscal year. While SBA does not 

expect the number of 504 Rural Pilot 

loans to reach that limit, SBA will 

provide public notice of the need to 

suspend lending under the 504 Rural 

Pilot for the remainder of the fiscal year 

if SBA determines that the number of 

pilot loans is approaching the limit. 

SBA will be using the following 

criteria to evaluate the 504 Rural Pilot 

to determine how well it is achieving its 

objectives and other aspects of 

performance: (1) The measurable 

objectives to be achieved through the 

504 Rural Pilot, including the number of 

small business concerns served, and the 

delinquency and default rates on the 

504 Rural Pilot loans compared to 

regular 504 loans; (2) the number of 

CDCs that participate in the 504 Rural 

Pilot and their performance in making 

and servicing 504 Rural Pilot loans; and 

(3) the costs and standards of 

performance which, in order to be 

acceptable, must not impact the overall 

subsidy rate for the 504 Loan Program. 

For data collections to evaluate the 

effectiveness of this pilot, SBA will use 

ETran, SBA’s electronic system for loan 

submission and servicing. 

Authority: 13 CFR 120.3. 

Dated: July 6, 2018. 

Linda E. McMahon, 

Administrator. 

[FR Doc. 2018–15312 Filed 7–18–18; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 23 

[Docket No. FAA–2016–9409; Special 

Conditions No. 23–279A–SC] 

Special Conditions: Cranfield 

Aerospace Limited, Textron Aviation 

Inc. Model 525-Series Airplanes; 

Tamarack Load Alleviation System and 

Cranfield Winglets—Interaction of 

Systems and Structures 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Amended final special 

conditions; request for comments. 

SUMMARY: These amended special 

conditions are issued for the Textron 

Aviation Inc. Model 525-series 

airplanes. These airplanes—as modified 

by Cranfield Aerospace Limited—will 

have a novel or unusual design feature 

associated with the installation of a 

Tamarack Active Technology Load 

Alleviation System and Cranfield 

Winglets. The applicable airworthiness 

regulations do not contain adequate or 

appropriate safety standards for this 

design feature. These amended special 

conditions contain the additional safety 

standards the Administrator considers 

necessary to establish a level of safety 

equivalent to that established by the 

existing airworthiness standards, change 

the Type Certificate holder, and remove 

the special flight permit requirement. 

DATES: These special conditions are 

effective July 19, 2018 and are 

applicable on July 10, 2018. 

We must receive your comments by 

September 17, 2018. 

ADDRESSES: Send comments identified 

by docket number FAA–2016–9409 

using any of the following methods: 

b Federal eRegulations Portal: Go to 

http://www.regulations.gov and follow 

the online instructions for sending your 

comments electronically. 

b Mail: Send comments to Docket 

Operations, M–30, U.S. Department of 

Transportation (DOT), 1200 New Jersey 

Avenue SE, Room W12–140, West 

Building Ground Floor, Washington, DC 

20590–0001. 

b Hand Delivery of Courier: Deliver 

comments to the ‘‘Mail’’ address 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

b Fax: Fax comments to Docket 

Operations at 202–493–2251. 

Privacy: The FAA will post all 

comments it receives, without change, 

to http://regulations.gov, including any 

personal information the commenter 

provides. Using the search function of 

the docket website, anyone can find and 

read the electronic form of all comments 

received into any FAA docket, 

including the name of the individual 

sending the comment (or signing the 

comment for an association, business, 

labor union, etc.). DOT’s complete 

Privacy Act Statement can be found in 

the Federal Register published on April 

11, 2000 (65 FR 19477–19478), as well 

as at http://DocketsInfo.dot.gov. 

Docket: You can read the background 

documents or comments received at 

http://www.regulations.gov. Follow the 

online instructions for accessing the 

docket or go to the Docket Operations in 

Room @12–140 of the West Building 


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