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Community Express Pilot Program

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U.S. Small Business Administration (SBA).


Notice of Plan to Extend and Restructure the Community Express Pilot Program.


This notice extends the Community Express Pilot Program in its current form through September 30, 2008 and announces SBA's plan to restructure the program. The restructured Community Express will be effective October 1, 2008 to provide SBA's lending partners a transition period to implement the changes and to accommodate any Community Express loan applications lenders may have in process. This notice also extends the Community Express Pilot Program through December 31, 2009. Finally, this notice reminds SBA's participating lenders of the statutory limitation on the number of loans SBA can process under a pilot program.


The Community Express Pilot Loan Program is extended in its current form through September 30, 2008. The effective date of the changes to Community Express is October 1, 2008, and SBA is extending the restructured Community Express as a pilot program through December 31, 2009.

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Charles Thomas, Office of Financial Assistance, U.S. Small Business Administration, 409 Third Street, SW., Washington, DC 20416; Telephone (202) 205-6490;

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The Community Express Pilot Program was established in 1999 based on the Agency's SBA Express Program. Lenders approved for participation in Community Express are authorized to use the expedited loan processing procedures in place for SBA Express, but the loans approved under Community Express must be to distressed or underserved markets. In addition, participating lenders must arrange and, when necessary, pay for appropriate management and technical assistance for their Community Express borrowers. To encourage lenders to make these loans, SBA provides its standard 75-85 percent guaranty, which contrasts with the 50 percent guaranty the Agency provides under SBA Express. The maximum loan amount under this pilot program is $250,000.

Following extensive internal analysis and discussion, as well as discussions with SBA's lending partners, SBA is restructuring and enhancing the Community Express Pilot Program to improve its management, administration, oversight, and delivery. Through this notice, SBA is extending the Community Express Pilot Program in its current form through September 30, 2008. Also, SBA is providing its lending partners with advance notification of the key features of the restructured Community Express Pilot Program and SBA's plans for implementing the restructured program, including the publication of procedural guidance and the availability of a transition period for lenders.

Under the restructured Community Express Pilot Program, borrower eligibility will be more clearly defined. First, small businesses whose principal office (as defined in 13 CFR 126.103) is located in a HUBZone or Community Reinvestment Act (CRA) area will be eligible for Community Express. These geographic areas are easily identifiable and searchable through Web-based facilities available through the Internet. Second, loans of $25,000 or less regardless of where the principal office of the business is located will be eligible for Community Express. Third, loans made under SBA Headquarters approved special market initiatives designed to support local community/economic development will be eligible for Community Express.

In addition, SBA is retaining the technical assistance (T/A) requirement of Community Express, but giving lenders the option to use SBA's new online Small Business Training Network (SBTN) and other SBA T/A resources to meet the program's requirements. Lenders will continue to be required to document in their loan file the T/A received by the borrower.

With the availability of SBA's SBTN and SBA's other T/A resources and with the Agency's higher 75-85 percent guaranty, the maximum interest rate lenders may charge for Community Express loans will be limited to the rate applicable under standard 7(a). Under standard 7(a), lenders may charge interest rates up to Prime plus 2.25 percent for loans with maturities of less than seven years and Prime plus 2.75 percent for loans with maturities that are seven years or greater. Lenders may charge rates 2 percent higher for loans of $25,000 or less and 1 percent higher for loans between $25,000 and $50,000.

SBA will publish detailed procedural guidance on the program's changes in coming weeks, which will be followed by lender support and training through its district offices. To assist lenders in understanding and implementing the restructured Community Express Pilot Program and to accommodate Community Express loan applications that lenders may already have in process, SBA will delay implementation of the changes until October 1, 2008. But, as of October 1, 2008, all Community Express loans must conform to the requirements and procedures of the restructured Community Express Pilot Program.

Community Express is being extended as a pilot program until December 31, 2009, which will allow SBA time to fully evaluate the results of these changes.

Because Community Express is a pilot program, SBA must ensure that it complies with Section 7(a)(25) of the Small Business Act, which prohibits the Agency from approving under any 7(a) pilot loan program more than 10 percent of the total number of 7(a) loans SBA approves in any fiscal year. During the early months of Fiscal Year 2008, SBA received loan guaranty requests under Community Express at a volume that Start Printed Page 36951would have exceeded this statutory limit by year end, if unchecked. As a result, during Fiscal Year 2008, the SBA has taken steps to limit the number of Community Express loans it will accept each month. In addition to keeping the number of Community Express loans within the statutory limitation, this action will help enhance competition, diversify SBA lending, and control SBA's risk under the pilot program. SBA will continue to closely monitor the number of Community Express loans approved and make further adjustments as needed.

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Authority: 13 CFR 120.3.

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Eric R. Zarnikow,

Associate Administrator for Capital Access.

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[FR Doc. E8-14846 Filed 6-27-08; 8:45 am]