Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 102697 

for charities participating in the 

Combined Federal Campaign (CFC). 

DATES: The authorization of short-term 

regulatory variation standards are 

effective on December 18, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Keith Willingham, Director, Office of 

the CFC, keith.willingham@opm.gov, 

202–606–2564. 

SUPPLEMENTARY INFORMATION: The CFC 

is the world’s largest and most 

successful annual workplace charity 

campaign, with 35 CFC campaign zones 

throughout the country and overseas 

and raising millions of dollars each 

year. Pledges made by Federal civilian, 

retiree, postal, and military donors 

during the campaign season support 

non-profit organizations that meet CFC 

regulations and provide health and 

human welfare benefits throughout the 

world. 

To provide public accountability, 

OPM generally requires participating 

charities to undergo a third-party audit 

of their finances. In a 1995 rulemaking, 

OPM exempted local charities from the 

audit requirement if they had annual 

revenue of less than $100,000. In 2014, 

OPM eliminated the distinction between 

‘‘local’’ and ‘‘national’’ charities and 

expanded the exemption to all charities 

with revenue of less than $100,000. See 

5 CFR 950.203(a)(2)(i). In that 

rulemaking, OPM also added a second 

tier, allowing charities with revenue of 

$100,000 to under $250,000 to 

participate without an audit but with a 

review by an independent certified 

public accountant instead. See 5 CFR 

950.203(a)(2)(ii). 

Participation by charities in the CFC 

dropped precipitously over the last 

decade, however. Charities have 

explained that the audit requirement 

serves as a barrier to participation. 

Revenue reported by charities has 

increased, and more than 75 percent of 

charities now exceed the current audit 

threshold of $250,000 in reported 

revenue. At the same time, costs of 

audits have risen dramatically and now 

often exceed the value of donations 

collected through the CFC. Audit 

services can now range from $15,000– 

$30,000. Accordingly, a charity cannot 

justify the expense of the audit, which 

yield a net loss to the charity. 

The mission of the CFC is to promote 

and support philanthropy through a 

program that is employee-focused, costefficient, and effective in providing all 

Federal employees the opportunity to 

donate. The CFC provides employees 

with an easy way to contribute to their 

charities of choice; so, when employees 

no longer find their favorite charity on 

the CFC list, they may not give as much 

or as often. Therefore, to attract more 

donors to the CFC and to retain and 

attract a more diverse group of charities, 

OPM is adjusting the audit requirements 

in an 18-month pilot program. 

OPM’s CFC regulations authorize the 

Director of OPM to ‘‘waive any of these 

[public accountability] standards and 

certifications upon a showing of 

extenuating circumstances.’’ 5 CFR 

950.203(e). In addition, the Director may 

‘‘exercise general supervision over all 

operations of the CFC and take all 

necessary steps to ensure the 

achievement of campaign objectives.’’ 5 

CFR 950.102(c). Recognizing that the 

financial thresholds have not been 

adjusted in over ten years (and that the 

$100,000 threshold is almost 20 years 

old), OPM finds that immediate steps 

are warranted to facilitate participation 

by charities in the CFC. 

Based on the feedback OPM has 

received from charities, the Acting 

Director has found that the current 

financial thresholds present extenuating 

circumstances that impair the 

achievement of campaign objectives as 

the thresholds have not been adjusted 

for inflation in over 10 years. 

Furthermore, the thresholds are 

inconsistent with the standards applied 

by other areas of the government. For 

example, the Office of Management and 

Budget currently requires audits for 

organizations that expend $750,000 or 

more in Federal funds. See 2 CFR part 

200, subpart F. Similarly, many similar 

state programs have raised their audit 

thresholds to $1,000,000. Because the 

existing regulatory thresholds are 

having a negative impact on the 

effectiveness of the CFC and revised 

thresholds would provide some 

necessary financial relief, the Acting 

Director finds that a limited waiver is 

appropriate. Specifically, waiving the 

audit requirement for charities with 

annual revenue of $1 million or less, 

and waiving the requirement for an 

independent review of financial 

statements for charities with annual 

revenue above $1 million but that 

receive less than $750,000 in CFC 

pledges will help address the 

extenuating circumstances of the 

increased revenues received by charities 

combined with the increased costs of 

financial auditing and review services 

without commensurate inflationary 

adjustments to the regulatory 

thresholds. 

Accordingly, OPM provides notice 

that, for the 18-month period after 

December 18, 2024, OPM will waive the 

regulatory thresholds for audits and/or 

reviews of financial statements for 

organizations with annual reported 

revenue of $1,000,000 or less on its IRS 

Form 990 or pro forma IRS Form 990 

and will waive the regulatory thresholds 

for audits of financial statements for 

organizations with annual reported 

revenue above $1,000,000 and with less 

than $750,000 coming from CFC. Details 

are available at https://

cfccharities.opm.gov/app/#!/home. 

All other organizations (e.g., an 

organization with annual reported 

revenue above $1,000,000 and with 

$750,000 or more coming from CFC) 

continue to be required to undergo an 

annual financial statement audit for CFC 

purposes. The organization must 

account for its funds based on generally 

accepted accounting principles. A copy 

of the audited financial statements and 

auditors report must be included with 

the application. See 5 CFR 

950.203(a)(2)). 

Next Steps 

OPM plans to update its regulations 

governing the CFC (RIN 3206–AO66). 

OPM will assess the effectiveness of this 

waiver in terms of encouraging charity 

participation in CFC and whether there 

is a resultant increase in employee 

participation. OPM will also assess the 

extent to which these pilot programs 

affect the number of charities 

participating in CFC and which 

charities meet these proposed 

thresholds. OPM charity application 

reviewers at the local national, and 

international levels will study the audits 

and financial reviews submitted with 

applications to ensure that these 

thresholds are providing appropriate 

levels of accountability. 

Office of Personnel Management. 

Kayyonne Marston, 

Federal Register Liaison. 

[FR Doc. 2024–29992 Filed 12–17–24; 8:45 am] 

BILLING CODE 6325–58–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

RIN 3245–AI21 

ALP Express Pilot to Permanent Status 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Final rule. 

SUMMARY: The U.S. Small Business 

Administration (‘‘SBA’’ or Agency) is 

making permanent the increased 

delegated authorities made available 

under the ALP Express Pilot for 

Certified Development Companies 

(‘‘CDCs’’) approved for the Accredited 

Lenders Program (‘‘ALP’’). These 

increased delegated authorities for 504 


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102698 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 

loans of $500,000 or less (‘‘ALP Express 

authority’’) were authorized under the 

Economic Aid to Hard-hit Small 

Businesses, Nonprofits, and Venues Act 

(Economic Aid Act or EAA). When 

these EAA-increased delegated 

authorities expired on September 30, 

2023, SBA implemented the ALP 

Express Pilot (Pilot) in October 2023 to 

allow SBA to further evaluate the 

improved customer service levels for 

SBA Borrowers and the use of these 

increased delegated authorities by ALP 

CDCs. The ALP Express Pilot is 

scheduled to expire on September 30, 

2025. Due to the success of the Pilot, 

SBA is revising regulations and 

proceeding to make the Pilot permanent 

after receiving supportive public 

comments and no objections to SBA’s 

October 24, 2024, notice of proposed 

rulemaking. SBA notified Congress of 

the intent to convert the Pilot to become 

a permanent part of the 504 Loan 

Program in September 2024. 

DATES: This rule is effective as of 

January 17, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Gregorius Suryadi, Office of Financial 

Assistance, U.S. Small Business 

Administration at (202) 205–6806 or 

gregorius.suryadi@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: 

I. Background Information 

The 504 Loan Program is an SBA 

financing program authorized under 

title V of the Small Business Investment 

Act of 1958, as amended, 15 U.S.C. 695 

et seq. (‘‘Small Business Investment 

Act’’). Under the 504 Loan Program, 

loans are made to small business 

applicants by Certified Development 

Companies (‘‘CDCs’’), which are 

certified and regulated by SBA to 

promote economic development within 

their community. 

There are three types of CDCs that 

participate in the 504 Loan Program. 

This document relates to the temporary 

increased delegated authorities that 

were granted, in accordance with 

section 328(b) of the Economic Aid Act 

(‘‘EAA’’), to CDCs that are approved by 

SBA to participate in the Accredited 

Lenders Program (hereafter ‘‘ALP 

CDCs’’), which is authorized under 

section 507(a) of the Small Business 

Investment Act. Under section 507(c) of 

the Small Business Investment Act, SBA 

is authorized to develop an expedited 

procedure for processing a loan 

application or servicing action 

submitted by ALP CDCs. [15 U.S.C. 

697d.] 

Prior to the Economic Aid Act, ALP 

CDCs were required to obtain SBA’s 

approval on both the loan’s eligibility 

and creditworthiness determinations. In 

addition, ALP CDCs only had delegated 

authority to make certain ‘‘No Adverse 

Change’’ certifications prior to loan 

closing without SBA’s review and 

approval and were only authorized to 

close 504 loans under the expedited 

loan closing procedures applicable to a 

Priority CDC. Further, ALP CDCs were 

required to obtain SBA’s approval for 

most servicing actions. Section 328(b) of 

the EAA temporarily provided ALP 

CDCs increased delegated authority to 

‘‘approve, authorize, close and service 

covered loans,’’ for loans of not more 

than $500,000 and that are not made to 

a borrower in an industry with a high 

rate of default as defined by SBA. SBA 

implemented these increased delegated 

authorities with the publication of an 

interim final rule on June 27, 2022. (87 

FR 37979). Pursuant to the EAA, these 

delegated authorities were to expire on 

September 30, 2023. 

In order to evaluate the use of these 

increased delegated authorities by ALP 

CDCs and to identify opportunities for 

further modification, SBA developed 

the ALP Express Pilot program to 

provide these increased delegated 

authorities through September 30, 2025, 

to ALP CDCs (hereafter referred to as 

‘‘ALP Express Pilot Loans’’). The ALP 

Express Pilot’s delegated authorities in 

effect represented a continuation of the 

ALP Express authority provided by the 

Economic Aid Act. (88 FR 69529 

(October 6, 2023)). Pursuant to its 

authority set forth in section 507(c) of 

the Small Business Investment Act (15 

U.S.C. 697d(c)), which authorizes SBA 

to develop expedited procedures for 

processing a loan application or 

servicing action submitted by ALP 

CDCs, SBA published a notice of 

proposed rulemaking on October 24, 

2024 (89 FR 84831), proposing to make 

permanent the increased delegated 

authorities available under the ALP 

Express Pilot. With this document SBA 

also requested public comment to help 

the Agency identify which parts of the 

pilot have been successful and which 

may need further modification. 

II. Summary of Comments Received 

On November 25, 2024, the notice of 

proposed rulemaking comment period 

ended. SBA received 11 comments to 

the notice of proposed rulemaking of 

which one was beyond the scope of the 

NPRM. Of the 10 unique comments 

received, 2 were from national trade 

associations, 7 were from Certified 

Development Companies, and one was 

from an individual. The one comment 

that was beyond the scope of the notice 

of proposed rulemaking was from an 

individual. Public comments received to 

further expand the pilot authorities will 

be addressed in the Section-by-Section 

Analysis. Of the 10 comments received, 

9 supported the changes as set forth in 

the notice of proposed rulemaking. One 

comment supported the changes and 

requested additional modification, and 

the comment from the individual was 

nonresponsive as it did not comment on 

the proposed rule but instead suggested 

revisions to the ALP Express Guide. 

SBA did not receive any comments 

opposing the changes. In addition to 

comments on these regulations there 

were also comments requesting that 

SBA implement policies and procedures 

on electronic signatures, electronic 

closings, and digital debentures to 

improve efficiencies across the 504 loan 

program for both ALP and non-ALP 

CDCs. 

III. Section-by-Section Analysis 

A. CDC’s Authorities. Under the ALP 

Express Pilot, SBA delegated to ALP 

CDCs the authority to make the final 

decision with respect to the applicant’s 

creditworthiness on ALP Express Pilot 

Loans. SBA continued to be responsible 

for reviewing each 504 loan to ensure 

that it meets all loan program 

requirements for program eligibility, 

and its risk management enhancement 

within E-Tran provided a tool to assist 

with fraud detection and prevention. 

SBA proposed to make these increased 

authorities permanent for loans that 

meet ALP Express eligibility criteria. 

SBA is not making additional changes to 

current ALP Express underwriting, 

servicing or closing authorities beyond 

those established by the ALP Express 

Pilot Program. In its public comments 

the National Association of 

Development Companies (NADCO), a 

national trade association, stated that 

additional delegated authorities cannot 

be implemented because SBA lacks this 

authority under the Accredited Lenders 

Program. Based on the excellent 

performance of this cohort of the 504 

loans portfolio, there has been low risk 

to the national 504 portfolio due to the 

implementation of the ALP Express 

Pilot. SBA expects ALP CDCs to 

continue to use this delegated authority 

as prudent lenders and will monitor the 

national portfolio of ALP Express loans. 

Of all ALP Express loans approved since 

inception of the Pilot and through June 

30, 2024, none were in default or in 

liquidation. SBA will monitor the risk of 


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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 102699 

this cohort on a continuous basis going 

forward. 

SBA also delegated to ALP CDCs the 

authority to approve certain servicing 

actions after closing on ALP Express 

Pilot Loans (though ALP CDCs were still 

required to notify the appropriate SBA 

servicing center of their approval of any 

servicing action on ALP Express Pilot 

Loans). In addition, SBA delegated to 

ALP CDCs the responsibility to 

undertake all actions necessary to close 

the ALP Express Pilot Loan and 

Debenture in accordance with the 

expedited loan closing procedures 

applicable to a Priority CDC and with 13 

CFR 120.960. SBA is making these 

increased authorities permanent for 

loans that meet ALP Express eligibility 

criteria (hereafter referred to as ‘‘ALP 

Express Loans’’). CDCs would use these 

delegated authorities to approve certain 

servicing actions after closing. SBA has 

not found any issues or concerns with 

the ALP Express loan cohort that would 

prompt SBA to reconsider making 

permanent these increased delegated 

authorities. SBA will continuously 

monitor the risk of this cohort due to 

these permanent servicing and closing 

delegations going forward. 

In their own discretion, ALP CDCs 

may decide not to exercise their 

increased delegated authority with 

respect to an ALP Express Loan and 

may instead submit the loan to SBA 

under nondelegated procedures. ALP 

CDCs may not use their ALP Express 

authority to service a loan that was 

approved under non-delegated authority 

that could have been made as an ALP 

Express Loan. In addition, Premier 

Certified Lender Program (PCLP) CDCs 

may decide to process an ALP Express 

Loan under their status as an ALP CDC 

instead of as a PCLP CDC, thereby not 

requiring the CDC to comply with Loan 

Loss Reserve Fund requirements for that 

loan. A PCLP CDC that decides to 

process a loan as an ALP Express Loan 

however may only use ALP Express 

authorities, not PCLP authority, for that 

loan. 

In making, closing, servicing, or 

liquidating an ALP Express Loan, CDCs 

are required to follow all Loan Program 

Requirements. This includes the loan 

closing and disbursement procedures in 

SOP 50 10 7.1 and any updates to the 

servicing and liquidation requirements 

in 13 CFR 120.535, 120.536, 120.540, 

120.842 and 120.960, as well as SOP 50 

55. SBA is not further expanding any of 

these responsibilities in making 

permanent the increased authorities 

available to ALP CDCs under the ALP 

Express delegations of authority. 

SBA received public comments 

recommending a further expansion of 

ALP Express delegated authorities. The 

commenters recommended that SBA: (1) 

Allow full delegated processing, 

approval, and authorization of ALP 

Express Loans; (2) Allow ALP CDCs to 

prepare, finalize, and execute the Loan 

Terms and Conditions; (3) Allow ALP 

CDCs to process and approve all loan 

modifications between loan approval 

and loan closing and enter changes 

directly in the Capital Access Financial 

System (CAFS); (4) Implement a loan 

scoring model for use by ALP CDCs in 

approving ALP Express Loans. SBA is 

not including these recommendations 

because SBA lacks this authority under 

the Accredited Lenders Program. 

For further guidance on ALP Express 

authority, please review the ALP 

Express Pilot Program Guide. This guide 

will apply to the increased delegated 

authorities made permanent under this 

final rule and will be updated as 

needed. 

Finally, in response to public 

comments, SBA is revising its 

regulations under 13 CFR 120.953 

related to certain responsibilities of 

Trustee appointed by SBA to facilitate 

504 Debenture sales and the related 

definition of ‘‘Debenture’’ in 13 CFR 

120.802. Pursuant to 13 CFR 120.953(c), 

SBA must appoint a Trustee to maintain 

physical possession of 504 Debentures 

for SBA and the Certificate holders. In 

practice, this requirement limits CDCs, 

and indirectly SBA borrowers, to 

executing only physical paper 

Debentures and prohibits the adoption 

of electronic Debentures and all their 

corresponding advantages and 

efficiencies. SBA is revising the 

definition of ‘‘Debenture’’ in 13 CFR 

120.802 to allow for either paper or 

electronic Debentures. A revision to the 

requirements set forth in 13 CFR 

120.953(c) will clarify that the SBA 

shall use a trustee to hold in trust paper 

Debentures. The consequence of 

adopting electronic Debentures will be a 

streamlined loan closing process and 

modernized documentation retention 

procedures for these documents, thereby 

lowering costs for CDCs and SBA 

borrowers. 

B. Application and Reporting 

Requirements. CDCs are required to 

comply with the reporting requirements 

in 13 CFR 120.830, using the 

application forms for current 504 loan 

processing, and are required to execute 

an SBA Terms and Conditions 

document for each 504 loan, including 

ALP Express Pilot loans, as set forth in 

SOP 50 10. ALP CDCs use SBA Form 

1244 to document its ALP Express 

authority when submitting an 

application for an ALP Express Pilot 

loan. In doing so, SBA tracks whether 

the ALP CDC was using its ALP Express 

increased delegated authority for the 

loan. In making the increased 

authorities available to ALP CDCs under 

the ALP Express Pilot Program 

permanent, SBA is not changing ALP 

CDC reporting requirements and related 

responsibilities. No further changes to 

Form 1244 are needed. 

C. Lender Oversight. ALP CDC 

oversight procedures shall continue to 

follow the requirements set forth in 13 

CFR part 120, subpart I, SOP 50 53 

(Lender Supervision and Enforcement) 

and SOP 51 00 (On-Site Lender Reviews 

and Examinations). The SOPs can be 

found on the SBA website. ALP CDCs 

will be monitored both for performance 

and other risk characteristics. The ALP 

CDC must comply with the requirement 

that it only make ALP Express Loans in 

an amount of $500,000 or less, along 

with all other loan program 

requirements. ALP CDCs also will be 

subject to 13 CFR 120.1400 through 

120.1600 and the provisions of SOP 50 

53 concerning supervision and 

enforcement. SBA is not changing these 

responsibilities in making permanent 

the increased authorities available to 

ALP CDCs. 

Compliance With Executive Orders 

12866, 12988, 13175, 13132, 13563, and 

14094, the Congressional Review Act, 

Paperwork Reduction Act, and 

Regulatory Flexibility Act Executive 

Orders 12866, 13563, and 14094 

Executive Order 12866, ‘‘Regulatory 

Planning and Review,’’ directs agencies 

to assess all costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). Executive Order 13563, 

‘‘Improving Regulation and Regulatory 

Review,’’ emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. Executive 

Order 14094, ‘‘Modernizing Regulatory 

Review,’’ amends section 3(f) of 

Executive Order 12866 and supplements 

and reaffirms the principles, structures 

and definitions governing contemporary 

regulatory review established in 

Executive Order 12866 and Executive 

Order 13563. The OMB Office of 

Information and Regulatory Affairs has 

determined that this rulemaking is not 

a significant regulatory action. SBA has 

drafted a cost-benefit analysis for the 

public’s information in the next section. 


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102700 Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 

A. Cost-Benefit Analysis 

Is there a need for the regulatory action? 

Access to capital is one of the primary 

challenges for small businesses to start, 

grow, and sustain their businesses. The 

SBA 504 loan program serves an 

important role in business lending for 

small businesses that do not have credit 

available elsewhere from conventional 

sources on reasonable terms. The 

Agency believes that a streamlined 

process for small dollar loans 

particularly for loans of $500,000 or less 

will facilitate increased participation by 

small business owners, especially those 

in underrepresented communities. SBA 

observed that upon implementing the 

increased delegated authorities required 

by the EAA, SBA was able to reduce the 

processing and approval time of loan 

applications of $500,000 or less for 

small businesses that needed immediate 

financial assistance. 

The ALP Express Pilot increased 

delegated authorities have proven that 

ALP CDCs are able to process, approve, 

and service ALP Express loans within 

the guidelines issued by the SBA. Due 

to the success of the Pilot, SBA is now 

making these delegations permanent. 

Accordingly, the permanent program 

change will reduce regulatory burdens, 

reduce the number of hours spent 

processing an application to deliver a 

loan for both SBA and CDCs and 

increase access to capital for small 

businesses. 

With respect to adopting electronic 

504 Debentures, SBA believes this 

change will streamline the loan closing 

process and lower costs for CDCs and 

SBA borrowers. 

B. Benefits and Costs of the Rulemaking 

What are the potential benefits and costs 

of this regulatory action? 

SBA anticipates that making 

permanent the ALP Express Pilot Loan 

authority and providing ALP CDCs with 

greater authority to approve and service 

loans will reduce processing time and 

therefore benefit small businesses, their 

employees, and the communities they 

serve. 

Indeed, SBA observed that the 

processing and approval time for ALP 

Express Pilot loans averaged 2.3 

business days whereas the processing 

time for regular 504 loans using nondelegated authority averaged 5 days. 

Therefore, small businesses will have 

access to capital to start, grow, and 

sustain their businesses in a shorter 

timeframe. SBA does not anticipate 

additional costs or impacts on the 

subsidy once these increased delegated 

authorities are made permanent. 

Finally, adoption of electronic 

Debentures will expedite the loan 

closing process and lower 

documentation storage and transmission 

costs. 

C. What alternatives have been 

considered? 

SBA could allow the ALP Express 

Pilot to expire and resume the level of 

ALP authorities that were in place prior 

to the implementation of the Economic 

Aid Act. Due to the efficiency gains 

under the ALP Express pilot, SBA 

considered it more prudent to retain 

these increased delegated authorities to 

reduce regulatory burdens for ALP CDCs 

and to responsibly streamline the 

processing, approval and closings of 504 

loan application under $500,000 

without substantially increasing the risk 

of waste, fraud, or abuse of the 

programs, or threatening the integrity of 

the business loan programs or the waste 

of taxpayer dollars. 

SBA reviewed public comments and 

received recommendations for 

alternatives that cannot be implemented 

because SBA does not have this 

authority under the Accredited Lenders 

Program. These include: (1) Allowing 

full delegated processing, approval, and 

authorization of ALP Express Loans; (2) 

Allowing ALP CDCs to prepare, finalize, 

and execute the Loan Terms and 

Conditions; (3) Allowing ALP CDCs to 

process and approve all loan 

modifications between loan approval 

and loan closing and enter changes 

directly in the CAFS; (4) Implementing 

a loan scoring model for use by ALP 

CDCs in approving ALP Express Loans. 

Finally, as an alternative to the 

changes being contemplated to 

§ 120.953, SBA could maintain its 

current physical Debenture regime 

where physical paper is shipped and 

stored. Due to the efficiency gains 

afforded by electronic Debentures, SBA 

considered it more prudent to transition 

to the use of electronic Debentures. 

Executive Order 12988 

This action meets applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The action would not have 

preemptive effect or retroactive effect. 

Executive Order 13175 

This final rule will not have Tribal 

implications under Executive Order 

13175, Consultation and Coordination 

with Indian Tribal Governments, 

because it would not have a substantial 

direct effect on one or more Indian 

tribes, on the relationship between the 

Federal Government and Indian tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

Executive Order 13132 

This final rule will not have 

federalism implications as defined in 

Executive Order 13132, Federalism. It 

would not have substantial direct effects 

on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government, as 

specified in the Executive order. As 

such it does not warrant the preparation 

of a Federalism Assessment. 

Paperwork Reduction Act 

This final rule does not impose 

additional reporting or recordkeeping 

requirements under the Paperwork 

Reduction Act, 44 U.S.C. chapter 35. In 

order to implement the Economic Aid 

Act, SBA determined that it was 

necessary to temporarily modify SBA 

Form 1244, which was approved on 

November 22, 2022, under OMB Control 

Number 3245–0071, Application for 

Section 504 Loans, to conform the 

application with the revised 

requirements for ALP Express Loan 

authority. The changes did not add any 

new burdens for the respondents. SBA 

made the following technical 

corrections and clarifying changes to 

SBA Form 1244 which became effective 

October 1, 2024: (1) revised question 

number 4 on page 2 to include the 

updated language as a result of the 

Criminal Justice Reviews for the SBA 

Business Loan Programs, Disaster Loan 

Programs, and Surety Bond Guaranty 

Program (89 FR 34094); (2) added a 

paragraph on page 4 authorizing the 

SBA to release information regarding 

existing SBA loan to Lender/CDC; (3) 

revised the instructions on page 5 

(Purpose of the Form) to clarify that 

CDCs with ALP Express Loan authority 

must use the form; (4) added a new ALP 

Express checkbox to page 8 in the 

Submission Method field; (5) added an 

additional row to the project table on 

page 9 for Other Secured Debt to be 

Refinanced; and (6) updated the 

instructions on pages 11 and 12 

(Required Exhibits) to identify which 

exhibits must be completed and 

uploaded in SBA’s E-Tran system for 

ALP Express Loans and which exhibits 

non-ASM CDCs must complete and 

upload into E-Tran. No additional 

modifications to SBA Form 1244 were 

necessary for the ALP Express Pilot, and 

no additional modifications to SBA 

Form 1244 will be necessary for 

purposes of making the ALP Express 


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Federal Register / Vol. 89, No. 243 / Wednesday, December 18, 2024 / Rules and Regulations 102701 

increased authorities permanent 

through this rulemaking. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601, et seq., requires 

administrative agencies to consider the 

effect of their actions on small 

businesses, small organizations, and 

small governmental jurisdictions. 

Pursuant to the RFA, when an agency 

issues a proposed rulemaking, it must 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis to address the impact of the 

rule on small entities. SBA published a 

notice of proposed rulemaking on 

October 24, 2024, with comments due 

on or before November 25, 2024, and 

received 10 supportive comments and 

no opposing comment. Section 605 of 

the RFA allows an agency to certify a 

rule, in lieu of preparing an analysis, if 

the rulemaking is not expected to have 

a significant economic impact on a 

substantial number of small entities. 

The rulemaking will have a positive 

impact and will be beneficial for all ALP 

CDCs. By making permanent the 

temporary increased delegated 

authorities available under the ALP 

Express Pilot program this rulemaking 

will improve the approval time of 504 

loan applications for loans in an amount 

of $500,000 or less. 

Between FY 2022 (June 27, 2022) and 

FY 2025 (October 31, 2024) SBA 

approved 4,971 non-ALP Express loans 

of $500,000 or less, for a total dollar 

amount of $1,511,075,000. In the same 

period SBA approved 2,364 ALP 

Express and ALP Express Pilot loans for 

a total dollar amount of $1,283,386,000. 

The total number of approved 504 loans 

of $500,000 or less over this period was 

7,335 loans, in the amount of 

$2,794,461,000. Based on the total 504 

loans of $500,000 or less approved since 

ALP Express implementation, ALP 

CDCs have demonstrated success in 

processing and servicing loans using 

their increased ALP Express delegated 

authority. In addition, since ALP 

Express implementation, there have 

been no instances of ALP Express loans 

in default or in liquidation. 

SBA estimates the burden for 

completing SBA Form 1244, 

‘‘Application For Section 504 Loans’’, 

including time for reviewing 

instructions, gathering data and 

documentation needed, and completing 

and reviewing the form, is 2.5 hours. 

SBA will not need to change SBA Form 

1244 as a result of this rulemaking. SBA 

anticipates the final rule will increase 

the number of CDCs making loans of 

$500,000 or less and increase the 

number of approved 504 program loans 

as a whole. The ALP Express Pilot 

added no additional cost burdens to 

SBA, CDCs, or small business borrowers 

and there were minimal changes to SBA 

forms. SBA used existing staff to 

implement the Pilot. No further changes 

to SBA forms or staffing levels are 

anticipated to make permanent the ALP 

Express increased delegated authorities. 

Finally, the ALP Express Pilot cohort of 

loans had no defaults and no 

liquidations. SBA will continue to 

monitor the risk of this cohort to SBA’s 

504 portfolio going forward. 

With respect to the electronic 

Debenture change, SBA currently must 

appoint a Trustee to maintain physical 

possession of 504 Debentures for SBA 

and the Certificate holders. In practice, 

this requirement limits CDCs, and 

indirectly SBA borrowers, to executing 

only physical paper Debentures and 

prohibits the adoption of electronic 

Debentures and all their corresponding 

advantages and efficiencies. A revision 

to the requirements set forth in 13 CFR 

120.953(c) will authorize SBA to 

maintain possession of electronic (or 

digital) versions of 504 Debentures, 

thereby streamlining the loan closing 

process and lowering costs for CDCs and 

SBA borrowers 

Based on the foregoing, the 

Administrator of the SBA hereby 

certifies that this rulemaking will not 

have a significant economic impact on 

a substantial number of small 

businesses. The SBA invited comments 

from the public on the certification for 

the proposed rule. SBA did not receive 

any objections to its certification. 

Congressional Review Act 

This rule has been determined not to 

meet the criteria set forth in 5 U.S.C. 

804(2). SBA will submit the rule to 

Congress and the Government 

Accountability Office consistent with 

the Congressional Review Act’s 

requirements. 

List of Subjects in 13 CFR Part 120 

Administrative practice and 

procedure, Banks, Banking, Business 

and industry, Child support, 

Community development, Confidential 

business information, Credit, Disaster 

assistance, Employee benefit plans, 

Energy conservation, Environmental 

protection, Equal employment 

opportunity, Exports, Flood insurance, 

Flood plains, Foreign trade, Fraud, 

Individuals with disabilities, Lead 

poisoning, Loan programs—business, 

Loan programs—energy, Loan 

programs—veterans, Reporting and 

recordkeeping requirements, Small 

businesses, Solar energy, Trusts and 

trustees, Veterans. 

Accordingly, for the reasons stated in 

the preamble, SBA amends 13 CFR part 

120 as follows: 

PART 120—BUSINESS LOANS 

■ 1. The authority citation for part 120 

continues to read as follows: 

Authority: 15 U.S.C. 634(b)(6), (b)(7), 

(b)(14), (h), and note, 636(a), (h) and (m), 650, 

687(f), 696(3) and (7), and 697(a) and (e); sec. 

521, Pub. L. 114–113, 129 Stat. 2242; sec. 

328(a), Pub. L. 116–260, 134 Stat. 1182. 

■ 2. Amend § 120.802 by revising the 

definition of Debenture to read as 

follows: 

§ 120.802 Definitions. 

* * * * * 

Debenture is an obligation issued by 

a CDC and guaranteed 100 percent by 

SBA, the proceeds of which are used to 

fund a 504 loan. SBA, in its discretion, 

may authorize either paper or electronic 

Debentures. 

* * * * * 

■ 3. Amend § 120.842 by revising 

paragraph (a) and removing paragraph 

(d) to read as follows: 

§ 120.842 ALP Express Loans. 

(a) Definition. For the purposes of this 

section, an ALP Express Loan means a 

504 loan in an amount that is not more 

than $500,000 and which is 

underwritten, approved, closed and 

serviced using the authorities set forth 

in this section. 

* * * * * 

■ 4. Amend § 120.953 by revising 

paragraph (c) to read as follows: 

§ 120.953 Trustee. 

* * * * * 

(c) Hold in trust paper Debentures 

composing a Debenture Pool for the 

benefit of SBA and the Certificate 

holders; 

* * * * * 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2024–29706 Filed 12–17–24; 8:45 am] 

BILLING CODE 8026–09–P 

DEPARTMENT OF COMMERCE 

Office of the Secretary 

15 CFR Part 3 

[Docket No. 241210–0320] 

RIN 0605–AA64 

Implementation of HAVANA Act of 

2021 

AGENCY: Department of Commerce. 


khammond on DSK9W7S144PROD with RULES